For over two decades collegiate athletic departments have made a common practice of outsourcing their rights fees
in several areas, most notably in the area of radio and television rights fees but also in the area of their corporate partnerships. Purchasing the rights fees from collegiate athletic departments was a practice developed by Host Communications, which originated in Lexington, Kentucky, in 1972 and was acquired by IMG in November 2007 to form IMG College.
These rights fees, which can be limited to a single college or university or an entire conference, can include all or multiple elements of the following services: corporate sponsorships, radio and television programs, publishing, printing, creative design, marketing, Internet, national advertising and signage sales, and numerous lifestyle and event marketing platforms ("IMG to Acquire," 2007). The reasons for the popularity of outsourcing are multifaceted. First, it provides a guaranteed revenue stream of a set amount regardless of team performance and the economy. Second, it eliminates the headcount issue for athletics departments who are not equipped to structure the types of compensation and benefit packages available to secure the services of people to sell their inventory. Third, it lets athletics directors and departments focus on what they do best. Finally, it allows the bundling of athletics departments by the outsourcing agencies to generate a higher price for premier properties.
In 2009 IMG College entered into a record USid="mce_marker"10 million agreement with Ohio State University. This contract is the largest ever in this marketing area and is even more impressive because it does not include any TV rights (which are owned by the Big 10) except the coaches' television shows. The deal also excludes the current licensing agreement with Nike, which will continue to be managed in-house (Smith, 2009). IMG's rights will include corporate sponsorships and stadium and arena signage, on-site marketing, coaches' endorsements and television shows, publishing rights, and a partnership with RadioOhio, the broadcast company that has held the Buckeyes' radio rights since 1984.
According to senior associate athletics director Ben Jay, "My concern, with the economy, is how many of our sponsorship deals were going to get renewed." Jay added, "(H)ow many of those sponsors are going to be looking for a reduction" The 10-year agreement gives OSU peace of mind on both accounts. Conversely, the length of the agreement provides IMG College with a sufficient length of time to develop its relationships and grow the business. OSU athletics director Gene Smith, when asked why the Buckeyes, one of the last programs to hold its rights in-house, was willing to make a change, stated
When you project our revenue in future years, IMG's bid is almost double what we were looking at had we kept the rights in-house. This deal gives us guaranteed long-term stability for the next 10 years that we might not have had.
Only time will tell how the current economy will affect the ability of IMG College not only to meet the obligations and expectations of this agreement but also to generate profit from the relationships. Needless to say, IMG College's competition and potential future clients will be watching with great interest.
Argument- OSU's decision to outsource its rights fees was justified and the most prudent course of action the university could have taken. Or should the university have decided to stay in-house to manage its rights fees. support your argument using critical thinking.
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