The University of Nebraska announced in March that it would bring its multimedia rights operations in-house after having Learfield IMG College license the properties for the past 15 years. The move made the Huskers one of the few Power Five program to eschew a third-party MMR partnership, which has become, thanks largely to Learfield IMG, the Division I industry standard.
While the guaranteed payments to schools are often publicized, Learfield IMG has aggressively tried to keep private the details of what it nets from these arrangements. And, for the most part, it has succeeded—until now.
Through a months-long D-I dragnet of public records requests, Sportico has obtained royalty reports marked “confidential” showing Learfield IMG’s full financial take with eight of its university partners, including Nebraska, whose deal is set to expire June 30.
Nebraska’s royalty reports suggest the Big Ten school was potentially leaving quite a bit of money on the table by outsourcing its promotional work to Learfield IMG, which paid an escalating guaranteed rights fee of $11.75 million for the 2017-18 season and $12.55 million for 2018-19. According to their agreement, the Huskers also earned 50% of any net collected revenue above $17.56 million in FY18 and $18.45 million in FY19. In both years, that amounted to only about $300,000 in royalties beyond Nebraska’s base fee.
Those figures may sound generous, but Learfield IMG, whose current client roster includes roughly 200 athletic departments plus major conferences like the Big 12 and Big Ten, was still getting plenty for its services. For those two most recent pre-pandemic seasons, the company reported collecting net revenue of $18,564,340 and $18,997,902—ultimately pocketing more than $6 million per season. In effect, Nebraska had been paying Learfield IMG a commission of nearly a third of its MMR proceeds.
In a written response to a series of questions, Learfield IMG said the revenue it earns from an individual school goes, in substantial part, to fulfilling its own staff salaries and expenditures needed to handle the business.
Georgia Tech is also opting to end its relationship with Learfield IMG College when its current agreement expires in June. In December, Georgia Tech inked a new partnership with Legends, the sports hospitality, sponsorship and sales consultancy co-founded by the New York Yankees and Dallas Cowboys. But the Yellow Jackets appear to be much less of a money-maker for Learfield IMG: The company netted $1.5 million during FY19, according to its royalty report, after paying the ACC school a guaranteed fee of $5.5 million.
Of the scores of schools Sportico made public records requests to, most refused to furnish their Learfield IMG royalty reports, or provided heavily redacted documents, claiming that the information constituted corporate trade secrets that were exempt from state disclosure requirements. Following a records request made to the University of Texas, Learfield IMG directly petitioned the state Attorney General’s Open Records Division to deny it, arguing that the release of UT’s royalty reports would be “profoundly detrimental” to its business.
In promoting its case for privacy, Learfield IMG’s lawyer wrote that the company “has spent (and continues to spend) considerable time and resources to prevent any reports of this nature… from being disclosed.” Learfield IMG further explained that only a few of its own employees, on a need-to-know basis, are able to access a specific school’s royalty reports through the company’s document management system.
The Texas AG ultimately sided with Learfield IMG, agreeing that the records should not be released, though another Lone Star State school, the University of Houston, provided its royalty report without protest. When asked about its position, Learfield IMG declined to comment.
“The trade-secret exemption is probably the single most abused and distorted of all freedom-of-information exemptions,” said Frank LoMonte, director of the Brechner Center for Freedom of Information at the University of Florida. “If open records laws mean anything at all, they mean that the public gets to see how an agency’s money is being spent and where revenue is coming from. The public has an absolute right to know whether a university negotiated a good bargain, or whether a commercial partner like Learfield is getting a preferential sweetheart deal.”
While Nebraska did not directly attribute its decision to walk away from the relationship this summer to the financial terms of its Learfield IMG contract, a school spokesperson did flag Learfield IMG’s changing business model, which is trending towards smaller guarantees and more profit-sharing.
“We felt [that] if the same level of guarantee isn’t there for schools moving forward, schools are taking on more of the risk,” said Garrett Klassy, Nebraska’s senior deputy athletic director. “If we’re taking on more of the risk on this, then yes, we should be able to collect more of the revenue that comes in.”
Klassy expressed confidence that the school will be able to perform as well as Learfield IMG, in terms of generating revenue.
Nebraska said it is still negotiating its final FY20 payments with Learfield IMG and therefore did not have the most recent report. But in its statement, Learfield IMG said that all but 1% of the guaranteed rights fee has “been accounted for” and that the company and school had already agreed to “iron out” the remaining amount this fiscal year, which it will include as part of its final royalty payment next month.
The University of Georgia’s royalty reports showed 40% of last season’s multimedia rights earnings leaving the campus. The SEC school’s MMR is handled as part of a joint venture by both Learfield IMG and JMI Sports. Although $18.9 million came in during 2019-20, the school’s share was limited to its $11.5 million guarantee. The 10-year agreement, which runs through 2026, allows the school to receive either its guaranteed rights fee or 60% of the gross collected cash—whichever is greater.
“While there are some nuances that are not obvious in the document, the numbers you have are correct,” said Claude Felton, UGA’s senior associate athletic director, when asked whether the royalty report indicated the school was making less money than it could. “We are pleased with the partnership we have.”
In general, the royalty reports document the total revenue generated by Learfield IMG and provide a breakdown of the rights fees earned by each school throughout the course of the year. The fees are typically based on an annual guaranteed minimum, plus additional royalties that kick in if certain revenue thresholds are met. Most of the reports Sportico obtained showed schools earning their set base fee.
In one high-profile relationship, Learfield IMG’s figures showed it losing a not insubstantial sum. According to UCLA’s royalty report, Learfield IMG collected $8.3 million in net MMR revenue for 2019-20, while owing a base guarantee of $11.6 million. Even after offsets, UCLA still received a total payment of $9.9 million, which left the company more than $1.7 million in the hole. That followed a nearly $1 million loss for Learfield IMG the previous year, records show. Last summer, the San Jose Mercury News cited anonymous sources in reporting the expectation that Learfield IMG would look to exit or substantially change its arrangement with the Bruins.
A UCLA spokesperson declined to comment on the relationship, but Learfield IMG sought to downplay the idea that its dealings in southern California were anything dramatic.
“It’s important to separate a ‘renegotiation’ from necessary adjustments, due to impairments, which are in keeping with the contracts we have in place with our partners,” the company said. “As with practically all of our discussions at the moment, conversations with UCLA are primarily about the latter and not the former.”
UCLA’s royalty report showed that last fiscal year’s Learfield IMG payment was reduced by $305,294 on account of the COVID-19 interruptions.
The financial impact of the pandemic, which led to the cancellation of the 2020 spring sports season and many spring football games, varied widely among the schools who provided royalty reports. Oregon State, home to a national powerhouse baseball program, was dinged by $788,901, according to its report. On the other hand, Kansas ($86,239), Houston ($71,384), and Minnesota ($59,651) saw their payments reduced by much less.
(This piece was corrected in the first paragraph to note that Nebraska is not the first Power Five school to internally manage its multimedia rights.)