After taking a look at the most recent database of revenues and expenses in college sports, we're putting the Big Ten under the microscope. Our four-part series continues today with a look at the revenue generated through branding initiatives like licensing and sponsorships.
It's fitting that the University of Michigan's athletic director has the word "brand" in his last name. In the Big Ten, there's no bigger brand than Michigan.
Ticket sales, donations and television dollars are the biggest revenue-drivers for college programs. But one of the more revealing categories in the recent "Outside the Lines" database encompasses revenue from licensing, sponsorships, advertising and royalties. It all adds up to branding, and in the Big Ten, Michigan is king.
Only Texas generates more money from licensing, sponsorships, advertising and royalties than Michigan, which has ranked second among public schools in the category for the past five fiscal years (2008-09 through 2012-13). Michigan's reported intake spiked from $11,087,101 in fiscal year 2007-08 to $22,473,192 in 2012-13. Although there's a substantial gap between Texas ($33,421518) and Michigan, there's also a financial canyon between Michigan and third-place Oklahoma ($12,805,600), Ohio State ($12,714,758) and Nebraska ($11,895,378).
"We really think of ourselves as a global brand," Michigan athletic director Dave Brandon told ESPN.com. "In my previous life, I ran a company [Domino's Pizza] that at the time was doing business in about 65 countries. I never visited a country where I didn't see at least one symbol of the University of Michigan. There was at least one kid wearing a jersey, some guy wearing a hat, some Michigan shirt, some 'Go Blue' thing.
"It's remarkable how our brand is way beyond a domestic brand. I'm not sure if other programs necessarily enjoy that recognition."
Many Big Ten schools have massive alumni bases. But Michigan's alumni distribution, combined with the school's academic reputation and athletic tradition, has created a branding giant.
Brandon attributes the revenue differential mainly to the makeup of Michigan's alumni. Another driver is the way Michigan markets its athletes.
"You could even trace it back to the early '90s and the Fab Five, you could trace it to Desmond Howard and Charles Woodson," said Manish Tripathy, a marketing professor at Emory University who helps manage the Emory Sports Marketing Analytics project. "Some of these large figures and personalities have contributed to people who are not alumni still identifying with the Michigan brand."
The revenue from licensing, sponsorships, advertising and royalties accounts for a small percentage of Michigan's overall athletic revenue, which Brandon pegs at about $150 million for the 2013-14 fiscal year. It's the same for other Big Ten schools.
But Brandon sees potential in these areas, especially licensing, which he thinks can grow "much faster" than the rate of inflation.
"I'd like to build that more," Minnesota athletic director Norwood Teague said of licensing. "I know we're going to do an aggressive job. Part of that also is winning at a higher level in football and basketball. When I was at [North] Carolina, we were No. 1 [in licensing] my whole entire six years working there, and I was the liaison, so I saw how we built it. But it wasn't built overnight."
Minnesota has excelled in revenue through licensing/sponsorships/advertising/royalties, ranking fourth among Big Ten schools for the past six fiscal years and in the top 15 nationally each year. Minnesota associate athletic director Chris Werle said the school's long-term agreements with Coca-Cola, Dairy Queen and Learfield Sports, its media rights holder, bring in escalating revenues.
Like Minnesota, Iowa has been in the top 20 in licensing/sponsorships/advertising/royalties since 2007-08. Associate athletic director Rick Klatt said Iowa has tremendous local support and national brand recognition with its Tiger Hawk logo, but must push to broaden its reach.
"It's gaining shelf space in nontraditional markets," Klatt said. "When we can gain some kind of marketing presence in a sports store in San Antonio when you're down there for the Alamo Bowl, if we can find a little niche for the Iowa Hawkeyes to be next to Michigan, Texas and USC, we'e making some headway. That's a victory."
Klatt knows Iowa can't become Michigan overnight, but with the right success on the field and strategies off of it, the brand can expand.
"It's a quantity thing, a history thing, a tradition thing," Klatt said. "Michigan, Penn State -- they have some numbers that work in their favor. But that doesn't mean we can't compete."
Most Big Ten schools have seen gradual revenue increases in licensing/sponsorships/advertising/royalties, and most have been fairly steady in the national rankings. But there are some exceptions: Ohio State went from 24th in 2007-08 to fourth in 2012-13. Illinois' revenue has flat-lined, and the school has gone from 25th in 2007-08 to 36th in 2012-13.
Penn State saw a significant drop from fiscal year 2010-11 ($5,984,967) to 2011-12 ($4,444,416) -- the year of the Jerry Sandusky child sex abuse scandal -- before rebounding in 2012-13 ($5,086,773).
"Locally, the support is still there; people are still paying to go watch the team," Tripathi said, "but on a national level, there has been a bit of a hit on the brand. That's manifesting in the decline in sales of merchandise."
Schools approach licensing and sponsorships in different ways, but consolidation is a common trait. All but four Big Ten members use the Collegiate Licensing Company, a division of IMG, to represent them in licensing agreements.
About a decade ago, Michigan significantly reduced the number of licenses it awarded to produce products. Kristen Ablauf, the school's director of trademark licensing, said Michigan used to have about 70 licensees for headwear, some of which weren't producing merchandise. Now there are only five national licensees -- LIDS and Dick's Sporting Goods among them -- as well as 12 local licensees.
"That has really helped increase revenues because we're targeting specific categories and channels as opposed to just licensing anybody," Ablauf said. "Along with our licensing agency, we work to put specific retailer programs together to make sure Michigan does maintain its status as a national school."
The Big Ten wants to become a more national conference as it expands to the East Coast with Rutgers and Maryland. The move should help Rutgers, which has generated the lowest revenues in licensing/sponsorships/advertising/royalties.
It also creates new branding opportunities for existing league members.
"The retail industry will take a look at and say, 'We need to have a presence in our store to satisfy the Big Ten consumer,'" Klatt said. "Our challenge will be, when they start choosing which schools to give presence to, they're clearly going to give some to Michigan, Ohio State, Penn State. But that next tier, we have to make sure we're in that."