« back to 2005 | Back to NCAA News Archive Index
|
Finding new revenue streams to support intercollegiate athletics programs is a never-ending search. But through the years, contracting an athletics program's marketing service has been a consistent source of funds.
The gold standard for such a business relationship may be the long-standing partnership between the University of Kentucky and Lexington, Kentucky-based Host Communications, whose new deal last April took the marketing concept to a higher level.
The 10-year, $80 million pact includes several unique components. First, the contract bundled all of Kentucky's corporate and multimedia rights, with the exception of signage at Rupp Arena, for one company to market and promote.
The deal already has established a precedent for other Division I schools.
"What's unique about this deal is the impact financially it had, and the value of it once we bundled it," said Kentucky's Rick Thompson, associate athletics director for external affairs. "We wrote it specifically to detail all the different pieces and put it all together for the first time."
The idea took shape in summer 2004 when Kentucky decided to accept bids for a bundled marketing rights plan. The NCAA took a similar bundled-rights approach when it solicited bids during its most recent television-rights negotiations.
With several companies in the marketing field such as Learfield Sports, ISP Sports, Action Sports Media, ESPN Regional and Viacom Sports, it led to competition that sparked the landmark contract.
Host Communications and Kentucky have a business relationship that dates to 1974, and Kentucky officials decided to keep the partnership alive.
"The University of Kentucky felt it was time to go out into the marketplace and get a value based on a bid process," said Steve Angelucci, a Host vice president and general manager. "I do know it was a money-driven bid, but there were other factors taken into consideration beyond the long-term relationship between Host and Kentucky. There were other resources that Host brings to the table, such as owning a printing company, owning a Web site development company, and being partners with the No. 1 CBS affiliate in the market. It's more than just having a good team of sales people."
Part of the process for Kentucky was to provide office space for the firm that won the bid. When the agreement with Host was signed, those plans were no longer needed since the two entities are in the same city.
Now, Angelucci is a regular when Ken-tucky's senior athletics administrators gather on Tuesday mornings. Such communication helps ensure that all goals and regulations are followed.
"Because of the complexity of the relationship and all the rights involved, something can arise that wasn't specifically addressed in the agreement," Angelucci said. "I would say at least nine out of 10 times it is reasonably resolved and decided upon by the simple fact we have professional people who work in good faith with each other."
In the instance a disagreement must be worked out more thoroughly, there is always room for reasonable compromise. In other words, gray areas usually go in favor of the Big Blue.
"Ultimately, our biggest and most valuable client is the school," Angelucci said. "Clearly, at the end of a discussion, if there is a disagreement, there is no tie. The runner in this case is absolutely the athletics department -- as it should be."
According to Robert Zullo, an assistant professor of sports administration at Mississippi State University, another unique aspect of the contract is that part of the guarantee dollars are used to create academic scholarships to attract some of the brightest minds in the state.
"You're actually helping academics by contracting out your marketing service," Zullo said. "When you watch or listen to a Kentucky men's basketball game throughout the state, there will be commercials (touting the academic scholarships). You will see a push from the university in that commercial, 'to not leave the state. Come here. We have a scholarship.' "
That strengthens the connection between the athletics department and the rest of campus, Zullo said.
"The president has to be happy when he's at the football game and sees a commercial and realizes some of those dollars are actually going to keep some of the better students in the Commonwealth of Kentucky," Zullo said. "It becomes not just an athletics deal, but the whole university's deal."
Unlike professional sports franchises, alumni and supporters of Kentucky athletics know the university isn't going to move to another location to find a more lucrative financial package. So finding means to generate revenues without alienating the ticket-buyers is another reason to outsource marketing.
"We have 22 sports, and not all of them are profitable," Thompson said. "This allows us additional revenues to fund our programs. In today's society, I think Kentucky is one of the few that is a total self-support unit."
Contracting out the marketing function also can limit the number of tasks athletics administrators have to juggle and thus create opportunities to handle other responsibilities on campus.
In today's marketplace at the Division I level, the concept is becoming a common practice.
"It gives you guaranteed revenue regardless of the coach's or team's performance," Angelucci said.
Thompson added, "It allows most of our sales unit to be housed under one roof working on the same page. We've effectively reduced the number of sellers in the marketplace. Our sponsors get a better message coming clearly from our representative.
"It increases the opportunity for those folks to spend more time, effort and money on the sales side of it."
© 2010 The National Collegiate Athletic Association
Terms and Conditions | Privacy Policy