Arizona State terminates multimedia-rights contract for sports

Arizona State is terminating its athletics multimedia rights agreement with IMG College, claiming more than $5 million in damages from IMG for failure to meet contract obligations.

The dispute with IMG — ASU's rights holder for football, men's basketball, women's basketball and baseball since 2009 — goes back to at least October 2012, according to documents obtained by azcentral sports. ASU sent IMG a notice of default in August 2013 then subsequently conducted an audit of IMG's performance and payments while seeking a resolution that it never achieved.

Kevin Galvin, ASU vice president for media relations, confirmed the termination in a statement Tuesday: "We were hopeful that a smooth transition process could be put in place as we begin to seek a new partner to promote Sun Devil athletics and discussions about IMG's outstanding obligations to the university continue. But as of Oct. 27, IMG will no longer be managing multimedia rights for ASU athletics."

Tim Healey, ASU's radio voice for football, men's basketball and baseball since 1998, will continue in that role. He called his 200th ASU football game Oct. 4. "My understanding from both sides is I still figure in their (ASU's) plans," and that other on-air talent will not change, Healey said.

ASU football games are carried on 14 radio stations this season and men's basketball for 2014-15 on 10 stations. Baseball is carried on one station.

IMG's inability to "provide full and effective coverage" throughout Arizona as well as in Las Vegas and Southern California is where ASU has suffered the greatest damage, per documents from April. ASU claims it is owed $4,295,393 for "failure to provide (sufficient) radio coverage" and considers that only a base-market loss with alternative calculations putting the loss at more than $8 million.

ASU also is seeking in damages from IMG: $763,270 for required radio spots it did not receive, $536,124 for a trade credit dispute and to recover its audit costs. There also is an issue over royalty payment from a Pac-12 wireless buyout.

The documents show that when Ray Anderson was hired as ASU Vice President of Athletics in February, the university renewed efforts to come to a resolution with IMG because of Anderson's existing relationship with George Pyne, then president of IMG Worldwide Sports.

"The parties, however, took markedly different approaches to the negotiations," Jose Cardenas, ASU senior vice president and general counsel, wrote to IMG on Sept. 30. "ASU's successive offers reflected concessions based upon concerns voiced by IMG. In contrast, each IMG offer was progressively worse as regards to ASU's interests. Most recently, IMG gave notice it would not negotiate the financial terms of its proposal further."

That left ASU with "no choice but to terminate the contract," Cardenas wrote.

IMG responded to ASU's termination with a statement Wednesday: "We strongly disagree with the university's actions, and are taking action to defend our rights and recover our significant investment in the long-term contract.

"While we had extensive negotiations with the university prior to receiving this termination notice, we needed to make a fiscally responsible decision regarding their increasing financial demands. In light of the termination by ASU and following a period of transition, the school will be responsible for all multimedia operations effective October 27."

IMG's contract with ASU was to run through 2021. The company, which has media right deals with almost 80 universities, guarantees $7 million in revenue to ASU, almost triple what it was making before teaming with IMG.

IMG lost money on its deal with ASU for several years and only now is approaching profitability on what it viewed as a long-term investment in the school.

Greg McElroy, ASU's new athletics chief business development officer, will play a central role in securing a new media rights deal. McElroy was senior vice president for sales and marketing with the Dallas Cowboys before coming to ASU.

Syracuse also terminated its agreement with IMG in July then reached a new contract with IMG in August. Kentucky is leaving IMG and in June announced a 15-year marketing deal with JMI Sports worth $210 million that begins in 2015-16.