Universities Follow Athletics’ Lead in Bundling Sponsorships

2015-06-24 Universities follow athletics lead in bundling sponsorships
USA Today – June 24, 2015 – By Steve Berkowitz  –

Following a path that their athletics departments began carving about 40 years ago, major public universities around the nation are starting to develop campus-wide corporate partnerships that they hope will help mitigate declining state appropriations and increasing costs.

In the latest example, the University of California, Berkeley announced Wednesday that it has signed a 10-year, roughly $4 million agreement that makes Sungevity, Inc., the school’s official solar energy partner.

This is the first school-wide deal that Cal has put together, and most of the money will go to the athletics department and the California Alumni Association. However, according to campus officials and documents, the school is heading toward completion of a broad financial services deal and has issued a request for proposals for a comprehensive rights/sponsorship contract with a coffee-and-tea provider.

The bid document that was issued in March for financial services proposals mentioned an even more ambitious prospect. It stated that the University of California Office of the President “is currently exploring system-wide or multi-campus partnerships, including in the category of consumer banking/financial services.”

Appropriations from the state for Cal have diminished from $506 million in 2008, 27% of the budget, to $319 million (14%) in 2014, the school said.

The activity of the Cal’s new University Partnership Program “is becoming a higher profile project as the days go on because universities are interested in seeing how this plays out — especially at UC Berkeley,” said Solly Fulp, who was appointed earlier this month as the school’s executive director of university business partnerships and services. “I mean, this is a very prestigious university for many reasons, and some feel that if this can work at Berkeley, it can work anywhere.”

These types of partnerships already are in place and/or being sought at schools including Arizona State, Kentucky, Ohio State and Washington. But those schools don’t have the same type of renown — or, perhaps, reputation — for campus activism that Cal does.

“I think one of the things in general for our university and many others is any kind of private partnership can be suspect to an academic community,” said Claire Holmes, Berkeley’s associate vice chancellor for communications and public affairs.

That being the case, does Cal’s administration have any trepidation about proceeding?

“I don’t think there’s any trepidation about this,” Holmes said. “The chancellor (Nicholas Dirks) is certainly behind it and the vice chancellor of administration, John Wilton, is definitely leading this. I think the way we’ll go about this will be very important — engaging people early in the process as we look at opportunities is part of the plan. We will be judicious and do our due diligence around who we partner with and how we structure these agreements.”

The deals are not without potential for controversy. The University of Minnesota’s financial services agreement with TCF Bank was featured in an ABC News investigation in September 2013 that looked at whether these deals result in extra, hidden or unfair banking fees for students — an allegation that Minnesota disputes.

Cal’s financial services bid document states that “students should be able to understand fees and charges without reading complex terms of service.” The document also says a prospective bank’s payments to Berkeley “should not be based on student spending, number of cards or accounts, outstanding balances and the like.”

The document offers the possibility of one bidder gaining access to students, faculty, staff and alumni, as well as the ability to market through Cal’s student government and student affairs and activities operations, its recreational sports program, residential service, alumni association and intercollegiate athletics program. At present, Bank of the West is the official bank of Cal athletics while Bank of America is the credit card partner of the Cal Alumni Association.

In the mid-1970s, college athletics departments began bundling various different advertising opportunities that once competed with each other. They now routinely package all of their local radio, TV, internet, marketing, corporate sponsorship and merchandising rights, generating millions of dollars — in some cases, tens of millions — annually. Universities’ central administrations are now trying to harness the scale and breadth of campus communities — what makes schools attractive to corporations — that can make these deals hard to put together.

Said Fulp, who has worked for college sports marketing giant IMG as well as Cal’s athletics department: “The whole concept of the University Partnership Program is that we’re saying (to the university community) … if we pool our relationships rather than (taking) the traditional siloed approach, which you see on many university campuses … the outcomes can be really special for a lot of stakeholders. If everyone works together, one plus one could equal four or six.”

Athletics programs remain a critical aspect of these deals because “in many ways they continue to be the front porch of the university — they’re a great way to bring people in,” said Tom Stultz, a longtime college sports marketer who is now president of JMI Sports — a firm that is assisting schools, including Kentucky and Arizona State, with campus-wide marketing efforts. But, he said, many companies are seeking much more than just the opportunity to have advertising signage at sports venues because of the changing tastes of their most prized audience.

“Millennials want to create authentic experiences” with brands and companies, he said.

At Washington, which has agreements with Starbucks and Coca-Cola, that could mean participating in a campus leadership program funded by Starbucks or sampling free Powerade at intramural sports events, said the school’s director of sponsorships and partnerships Steven Bell.

Fulp said Cal officials discovered this as they worked to put together a naming rights deal for the field at Cal’s Memorial Stadium — a quest that, in December 2013, resulted in a 15-year, $18 million agreement with Kabam, a mobile gaming company.

“We discovered in that process that there was a lot of interest from many companies in a deeper relationship with UC Berkeley that extended beyond the athletics department — whether it was engaging with our students, our direct (business-to-business) opportunities, different academic departments on campus, the value of the UC Berkeley brand,” said Fulp, who was the athletics department’s chief operating officer during that time.

While Cal has been handling much of the work on these deals internally, it has used one outside firm for rights valuation (Navigate Research, a Chicago-based company) and another for help in identifying potentially interested companies (Premier Partnerships, a Los Angeles-based company). The firms are being paid through both monthly retainers and prospective commissions, Fulp said.

Will it be worth that expense, plus the cost of additional university staff needed to service partnerships as they get made and keep working on finding new ones?

Fulp declined to provide specific revenue projections, but added: “I would say it’s significant (enough) for us to invest in this program and make it a focus and a priority.”

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