As a follow-up to our research (“How Every D-I Athletic Director Can Benefit from IMG’s $100M ISP Purchase” ), this article examines the three considerations for revenue optimization for multimedia rights (MMR).
1. Annual revenue amounts from the two most popular sports, football and men’s basketball, go a long way in determining the revenue a school extracts from its MMR agreement.1 Consider how annual revenue from football and men’s basketball affects a school’s average annual guaranteed rights fees (GRF):
| FB & MBB Revenue: | $15 to $30 Million | $30 to $50 Million | $50 Million and Above |
|---|---|---|---|
| Big-6 Avg. Annual GRF | $2,782,752 | $4,426,607 | $6,390,793 |
| FB & MBB Revenue: | $0 to $5 Million | $5 to $10 Million | $10 Million and Above |
|---|---|---|---|
| Non-Big-6 Avg. Annual GRF | $283,992 | $370,193 | $1,508,071 |
2. Beyond just average GRF, football and men’s basketball revenue greatly influences revenue-sharing thresholds of MMR deals. In the same way a dollar saved is a dollar earned; a dollar generated by lowering revenue-share thresholds is the same as a dollar generated by increasing annual GRF. Schools with larger revenue inflow from the two sports can expect more money through lower relative revenue-sharing thresholds.
The data we analyzed revealed the average ratio of a Big-6 school’s revenue-sharing threshold(s) to average GRF to be 1.74 (Texas excluded). In other words, if a school receives $1 million in GRF, the school can expect the average revenue-sharing threshold(s) to be $1.74 million. For non–Big-6 schools, the average is 2.64.
Here’s how specific revenue levels impact the ratio (minus, or under, amounts are favorable for a school):
| FB & MBB Revenue: | $15 to $30 Million | $30 to $50 Million | $50 Million and Above |
|---|---|---|---|
| Big-6 Ratio vs. Total Ratio | +0.19 | -0.08 | -0.05 |
| FB & MBB Revenue: | $0 to $5 Million | $5 to $10 Million | $10 Million and Above |
|---|---|---|---|
| Non-Big-6 Ratio vs. Total Ratio | $283,992 | $370,193 | $1,508,071 |
Interestingly, there are six Big-6 schools (of 43 examined) that do not receive both an annual GRF and a revenue-sharing fee. In contrast, there was one non–Big-6 school (of 31 examined) with similar terms. An absolute priority for those athletic directors in future negotiations should be to demand both. The market is bearing it, and teams not receiving both are being left behind.
3. Finally, and unrelated to revenue streams from football and men’s basketball, is a benchmark comparison between different MMR companies and how the aforementioned measures compare by MMR partner:
| MMR Partner: | IMG | Learfield | All Others |
|---|---|---|---|
| Big-6 Avg. Annual GRF | $4,981,877 | $4,609,060 | $2,488,254 |
| Big-6 Rev Share to GRF Ratio | 1.72 | 1.46 | 2.36 |
| Non-Big-6 Avg. Annual GRF | $470,560 | $1,069,367 | $47,222 |
| Non-Big-6 Rev Share to GRF Ratio | 3.59 | 1.94 | 1.00 |
For Big-6 and non–Big-6 schools we examined, local companies tend to provide less-favorable terms as compared to IMG and Learfield. Non–Big-6 schools seemingly have less of a choice, with Learfield clear and away the provider of the most favorable financial terms.
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Analysis of the Entire Market for Multimedia Rights Agreements
(Abstract — Request the full report –)
The sale of multi-media rights is a critical component in revenue generation for athletic departments, with fees paid to acquire these rights continuing to escalate. Our goal is to give readers relevant, insightful market information to maximize upcoming multi-media rights deals. We created our report by examining every current, publically-available multi-media rights contractual agreement and using certain school-specific data, all attained from the WinAD database. The result is a current, comprehensive view of the multi-media rights market. The report, on a conference by conference basis, details key financial and contractual elements of rights agreements, benchmarking schools against peer institutions across a number of variables and exploring relationships between fees received and possible explanatory statistics. This information will allow schools to be not only better informed of the multi-media rights market, but also their current standing within the market as they go into future negotiations… Request the full report
