The college sports landscape is undergoing as much change from the business side as it is on the fields of play. Issues like the rights of student-athletes, the cost-benefit of massive programs, the role athletics should play in the college environment and how the digital and social world can help or hinder business, continue to churn.
Into the mix comes some interesting “attacker” companies to try and solve those issues, one of which is Virginia-based Rockbridge Sports, Media and Entertainment. We caught up with Rich Klein – Co-Founder and Principal, to get his take on the environment and what his relatively new company is doing to help rearrange the status quo. (His bio follows)
What is the paradigm that has shifted for Rockbridge to come into being, and how is your offer different from the much larger competitors in the college space?
Collegiate multimedia rights over the last dozen years have seen a flawed model take root. For the most part, outsourced deals were being struck that simply were not financially sustainable and were creating rifts between rights holders and the Athletic Departments and we believed that this speculation game was not healthy for the industry in the long run. That is why we started Rockbridge. We felt there was a better way. Everything we thought was going to happen, is starting to happen. Consolidation of companies that were financially forced to because they were highly leveraged – and the further positioning of those companies not to succeed on the ground but to be rolled up and sold – did not and still currently do not create a transparent, mutually beneficial model that offers the control a University should have. In a recent poll, over 90% over Athletic Departments said they did not have a good relationship with their multimedia rights partner. That is because rights holders are asking for financial relief, more rights, more inventory and less restrictions on types of companies that can sponsor the Athletics Department and quite frankly it is hard to blame them because these companies are looking for more and more ways to mitigate their financial losses. The problem is that a lot of what they define they are asking for runs counter to a University’s mission. Our approach is not to “own” or “control” the sponsorship and multimedia rights at a University, but rather to deliver targeted strategic, financial, creative and personnel resources and services to the athletic department so as to drive significant incremental revenue, maximize program resources, and grow the University brand. This “insourcing partnership” model provides the University the greatest degree of institutional control of its brand and assets, while still providing the resources, expertise and leadership necessary to build a world class corporate partnership program that is custom designed for that institution – one that allows the University to rise above its competitors – not be homogenized among them.
You have started with several smaller schools, is the value proposition for them more personal business management or a greater exploitation of local assets they couldn’t do themselves?
It is both. Our revenue generation system is built around intense preparation, passionate execution and servant leadership and it does not matter what size the school when you execute the system. It is our commitment to transparency and to doing the work on the front end, in partnership with the University, that sets us apart. We help our clients understand how the business operates on their campus – from local staffing and commission schedules to media production costs to the sources of incremental revenue growth. This approach creates a credible and mutually understood belief and commitment to a growth strategy and plan that is unique to that institution – not a national or homogenized plug and play approach that is unique to a rights holder. And when you select good partners that believe in their growth and in the strategy and are working in good faith up front to build something together, it becomes easy to structure the right business terms and lay a foundation for mutual success. I should also note that we also have a solid track record of success at the Power Conference Schools, and it is only a matter of time before we before we will again.
Is the high school space something you see as becoming more viable as well?
As a long term multimedia rights partner for two of the more progressive high state associations in Arizona and Michigan, we are seeing firsthand the value they can deliver for corporate sponsors. With every day that passes, the marketplace is understanding more and more that this space is growing and is where the college market was about 20 years ago. High School State Associations are under increasingly more pressure to generate revenue while at the same time ensuring that their core values are kept intact which is why we believe our system fits their approach. Opportunities for corporate partners to directly enhance the high school student experience is not only a noble community pursuit, but is a viable and valuable part of a their marketing efforts which is being proven as we sign up more prestigious brands. There are few properties that reach across every community in a state and to the intimate level that high school does and brands want to be part of that.
What are the areas of opportunity in the multimedia rights space area?
