How Closely Should Health Care Services be Tied to Sponsorship?
The monetization of college athletics, recently ratcheted up several notches by shrinking athletic budgets and IMG's entry, is reshaping the sponsorship paradigm on campuses across the country. One case in Arkansas, for instance, is raising a thorny issue around sponsorship of healthcare services.
On September 21st, business publication Arkansas Business ran a story entitled "Physician Groups Bruised By Hogs' Medical Proposal" that said the University of Arkansas' athletics new plan to make healthcare services an official sponsorship category, rather than a supplier, "ended half-century relationships" with Ozark, Washington Regional and Medical Associates of Northwest Arkansas.
According to the piece, athletic department representatives were rebuffed when they made separate presentations to each healthcare organization that included proposals to generate $1.35 million in sponsorship revenue over a three-year period.
Sports marketing firm, ISP, who participated in the presentation, was hired last year and is under contract to deliver $73 million in revenue to UA Athletics through 2018.
UA Athletic Director Jeff Long says sponsorship was never an issue raised in the presentation.
“We said from the beginning, ‘We want you to have that discussion when we reach agreement with partners,’ but nowhere did we ever say, ‘You need to buy this much advertising. You need to put this much on the table,'" UA Athletic director Jeff Long insists.
In response to a Freedom of Information Act request, UA provided slides from the presentation to the paper, but the paper insists that the sponsorship slide was missing from the presentation the school provided.
The slide, Arkansas Business says they obtained elsewhere, asked for 'a minimum corporate sponsorship level of $450k per year.' In response, University of Arkansas Chancellor Dr. David Gearhart said yesterday that the slide never made the final presentation.
Aside from services, it seems perfectly sound to reason that healthcare service providers should pay for the consumer exposure they receive from athletic partnerships, but should sponsorship be an entirely separate discussion from the selection of healthcare services? Yes, a standard of services certainly needs to be established and met, but Arkansas' actions in response to this story indicate that healthcare services will be the next situation akin to commercial/chart airline deals, where the team takes phantom services, but advertises competitors to consumers.
Arkansas officials say the new plan provides for a consistent standard of continuous services across all men's and women's sports in a way that the old model did not.
The school ultimately announced Advanced Orthopaedic Specialists and Physicians’ Specialty Hospital would be the Arkansas' Athletics healthcare partners with an undisclosed sponsorship and advertising deal accompanying the deal, Arkansas Business says.
Driven by guaranteed revenues and the risk taken on with them, agencies will need to explore new categories and get increasingly creative to recoup sky high rights fees. This will not be the last conflict to be raised.