Where Do College Sports Sponsorship Sales Go From Here?

It wasn’t that long ago that most schools had a small staff within their athletic department tasked with selling multimedia inventory.  Stadium signage, radio ads and halftime entertainment were all available for sponsorship, and personnel within the athletic department were the ones responsible for selling it.

A trend began in the ’90s to outsource this selling function to private companies who were better equipped to maximize the possible revenue, even after taking a “commission” for their services.  Learfield and ISP were among the first companies to gain substantial market share, and there have been a few others such as IMG College and Nelligan that have come along since.

Why would schools do this?  There are several reasons:

  1. These deals are often long-term in nature, between five and ten years.  Guaranteeing a revenue stream for that length of time removes the risk that your in-house sales team may struggle in some years to bring in the same revenue;
  2. It reduces costs by moving personnel off its books (to the rights holder);
  3. Rights holders tend to be better trained and motivated (through financial incentives).  Many universities aren’t able to pay bonuses or commissions based on sales, which is a key component to how rights holders pay their employees; and
  4. Rights holders’ access to national brand sponsors.  One way the rights holders make their money back is by pooling together multiple schools in a package for national corporate sponsors (e.g. Lowe’s, LG) that, on their own, the schools would not have been able to access.

The result of this outsourcing model has generally been a success, both for the schools and the rights holders.  Much like the explosion of television rights fees, sponsorship inventory rights fees have been driven higher and higher due to more viable competition  and the popularity of the product.

Recently there have been major shifts in the sponsorship sales industry, including long-time holdout Ohio State outsourcing its rights to IMG in 2009IMG’s acquisition of ISP in 2010, and Learfield’s acquisition of Nelligan just this month.  Amazingly, Michigan State is the only BCS conference school to still maintain their multimedia rights in-house.  We have also seen some schools partnering with similar companies to assist with the selling of their ticket inventory.

Countering the trend is Rockbridge Sports Group, which was recently founded on the premise these multimedia rights deals have gone too far.  They are pursuing a model which is essentially a hybrid between the old in-house model and the current outsourcing model.  They will consult and provide sales assistance while the school maintains control of its rights, banking on the industry pendulum swinging back towards more school control.

So where do college sports sponsorship sales go from here?  Is Rockbridge on the leading edge of a swing back toward more school control? Have rights fees peaked or is there still room for growth?  This is still a relatively young and emerging industry, so it will be fascinating to watch its evolution in the coming years.

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