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April 08, 2004

NCAA Mega-Deal For Carbonated Sugar Water

FROM ATLANTA come details of Coke’s comprehensive 11 year sponsorship deal with the NCAA. The price tag was $500 million dollars. That’s half a billion dollars (with a “b”).

At a time when the NCAA has been criticized for over commercializing its amateur organization, the Coke deal has raised more than a few eyebrows among college athletics critics.

Although NCAA president Myles Brand has stated repeatedly that he favors less commercialism in college athletics, there appears to be some prevarication on that assertion. Brand seems to be splitting hairs. Last year he told The Chronicle of Higher Education, “Commercialization, per se, isn’t bad. It’s how it’s done that can cause a problem.”

Coke is one of the NCAA’s three super sponsors—dubbed “corporate champions” by the association. The others are Pontiac and Cingular. This is part of the NCAA strategy of moving toward a lesser number of big sponsors.

The NCAA-Coke alliance appears to be a win-win arrangement. With its all American mom & apple pie presence, Coke (and its flanker brands Powerade, Dasani and Sprite) stands for fun, energy and refreshment.

Aside from some criticism regarding a lack of nutritional value and contributing to tooth decay, Coke is a relatively safe product for the NCAA to partner with. And with none of the controversy attached to that other popular carbonated beverage—beer.

The long-term 11 year sponsorship gives Coke a much desired beverage category exclusivity. While the $500 million price tag is substantial by anyone’s standards, Coke will be spending a total of $3.14 billion on marketing and other expenditures over the next 12 years (according to Coke’s 2003 annual report).

Coke’s revenues in 2003 were $21 billion.

A Coke marketing executive expressed some of the thought process that led up to approving the deal, “Were we nervous? Yes. We were getting married.”

Integral to the deal was Coke’s exclusive access to 87 championships in 22 sports. Some 80% of the 360,000 college athletes play sports other than football and basketball, according to NCAA estimates.

(this 336 word excerpt—along with supportive commentary—was reduced from an 1854 word article in The Chronicle Of Higher Education of 4-6-04)