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SBJ/June 4 - 10, 2001/No Topic Name
Non-revenue teams rely on football, men’s hoops
Published June 4, 2001
NACMA AWARD WINNERS
As part of our special report on college sponsorship, Street & Smith's SportsBusiness Journal profiles the 2000-01 NACMA/Host Communications Marketer of the Year award winners, beginning on page 32.
The National Association of Collegiate Marketing Administrators selected its winners from four categories — NCAA Division I-A, NCAA Division I-AA/I-AAA, NCAA Division II/III and NAIA/Other Four-Year Institutions/Junior/Community Colleges. Winners must be a NACMA member and must have worked full time in a marketing capacity (director of marketing, associate athletic director in charge of marketing, etc.) for an institution for three consecutive years.
Glenn Toth knows that when he approaches potential corporate sponsors for the UCLA athletic department, they will care little that the Bruins won national championships this year in women's gymnastics, women's track and both men's and women's water polo.
Like his counterparts throughout the NCAA, UCLA's associate athletic director in charge of corporate relations has found that sponsors want to focus their attention and budgets on the school's football and men's basketball teams.
Any consideration sponsors might give to non-revenue teams — or "Olympic" sports, as they often are referred to by athletic officials — usually comes about only as a condition of landing a deal for the football and basketball squads.
Like revenue from ticket sales and television/radio deals, college sponsorship money comes mostly from football and basketball, helping to fund the rest of the athletic department.
"You try and be creative, but it's an uphill battle for the Olympic sports to find sponsors," Toth said. "The consolation is that sponsorship money that's primarily driven by football and men's basketball is not necessarily designated by sport. It goes into the department's general operating fund so that everyone benefits."
That's not always the case, with schools often directing some sponsor money to football and basketball coaches as part of their compensation packages. As part of Michigan State's deal with Nike, basketball coach Tom Izzo receives $200,000 from the shoemaker. At the University of Florida, football coach Steve Spurrier receives about 80 percent of the $1.2 million in cash that Nike annually pays the school.
A shoe/apparel deal remains the most lucrative sponsorship for most major university athletic programs, even with the softening of the footwear market that has caused companies like Reebok to take a lesser role in college sports sponsorship.
"We decided the all-school deal does not work for us economically," said John Lynch, senior director of sports marketing for Reebok. "The price of outfitting all of the teams and providing a cash component is not something that we feel right now is the best use of funds. While you get great visibility through football and basketball, the visibility you get through the others is reduced."
Lynch noted that while Reebok has let the last of its major all-sport deals expire with Arkansas, Virginia and Wisconsin, it still has contracts for football and/or basketball with Boston College, Air Force, Memphis and South Florida.
UCLA, a former Reebok account, signed a six-year, $18 million contract with Adidas two years ago to cover its entire department. With about $1.7 million in cash and $1.3 million in apparel coming into the program annually, it represents a huge chunk of the $5 million the Bruins take in annually in cash and trade from sponsors and covers a significant portion of the school's $32 million annual athletic budget.
Nike Inc. has equipment and apparel accounts with about 200 athletic departments. Fifteen to 20 of those are full-program deals, such as the seven-year contract the company signed in January with the University of Michigan worth between $25 million and $28 million in cash, equipment and apparel.
Apparel deals typically include bonuses for the school, such as summer internships available to all students. Adidas installs full-time representatives at its schools to act as liaisons. Michigan's Nike contract requires the company to fund several graduate journalism fellowships. In return, the companies receive tickets to games and other perks, but the deals are mostly about exposure and potential shoe sales.
"It's a difficult thing to quantify," said Vada Manager, director of global issues management for Nike. "You want to create that psychic connection in the customer's mind that comes from building quality partnerships with first-rate programs."
Shoe and apparel deals also provide licensing revenue to the schools, which receive a percentage (usually around 7 percent) of sales of team logo merchandise with the sponsor logo.
Outfitting an entire athletic department can cost up to $2 million annually, which is why many schools negotiate a deal to cover all teams, even if that means sacrificing cash in return for more product.
Doug Dickey, athletic director at the University of Tennessee, said the school could have commanded more in cash in its four-year, $8 million deal with Adidas had it limited the deal to football, men's basketball and women's basketball. Instead, the school opted to accept $1 million in cash and $1 million in equipment annually in order to equip the entire department.
"The question is whether the value of football and basketball gives you enough strength to get someone involved in everything," Dickey said. "Whichever way you do it is probably a wash."
"Most of the value is in football and basketball," said Chris Bevilacqua, who negotiated a dozen university contracts for Nike before leaving the company two years ago. "Usually it's the school that brings up the other sports, although it's not going to make the deal bigger. It's just that the company is going to spread its cost around to more teams."
Bevilacqua said handling the apparel needs of an entire athletic department can be an operational challenge, requiring significant day-to-day involvement, which is another reason apparel companies often look to partner with just football and basketball programs. Said Bevilacqua, "It's a lot easier to handle three or four teams than 30."
While apparel deals account for much of college athletic sponsorship revenue, other sponsor money is out there. Tennessee receives about $200,000 annually from longtime sponsor Gatorade. UCLA has six-figure deals with Gatorade, Coca-Cola, MBNA Bank, Pacific Bell and State Farm.
The University of Virginia, which is looking for an apparel contract to replace its Reebok deal that ends this month, receives $350,000 annually from each of four "Team Virginia" sponsors: First Union, Hardee's, State Farm and the Virginia Lottery.
Keith VanderBeek, Virginia's associate athletic director for business operations, said those deals are driven mostly by football and basketball.
"We stress to any potential sponsor that there's value to any in-event exposure," VanderBeek said. "But they're obviously going to see more return from millions of people watching on television than from 5,000 people in a soccer stadium."
The University of Texas, which has long had one of the nation's top women's sports programs, grew its sponsorship program out of the women's department. In 1993, the women's department generated $120,000 from selling game-related sponsorships of women's basketball and volleyball games to companies such as Taco Bell and HEB Groceries.
The Longhorns have a seven-year, $22 million contract with Nike, but senior associate athletic director Christine Plonsky estimates that much of the school's other sponsorship revenue grew out of the relationships established by the women's department.
"We were selling game sponsorships to women's sports long before football," Plonsky said. "While it might be easier these days to sell football and basketball, there are numerous deals that can be done for the non-revenue sports on a local and regional level. And those sponsor dollars add up."
Pete Williams is a writer in Florida.