Lexington Herald-Leader – August 11, 2014 – By Tom Martin –
Greenup, Ky., native behind UK multimedia deal aims to deliver what fans want, create ‘digital network’ on campus.
The Greenup, Ky., native has more than 40 years of professional executive experience negotiating and securing more than a billion dollars in multimedia and sponsorship-rights agreements with major universities — agreements like the 15-year deal announced in late June between JMI and UK, valued at $210 million.
We wonder what all of this means. Who better to ask than Tom Stultz himself?
Tom Martin: You recently negotiated this deal with the University of Kentucky; it’s a multimedia deal but does not include television, correct?
Tom Stultz: Not the live events on television. We’ll still have coaches’ shows and we’ll be able to create pre-game, post-game programming and some feature programming. But all the live events now are owned by ESPN for the SEC Network.
Martin: Explain to us how a multimedia deal works for JMI, how it works for UK?
Stultz: Basically a rights holder like us will make guarantees to the university which gives them predictable and manageable revenue streams that they can count on from year to year. They’re doing it on a long-term basis and obviously the more rights that they put into the package the better. So we have media, we have corporate sponsors, we have signage in the venues, we have hospitality, we have game-day events, we have the use of the marks for sponsors that want to do it and naming rights at some of the facilities.
So, we have a lot of inventory to sell. We then put together a staff, a production team and a plan and build from that. We’re responsible for generating all the revenue. We keep all that we generate up to a certain level and then we share 50/50 with the university anything above that.
Martin: What sorts of innovations will JMI bring to the scene, and will the typical Cats fan notice any changes?
Stultz: We’re still working on that, but a big part of our RFP response is to do a lot of innovative things, particularly with mobile applications, with new media, social media, the websites; looking at ways that add additional television and radio programming. Part of our rights goes beyond athletics and includes the campus, and there’s a possibility of doing some very unique and creative things for the first time.
So, hopefully the fans will notice. Hopefully they’ll still be listening to Tom Leach and join Mike Pratt and the other guys on the radio. But hopefully they’ll see that we’re doing a lot of creative, innovative things to try to get the content to them in the ways that they want to receive it today, which has changed a lot since we started in the business.
Martin: The deal, as you mentioned, includes stadium and arena corporate signs and programs for home UK games?
Martin: But not at Rupp?
Stultz: Rupp is a city-owned facility and UK is a tenant there. We have some activation rights on the court during the games, but not the signage and sponsorships of the arena.
Martin: And what does that mean — activation rights?
Stultz: If there’s a half-court shot for a contest for a sponsor, we would be managing that. But the signage in there belongs to the arena.
Martin: The arrangement with UK does provide JMI with naming rights to university athletics properties — premium areas. Do you anticipate taking advantage of that opportunity and how would you do that?
Stultz: We do want to take advantage of it. Commonwealth Stadium is one that we think is right for a good naming partner. And we’re doing research now to figure out what’s the best way to price that and who are best targets. We have to run all that through the university to get approval, but we definitely want to do that and with the new suites and club areas, you know, it’s just additional inventory that we can offer the sponsors to help them stand out from the crowd.
The naming rights of the stadium and what we hope will someday be a new baseball stadium on campus, both of those are in our budget and helped drive our price up so that we’re in essence already paying the university for that; now we have to go sell it.
Martin: Nonathletic campus facilities, do you anticipate marketing the multimedia rights in any of those locations?
Stultz: What we hope to do on campus, and we’re still working it out, but we hope to establish a digital network on campus with signs, way stations, kiosks and different things like that. Some of those will have some advertising on it, some of it will just have information depending on where it is. We certainly don’t want to over-commercialize the campus, that’s not the intent. But for the first time somebody can be the official sponsor not just of athletics, but also the university.
And so, we’re navigating that space, but we believe that that is a really large untapped revenue stream for universities, and the university seems to be committed to working with us to do it right so that they’re not over commercializing but also getting revenues and new revenue streams for academics and facilities and other things that they need with the other budgets being tightened all the time.
Martin: How about the UK athletics corporate partnership program. Will JMI play any kind of a role in its continued development and if you would, how would you do that?
Stultz: We will continue to manage that and hope to expand it. Right now, there are about eight official corporate partners. We’d like to see that increased and we want to see the corporate partners become more engaged. Yes, I want to get more money out of it, but I also want them to feel a bigger part of the brand and be more engaged in actually doing things to help build the UK brand and help build their brand and make the relationship a lot closer than it traditionally has been.
Martin: For many of those in town who have followed the work of the Rupp Arena task force from its beginning to where it is now, there was a raised eyebrow regarding the timing of the JMI announcement. I know that you invested a lot of time and energy pursuing an IMG initiative to build a new arena on the High Street parking lot across from Rupp. In your opinion does that idea still have any merit?
Stultz: For the record, our deal and the timing was just a coincidence. There’s nothing in our proposal that says anything about the facilities, and certainly we didn’t win the bid on the multimedia site because of any potential involvement in a stadium or arena project.
Having said that, I do hope that the university and the city can sit down and reach some agreement, and if there’s a role that we can play, we would love to. I think there is money that’s out there, but then you have to agree to the business terms, the plans, the pricing and the modeling, and there are a lot of hoops to jump through. But I do think it’s in the city’s best interest and the university’s best interest to try to figure out how to work together on it.
Martin: UK’s lease with Rupp expires at the end of the 2017-18 season. Do you anticipate your firm will be involved in any way with UK in looking at alternatives to Rupp, if that should be desired?
Stultz: We would hope to be involved as they discuss the marketing rights at the arena. Hopefully they would find a way to work with the Lexington Center and the arena to where the university would control those rights as part of their lease, because it makes more sense to a corporate partner for Kentucky to be able to have exclusivity in all the main venues.
Basketball is a very high profile sport here, so I wouldn’t be surprised if the university came to us and said ‘We’re going to try to make that part of the lease (agreement), but you have to pay more to get it.’ And I would think our role would be to say there’s a value to that and let’s go get it.