The outsourcing of licensing, media, and sponsorship rights is a business to bus

Question

The outsourcing of licensing, media, and sponsorship rights is a business to business operation. Outside firms such as IMG College, Learfield, CBS, and Nelligan endeavor to find local, regional, and national businesses to buy advertising and sponsorships. Selling tickets is, in contrast, primarily a business to consumer endeavor. Assume you are the athletic director for a midsized Division 1 university. What would you see as some fundamental differences in and challenges to these two sales approaches?

Explanation / Answer

Licensing, sponsorship rights outsourcing are type of business arrangements. It allows one to make income from all kinds of intellectual property. It can include know how knowledge/ competency of doing business, creative and disruptive ideas, patents, trademarks, output, brand will or reputation in market, designs of products, copyrights etc. It is like owner retains ownership of its intellectual property, while grants others the right to use it. It required royalties in return for outsourcing licensing, media, or sponsorship rights. It becomes easy to expand the market penetration of a business and reach in different geographic like from urban to rural or from one class of customer to other segment. More reach in sub segments, produces more sales, in turn revenue and profitability and enhanced brand equity.

On the other hand, ticket selling is B2C sales, more sales workforce does the job. It could reach more people in different geographies and micro segments via direct selling, telesales, online/ social media sales, store/ outlet sales etc. Revenue comes from Cost of goods sold minus any direct and indirect expenses and costs.

Challenge in case of outsourcing Licensing, sponsorship rights can be having a very good product with excellent value proposition to its customers in the long run, well revenue generation forecasting and predictability. A strong sense of confidence is required by businesses that will buy these rights and pay royalty to the outsourcer. Many times, a sufficient bank balance, financial muscle, infrastructure etc. is also needed for the small and big businesses who want to buy such licensing rights. Hence, selection of such buyer is critical challenge.

Challenge in case of ticket selling is trained and happily employed sales force. In competent workforce may not be able to sell well offline or online and could incur more fixed and variable costs to the company, affecting profit margin. If employee attrition is high, then again recruiting again and again levies more cost to company, incurring opportunity costs and revenue losses.

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