Steinberg marketing deal may pay off soon, UH says

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By Ferd Lewis
Advertiser Staff Writer

The University of Hawai'i's sports marketing deal with agent Leigh Steinberg is beginning to bear fruit, UH officials say. The plan includes selling advertising signage space in Stan Sheriff Center in 14 areas, from the scoreboard to the floor to the tape on the volleyball net, that together could bring in more than $200,000. See graphic. Jeff Widener • The Honolulu Advertiser

UH officials said based on early sales they project to net between $800,000 and $1 million from the $1.5 million in cash corporate sponsorships sold by the Steinberg firm in this, the second year of the deal. In addition, they say they expect to receive more than $600,000 in trade.

"I think they've raised the bar on value for us," UH athletic director Hugh Yoshida said of the arrangement that has Steinberg's people selling signage in campus athletic facilities and at Aloha Stadium on football game days.

"Considering football is coming off a 3-9 season and the national economy is, at best, flat, the early numbers look very good," said Jim Donovan, UH associate athletic director.

Signage positions as diverse as the tape on the volleyball net to the bottom of Duke Kahanamoku Pool are being sold individually from $1,000 (entrance signs and basketball cart) to $70,000 (basketball court floor). Sponsorship packages range from $5,000 to $200,000 annually with incentives that include signage, program ads, tickets, etc. Pepsi and The Honolulu Advertiser are both at the $200,000 level, UH said.

After expenses and commissions, UH said it netted

about $630,000 on sales of $1.2 million last year, approximating what the school did when it had its own marketing department two years earlier.

The two-person department, which delivered approximately $600,000 in sponsorships and advertising, was disbanded in 1999 amid efforts to pare the $1 million deficit that followed the 0-12 football season of 1998.

In 1999, UH relied on help from its radio and television broadcast partners and existing contracts.

Growing trend

Then, at the behest of new head football coach June Jones, the school entered an arrangement with Steinberg's California-based firm, Steinberg, Moorad & Dunn. Jones is a long-time friend and client of Steinberg, who was the inspiration for the character played by Tom Cruise in the movie "Jerry Maguire."

David Dunn, who has since broken away from the firm, negotiated Jones' initial five-year $320,000 base salary contract with UH in December of 1998.

Out-sourcing signage, advertising and broadcasting packages is a growing trend in college athletics. Texas Christian, Nevada-Las Vegas and Temple are among the schools that have recently signed with marketing firms.

At UH, the Steinberg deal has two components, consulting and marketing. The school has retained Steinberg as a consultant on a wide range of issues, including the feasibility of UH operating Aloha Stadium, identifying candidates for head coaching vacancies and evaluating potential conference affiliations as part of a five-year contract that pays $100,000 annually plus up to $12,000 in reimbursable travel expenses.

Then, there is a marketing agreement that is renewable annually to develop and sell corporate sponsorships and advertising. For that, Steinberg's firm receives a flat $150,000 fee this year. UH assumes salaries and expenses for the four-member staff (three full time) up to $300,000.

Last year Steinberg got no flat fee but received 50 percent of revenues past the $750,000 marker and UH assumed $325,000 in salaries and expenses.

In the first year of the marketing agreement, Steinberg received approximately $225,000 and UH netted about $630,000, according to school officials.

Some questions

UH officials have defended the terms of the arrangement saying the protocol in many agreements is to pay a flat 50 percent commission from the first dollar. For example, Donovan said San Jose State's agreement with Host Communications provides for a $75,000 fee plus 50 percent commission on all revenues generated.

Steinberg was not immediately available for comment.

Donovan said UH was satisfied with the return since "once they got on board, the Steinberg marketing people had barely two months lead time before the start of the football season. Usually you're talking about six months or more to sell sponsorships of this type."

This year, if early projections hold, Donovan said the Warriors expect to net between $800,000 and $1 million from the relationship, figures that would represent between 5 and 6.25 percent of the budget of an athletic department that operates 19 sports.

Privately, however, some members of the advertising community have questioned whether the arrival of Steinberg's people has resulted in developing a deeper pool of clients or just redistributing the existing dollars.

"There's some truth in that since there are only so many local companies," Donovan said. "Hopefully, however, more of a market will be able to be developed nationally as our program becomes more successful and visible."

John Fink, president and general manager of KFVE (Ch. 5), which holds the television rights to UH events, said, "Our goal is to try to work with Steinberg to try and grow the pie and not to see the existing pie split up even further. Our hope is that new players could be brought into the mix through some of the great connections Steinberg has throughout the Mainland that will increase the value of UH sports marketing and television coverage."

New scoreboard

Stephanie Pietsch, who heads Steinberg's operations here as director of corporate sponsorship, said marketing opportunities have been expanded this year. At Rainbow Stadium, a new scoreboard costing in the neighborhood of $75,000 is expected to be purchased in time for the upcoming season. Donovan said at least two sponsors have signed to place ads on the board and UH hopes to have the scoreboard paid for entirely through advertising in its first season.

Pietsch said Aloha Stadium will have a "new look" on UH game days with sponsor banners that had been draped over the edge of the stands being replaced by plastic, A-shaped sideline standards like those at European soccer matches.

Yoshida said while UH, "hopes to maximize sponsorship opportunities and provide the resources to make our student-athletes, coaches and teams competitive, we're trying to keep the venue clean, too. We're sensitive to the fans, too. We don't want to go overboard and turn them off."