The NCAA News - News FeaturesDecember 23, 1996
NCAA agrees to $75 million marketing pact
The NCAA has reached an agreement with Host Communications, Inc. (HCI), that covers exclusive rights for NCAA corporate marketing programs from September 1, 1997, through August 31, 2002.
HCI will pay the Association a minimum of $75 million over this five-year period for exclusive rights to NCAA corporate partner programs, management of selected championship radio broadcasts, and publication and distribution of selected championship event programs and associated materials.
In addition, Host will exclusively market NCAA fan festivals that are conducted in conjunction with championship events.
The agreement continues a 22-year relationship between the NCAA and Host Communications. During that time, HCI has helped the NCAA create championship radio networks for the Division I Men's and Women's Basketball Championships and the College World Series, attract 16 prominent NCAA corporate marketing partners, produce game programs for 39 championship events (including the Men's and Women's Final Fours) and extend event telecasts internationally.
"We've had a long and productive relationship with Host Communications, and with Jim Host (HCI chief executive officer)," NCAA Executive Director Cedric W. Dempsey said. "They share our values and commitment to college athletics. I think this agreement will strengthen the NCAA and college athletics as we move into the 21st century."
"I'm delighted with this agreement," Host said. "Our long relationship with the NCAA has been both productive and enjoyable. I think college athletics is on the verge of its best period yet, and we look forward to helping the NCAA continue its leadership role in shaping future growth."
The $75 million will be paid to the NCAA through a graduated schedule, starting with approximately $11.5 million in the first year of the agreement. The report of the NCAA Special Committee to Study Marketing, Licensing and Promotions, which laid the groundwork for the agreement, featured a set of financial principles that included the following:
As much as possible, NCAA licensing and marketing revenue should not be designated or directly connected to specific NCAA programs, activities or expenditure categories within the NCAA's general operating budget.
Maximizing the allocations or distributions to member institutions should be a high priority for NCAA governing bodies as they consider the Association's budgetary matters.
There should be a recognition that licensing revenue generated through a true partnership between the NCAA, conferences and member institutions accrues to the benefit of all NCAA members.
At its August meeting, the NCAA Executive Committee approved a special committee recommendation that necessary administrative costs would be deducted from the gross revenue generated by the corporate partner program and that the remaining funds -- at a minimum the incremental revenues (that is, money beyond that generated by the existing contract) -- would be distributed to the Division I membership through the distribution formula that was approved at the 1996 Convention.
Host praised the work of the special committee that examined the Association's marketing, licensing and promotion efforts, noting that it made more effective marketing possible by loosening several restrictions that previously had been in place.
In particular, he said that it now will be possible for corporate partners to be permitted to "sample" at championship events; that signage rights for corporate partners will be enhanced near championship venues; and that use of the championship mark would be permitted on billboards in the championship locale.
Host said the last item is especially significant because
previous restrictions had left corporate partners susceptible to ambush marketing from rivals.
Host also noted the significance of the NCAA assuming administration of fan festivals at selected championship events.
In particular, the NCAA will conduct the fan festivals at the both the 1998 Men's and Women's Final Fours. Previous fan festivals at the men's event have been conducted by the National Association of Basketball Coaches.
"There will be a massive marketing effort for both," Host said.
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