IMG, Learfield merger could put schools between a rock and a hard place

The potential consolidation of the two most powerful entities in major college sports licensing and media would create a landscape at which schools would be forced to choose to play the game according to a new set of rules or fly solo.

The news of a proposed IMG Learfield merger could be more than a game changer for colleges and universities in the United States. It would be an entirely new game.

On Tuesday, John Ourand and Michael Smith of Sports Business Journal broke the news that the two companies had agreed to the terms of a merger. While there are significant regulatory hurdles that have yet to be cleared, like reviews by the Federal Trade Commission and/or the Justice Department, it’s reasonable to expect that the deal may become final.

If that happens, the new $2 billion company would effectively own licensing and media rights in major college sports. According to Jason Belzer of Forbes the combined holdings of the two companies would create a portfolio that encompasses 85 percent of schools who play football within the Power 5 structure, and 70 percent of all D1 schools. That kind of market share would put the new company in a position of significant power within the industry.

With that kind of power, the new company would be somewhat able to dictate its terms to schools which wanted to sell the rights to manage their licensing and media. While it’s true that the company would depend on the schools to provide those rights in order to maintain their market dominance, the facts of the situation might mean the schools would need IMG/Learfield more than IMG/Learfield needs them.

Even with potential layoffs that could result from redundancies created in the merger, IMG/Learfield would have the best infrastructure to handle the schools’ needs. Additionally, IMG/Learfield already has relationships in place with the biggest vendors and media outlets in the nation. Those are two components that schools don’t have in place.

The schools are unlikely to be able to pivot into that situation as well. Budget constraints that schools all over the country are dealing with would likely preempt the hiring of all the new staff it could take for a school to manage its own licensing and media. Saddling existing staff with those new responsibilities could prove difficult as well. It’s far easier to hand those responsibilities over along with the rights then sit back and collect the checks.

What might prove just as difficult as going it alone would be acquiescing to the demands of a behemoth only concerned with its own bottom line. If IMG/Learfield felt inclined to do so, it could essentially set its own prices and contract lengths. The schools would have the option of either choking them down to avoid dealing with the demands of self-management or venturing into unfamiliar territory just to protect their agency.

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It’s difficult to see IMG/Learfield making outrageous demands of the schools it partners with, even with the new leverage that a merger would give the joint company. The point is, however, that they could do so. That possibility might be enough to make the leadership of NCAA-member institutions across the country re-evaluate their positions on the subject.