WVU radio deal is rare
MORGANTOWN, W.Va. -- The longer West Virginia University must wait to complete a proposed multimedia partnership with IMG College, the more likely another obstacle could be thrown into its path by the party responsible for the delay.
Through a Freedom of Information Act request, the Daily Mail obtained the active contract binding West Virginia Radio Corp. and WVU's Mountaineer Sports Network, the group that has managed the athletic department's multimedia properties for many years.
The contract is for the 2010-11, 2011-12 and 2012-13 seasons, but has a section that allows for a mutual renewal to "extend the term under the same terms with written notice by May 15, 2013."
That date could be used against WVU to further complicate its pending union with IMG College. The two seemed on track to forming a relationship two months ago. In a Jan. 18 letter to IMG College, WVU stated its intent "to license certain athletic and sponsorship rights" to one of the industry leaders.
West Virginia Radio has since questioned the integrity of the bidding process. WVU revealed Feb. 20 it was pausing the process after West Virginia Radio's owner, businessman John Raese, challenged how WVU awarded the contract. Earlier this month, WVU requested assistance from State Attorney General Patrick Morrissey.
However, the inequitable terms of the contract might prevent WVU from renewing with West Virginia Radio. Within the contract, MSN grants West Virginia Radio and chosen affiliates "exclusive local radio broadcasting rights."
West Virginia Radio pays MSN and WVU no money for the rights.
"It's definitely a huge missed revenue opportunity that could account for anywhere between 10 to 20 percent of the total sponsorship revenue for a school, depending on the popularity of the radio network," said Dan Kozlak, manager of analytics at Navigate Research.
A national firm specializing in conducting research, measurement and analysis of sponsorships in sports and entertainment, Navigate Research estimated the annual value of the broadcast fees to WVU would be between $300,000 and $400,000.
The Chicago-based group has measured sponsorship valuations, effectiveness and return on investment for hundreds of clients.
"That station is likely selling advertising spots surrounding those games, and they are reaping the higher commercial rates and higher audiences generated by WVU, and not giving any of that share back to the school," Kozlak said.
WVU athletic director Oliver Luck, who was hired a month after the contract was signed in May 2010, declined to comment and the university has decided to stay quiet until the dispute ends.
Clarksburg attorney Frank Simmerman, who is representing West Virginia Radio and stated last week his client believes its bid for the multimedia rights was better than IMG College's, said Tuesday that "in 35 years I have never commented on pending litigation or a legal matter in the press." Simmerman then hung up his phone before he could be asked anything about his client's latest claim.
Bob Gwynne, the executive vice president and general counsel at Raese's Greer Industries, did not return messages left Monday and Tuesday.
The Daily Mail first reported a 12-year deal between WVU and IMG College that with incentives could be worth more than $110 million. WVU expects to make about $9 million a year.
"I think Oliver and his team are very smart to shop the media rights around," said Andy Dallin, the co-founder of the California-based sports marketing agency ADC Partners. "It is worth well more than what this contract is providing the university."
A $300,000 fee would not only be equal to the base salary of assistant football coaches Shannon Dawson and Lonnie Galloway, but be more than the combined revenue of baseball, men's soccer, men's swimming and diving and wrestling ($286,767), according to WVU's most recent equity report from the 2011-12 fiscal year.
The same report shows a $400,000 fee would have covered the recruiting expenses for football ($373,586), men's basketball ($217,518), women's basketball ($126,148) and all of the remaining sports ($320,198).
Dallin, whose group helps businesses create, evaluate and operate effective marketing programs, said he was "surprised" to learn MSN received no rights fees from West Virginia Radio.
"I think in modern, contemporary collegiate athletics, unless there is an extraordinary revenue sharing model where the university and its radio partners have a defined split so they are true partners and that every dollar that comes in is divided evenly - and to be clear, I'm not an attorney ... but that's not how I read this agreement - that this is very rare," he said.
"Most universities, almost every one we've ever interacted with, know they can generate a guaranteed rights fee or license fee, depending on what you want to call it. It's rare to see a broadcast agreement that doesn't involve that fee."
West Virginia Radio, which does provide WVU with a small amount of free advertising, is asked to handle a 60-minute pregame show, the game broadcast and a postgame show. MSN asks for "approximately" four hours for a football game and three hours for a men's basketball game. Any commercial inventory as part of a separate pregame show and a postgame show on a West Virginia Radio affiliate would not be shared with MSN and instead belong to West Virginia Radio, though the concept of "shoulder programming" is not uncommon.
Additionally, MSN is obligated to provide "transportation, hotels and meals ... for all West Virginia Radio Corp. personnel to away football and basketball games." West Virginia Radio selects a game site engineer, game site producer (for football games), studio engineer/producer, studio highlight producer, studio production coordinator, satellite uplink engineer(s) and studio talent.
"This is a nice piece of business," Dallin said. "In my mind, I would say that for the West Virginia Radio Corp. and its subsidiaries, this is a good deal."
Contact sportswriter Mike Casazza at email@example.com or 304-319-1142. His blog is at blogs.dailymail.com/wvu.