Opportunities will continue to exist within traditional rights and in the growth of digital assets. Those medians whereby sports brands can deliver value to their sponsors will always be viable, but sports properties will have to continue to look at doing things differently, not just better. For instance, we have helped build along with the Western Athletic Conference, the WAC Sports Digital Network which runs on multiple platforms and is an asset that the WAC owns outright. That means they control their own content, delivery and can offer ownership opportunities that were only offered heretofore through outsourcing to ESPN 3 and others in the space. Once we determined we could produce, distribute and market quality content directly to WAC fans, we decided that we would retain our valuable data and sponsor able inventory much like the ownership professional teams have with their regional television and digital networks.
Colleges with massive football and basketball programs seem to be more ties to quick change then even most professional teams these days. Is the bottom line so fragile at the college level that a large school needs to act quickly so as to keep their constituents happy?
State funding is increasingly harder to rely on and even with lucrative long term revenue positions of conference television deals, there is still such pressure to continue to grow your revenue streams. Donors and students through student fees are a critical part of that stream (in addition to multimedia revenue) so you have to stress customer service to those groups in addition to athletic success. Football and basketball programs obviously drive this but the recent change of Michigan’s Athletic Director is a prime example of how this extends beyond coaches of the two main sports. It is a tough balancing act to generate incremental revenue, succeed at your sports and keep the mission and the traditions of the University at the forefront of all that you do.
There has been talk in some places of an overvaluation of college rights. Is the marketplace set for a correction?
It depends on the property and the deal in place. Is it fair and sustainable or is it deal that is part of the speculation bubble (an unprofitable deal but betting that the property will garner more value when they sell the asset to a suitor in the future)? There are enough of the latter that if I am a University President and/ or an Athletic Director, I would begin to dig in and prepare for ‘Correction” day when I might have to bring it back in house and understand what that means. Furthermore, if you are not in the “top 35”then that proactive planning should begin now so that you are organized even if you are 2 or even 3 years away from your mmr rights deals expiring.
For schools outside of the power conferences, what are the biggest opportunities you see that have not yet been exploited fully?
Those schools and even some schools in those power conferences really need to begin focusing on how they need to build a real battle worthy sponsorship program – one where you can drive significant incremental revenues and deliver real value to your sponsors all within the core values of your University. Those programs that are outside the power conferences are in a tough spot because if those schools have partnerships with bigger mmr companies, they might not be getting the attention they should be getting to maximize their revenues and if they do it in house, they likely do not have the expertise to build a sponsor program that can truly maximize output. But they have to start doing something or they will get left even further behind – status quo is not an option.
As you look forward into the landscape, are there sports that you see on the collegiate level or the amateur level as being the next big opportunity? and is so what are they and why?
Certain Olympic Sports at the collegiate level like soccer and lacrosse are starting to grow into a revenue producing proposition or at least begin to be net neutral. Sports like this are growing in numbers and their demographics for sport specific sponsors are attractive. We also see the potential of multi-sport events like an authentic (non AAU or made for television event) national high school competition being something that can generate significant interest and value – and we are looking at those type of possibilities today.
About Rich Klein…
Prior to co-founding Rockbridge, Rich worked for CBS Collegiate Sports Properties for 15 years, following a successful career in Higher Education publishing sales with McGraw-Hill. Rich began his time with CBS as the sponsorship sales lead for the state of the art Schottenstein Center at The Ohio State University and afterward was the General Manager at Cavalier Sports Marketing at The University of Virginia for five years.
During his time as a Vice President of Collegiate Properties, Rich has been responsible for the acquisition, start-up and direct oversight of numerous collegiate multi-media and media properties for CBS including LSU, University of Virginia, University of Maryland, and University of Utah. His creative inventory concepts have become standard within the collegiate marketplace, generating over 200 million dollars in sponsorship sales throughout his career. The son of a college basketball coach, Rich has excelled in creating the culture, structure and team necessary to generate significant and incremental revenue growth.
Rich is also committed to his family and community. Throughout his four children’s formative years, Rich has supported their activities in both athletic and cultural organizations as a coach and volunteer. He continues today as a member of The Board of Advancement at The Covenant School in Charlottesville, VA and as part of a mission team that travels to the barrios of Grenada, Nicaragua. Klein earned his BSBA from East Carolina University in 1988.
