With the recent announcement that IMG and Learfield will potentially be consolidating and forming a 200-school ‘Super Rights Holder’, many schools are wondering what this is going to mean to them. The market is going to change dramatically in the future ifconsolidation occurs, but for the short term, it will be business as usual. Not much will change in the next 12 months…
BUT after that, there will be some massive changes to reduce costs and increase profitability for this new ‘Super Rights Holder.’
The following are the most important aspects that will come about if this merger is approved and 86% of all Power 5 schools are now housed under one roof. I would not be surprised and caution everyone to be prepared for further consolidation by competitors or with the ‘Super Rights Holder’ in retaliation further limiting options.
As is the case with any change, some of these effects are positives for schools and some of these are negatives:
1) There will be the first true national partnership option available for sponsors.
Learfield and IMG have preached to sponsors in the past that they could offer a truly national platform, however, if a partner wanted to activate across the entire country they needed to negotiate with multiple sales units, across multiple rights holders or at least with the two main ones separately. This merger will allow for true national partnerships, theoretically adding to the dollar figures that universities will receive as part of their revenue agreements… that is if they are structured properly and fall within the revenue share threshold of their agreement!
2) Smaller local sales forces
Due to the reliance on national partnerships, this will lead to diminishing local sales forces needed on the ground at properties. National and regional sales will begin to dominate corporate partnership agreements and an internal restructuring will occur for rights holders. The need for three, four or five salespeople will become less and less likely to occur at each individual property. There will be more of a focus on activation of these national and regional deals and less of a reliance on local partnerships. This should decrease costs and lead to less overhead operating for the ‘Super Rights Holder.’
3) The regions will be consolidated, costing jobs and changing leadership.
If IMG and Learfield merge to form the ‘Super Rights Holder,’ so will the Regional Vice President roles and oversight of each region. If I were currently sitting in one of these positions, I would be politicking for my job as hard as I possibly could by working my relationships across campuses and showing my true worth over my competitor in the region from the other rights holder through these relationships. This change will be minimal in the day-to-day operations of local properties at first, but can truly affect the partnership the school has with the rights holder in the long term.
It will be interesting to see the percentage of Learfield Vice Presidents or IMG Vice Presidents that retain their jobs through this merger and if it is truly 50/50. How many of these leaders will go back to being the heads of properties AKA General Managers will also be a trend to watch.
4) There are now more limited options now available for schools.
This may be the biggest fear for schools that are on the negotiating block within the next three to five years. By the limiting of partnership options available, schools will be left to negotiate with one ‘Super Rights Holder’ as opposed to bringing both larger parties to the table. Yes, I still understand there are additional options for schools such as Van Wagner Sports and Entertainment, Fox Sports, JMI Sports and OutFront Media Sports, however, this thinking is flawed for a few reasons:
– None of these partnerships will be able to incorporate the national sales that a combined Learfield-IMG ‘Super Rights Holder’ effort can offer. This will be a huge selling point and will allow for a perceived greater revenue offering from the ‘Super Rights Holder’ to a school. However, realistically it may cause schools to have a fear of missing out (FOMO) on larger partnership deals and ultimately lead to lower rights fees and worst structures for the school’s bottom line if negotiated improperly.
– JMI Sports and IMG College have already struck a partnership together on multiple properties including University of Georgia and Columbia University, and now would be in business with the new ‘Super Rights Holder’. JMI Sports only has two solo properties in University of Kentucky and Clemson University and has considerable capital tied into these properties limiting their potential future growth.
– Lastly rumors have swirled that OutFront Media Sports Properties is potentially the next rightsholder to be consolidated and has already been contacted for a potential acquisition. OutFront Media Sports has the Power 5 rights at LSU, University of Maryland, University of Virginia and other Division I schools. It falls within a company whose main industry is the Outdoor billboards and it would make sense for them to be the next domino to fall as LSU, University of Virginia and University of Maryland have all recently announced ten-year contract extensions. The other rights holders who were waiting to pick off these schools have failed and make them a viable acquisition option. If this is with the ‘Super Rights Holder’ or one of the other two rights holders it will still lead to decreased options. We will see as this has long been a rumor back to the CBS Sports Properties years, but now may cause merit.
5) There is a greater need to partner with a multimedia rights expert to maximize your deal and ensure the proper structure.
With IMG and Learfield combining forces the time is more prevalent than ever for universities to engage with a multimedia rights expert to help them negotiate their partnership deals and extensions. Learfield and IMG going to market together can affect the structure being offered to each individual school and unless you work with a partner with current knowledge you are setting yourself up for failure. You need someone on your side to help negotiate and ensure you have the best deal for your institution! Each school must understand ‘Who They Are’ and the structure needed on their specific campus for maximum revenue moving forward. Partnering with an organization who can help with the RFP process, renegotiation or examining your current structure will ensure the best partnership is developed. Understand what is available on either a guaranteed perspective or the financial upside through greater potential of national partnerships is essential in securing the right deal. In theory, cost should decrease by this partnership between Learfield and IMG and partnering with an organization who can examine your current contract or future needs will only increase the money coming back to your athletic department’s bottom line.
In closing, if the IMG-Learfield merger is approved and goes through, there are both potential positive and negative effects for athletic departments. Leaders must ensure they have the proper structure and knowledge to limit the effect of the merger on their bottom lines. If structured right, it could potentially be a positive for them when the national sales increase revenue and there is a decrease in costs at the local level.
This will be an interesting next few months and I know many of you will be watching closely to see how it will affect your department. The best thing you can do is ensure your house in order by evaluating your internal model and acquiring the right knowledge for when these changes come!