Funding Collegiate Athletics: Part of the Business

David Clough, faculty athletic representative and chemical and biological engineering professor, explained that there is financial gain in licensing. Not only does Frontier represent an asset that the university could take advantage of, but allowing a corporation to purchase the naming rights of Folsom Field could also relieve budget pressures.

The Sports Marketing Association stated, “Most NCAA Division I Athletic Programs operate within an annual budget deficit, so directors have increasingly relied on corporate sponsorships to obtain the funds necessary to operate their programs.”

This is certainly true for The University of Colorado. The athletic department is awarded about four percent of the university’s annual budget, or about 50 million dollars each year. Subtract the 10 million the athletic department owes the Board of Regents each year for athletic scholarships, which increases each time tuition is raised, and it becomes difficult to fund not only football, but the entire CU athletic program.  Student fees do not cover athletic expenses. Compare this to other universities, some of which receive 70 to 80 percent of the school’s annual budget to fund athletics.

“If we don’t do it,” said Jon Major, sophomore outside linebacker and finance major, “we’ll be in a financial hole.”

Clough further explained that football funds more than just football.

 “The reality is everything hangs by fingernails on the exposure and success of the football team,” said Clough. “It would be nice to build something where we could cover both the ups and downs of athletics. Naming rights could help with that.”

Selling the naming rights of Folsom Field would therefore benefit not only football, but the entirety of University of Colorado Athletics.

While the money would directly benefit the athletic program, selling the naming rights of Folsom Field would also benefit the community. A partnership with Frontier Airlines would create ample advertising opportunities.

“We are trying to monetize an asset that is currently not utilized,” said Bohn. “Frontier represents an asset we could take advantage of or not.”

Bohn explained that naming rights act as leverage to activate advertisement. For example, if the University of Colorado were to enter into a contract with the corporation, magazines in Frontier airplanes and televisions during flights would help in getting the word out as to what the university has to offer. CU athletics, outstanding programs in science and research and the newly built Center for Community are all parts of the university that could be featured on in-flight channels.

“People start to see that maybe they want to come here,” said Bohn.

In addition, while the money received as a result of the naming rights would go exclusively towards athletic scholarships, the school would figure out ways to monetize benefits to faculty and staff. However, any discounts received from Frontier Airlines would most likely show bias toward CU athletic supporters.

“I would anticipate that we would have an opportunity to reward our season ticket holders,” said Bohn.

Another nice bonus? Frontier already flies to all of the Pac 12 cities, the conference CU will be moving to for the 2011 Football Season.

In return, Frontier Airlines would have the right to use the University of Colorado mark and use signs inside the stadium, as well as access to charter groups, donors and alumni.

Despite these very commercial benefits both parties will receive as a result of the naming rights, Bohn insists that the athletic program will not be overly commercialized. No corporate mark will be associated with the football team or with Ralphie. Most importantly, Folsom Field will still remain part of the stadium name.

Sweet Benefits or Meaningless Dollars?

However, not everyone is onboard with Frontier. Frontier Airlines is already the exclusive airlines partner for CU football and basketball. Therefore, the corporation already plays an integral part in university athletics.

While Bohn claimed naming rights would create a nice tie to the existing relationship the university already has with the corporation, others see it creating minimal opportunities.

“Frontier is already a huge supporter of CU football along with some other corporations, so they already bring in a lot of advertising,” said McDonnell. “For only a million a year I don’t think it’s worth it. They hiked up our tuition so it seems like they are just digging for money.”

Donald Lichtenstein, professor and chair of marketing at the Leeds School of Business, further pointed out that any agreement reached will not be disclosed in terms of current dollars. For example, a 25 million dollar deal spread out over a given time period does not mean 25 million dollars today. Schools want to come up with an impressive sum of money, because it is a PR plus, but in reality, they don’t disclose any real values.

Further, given a disappointing 2010 Football Season, this might not be the best time to sell naming rights.

“You can only sell it once, the idea being make it good,” said Lichtenstein. “A team playing bad gets less exposure. You want to sell when the stock is high in terms of the quality of the football team, not when it is low. What happens if CU becomes a great football team in five years?”

Risky Business

In addition, there are risks that the university faces when signing naming rights contracts.

The Sports Marketing Association stated that, “pride and team identification are considered the primary benefits of having a team, so it has been deemed critical the team’s playing space bear a name that commemorates the relationship among team, city, and fans....Therefore, it seems reasonable to suggest that by altering the name and tradition associated with an athletic facility, there could be a trickle-down effect that might adversely affect psychological attachment and attitudes toward commercialism.”

This has proven to be true, as several CU Buff fans have spoken out in opposition to the naming rights.

“I don’t think this move is necessary at all,” said Isaac Droke, junior news broadcast major. “Folsom Field has been Folsom Field for as long as I can remember and I think it should stay that way.”

Lichtenstein further explained that this is a form of co-branding in which both entities are at risk in what each other do in terms of tarnishing equity of their brand name. There is a danger when co-branding anything. Take for example Enron Stadium, former name of the Houston Astros’ playing space. When the Enron Corp. scandal broke, causing the corporation to file for bankruptcy, the Astros decided to remove its name from the stadium.

Critical in a successful marketing strategy of naming rights would therefore include choosing a company that resonated well with the community and one in which the risks are low. Local sentiment should figure into the equation. A Wall Street Corporation would likely not resonate well with a liberal community such as Boulder.

The good news, then, is Frontier Airlines is a Denver based company. So far to date, the corporation has had nothing offensive or outrageous reported in their name.

“We will get this right,” said Bohn. “We won’t make that mistake.”

Precautions

In order to ensure such a mistake will not be made, CU is taking measures to ensure only the right sponsor will be the one to stamp their name on Folsom Field.

Bohn explained that the university reserves the right to deny sponsorship of certain corporations. The university has no interest in alcohol, tobacco, condom, or feminine product companies, as well as political action committees. Sponsorship is not limited to corporations, but individuals with criminal backgrounds are not contenders.

In addition, the contract would include several precautions to ensure a good deal for the university. For example, any contract would include an exit clause. If the university found it was unhappy with the sponsor, it would be able to get out at virtually no cost.

Further, while the university could wait until the football team’s performance improves, which would increase their monetary value, the agreement removes negative consequences if the team worsens.

“It is a double edged sword,” said Bohn. “We could base it on performance, or we could take a guaranteed number rather than risking a possible decline in the team.”

The Legacy Will Live On

Clough argued that in the end, the naming rights of Folsom Field creates opportunity for the university. Despite the break with tradition, Folsom Field will remain Folsom Field to many.

“I guess in the end, anything we can do to help the program to get recruits and help win games works for me,” said Droke. “Big football programs have lots of money and that’s what CU needs to have in order to become a great football school.”