As the industry leader in evaluating and measuring marketing investments, Navigate has a wealth of knowledge in the sponsorship and marketing space. This blog shares our knowledge and insights on current events in the sports business, marketing and sponsorship worlds.
CHICAGO, IL – October 29, 2015 – The University of California, Berkeley UC Berkeley today announced it has selected Bank of the West as the Official Bank of UC Berkeley. The 10-year agreement is one of the most comprehensive agreements in the country, both in terms of the services provided and financial support. Navigate Research worked with UC Berkeley to align stakeholders across campus and provided research and analytics to value and build a partnership of this caliber.
“Navigate has been a valuable partner throughout this entire process”, said Solly Fulp, Executive Director of University Business Partnerships & Services for UC Berkeley. “They assisted in creating a comprehensive university-banking partnership that addressed UC Berkeley’s priorities in student programming, brand alignment, campus services, and revenue support.”
For more specifics on the agreement, review the official press release here.
Just a few months into her freshman year, Jordan Davis got a phone call that sent her into a financial tailspin: Her mother had been laid off and no longer could pay Davis’ college expenses. “It was sink or swim,” Davis, now a UC Berkeley senior, recalls. “I was terrified.”
Jordan Davis, a Berkeley senior, is a peer mentor in the Bears for Financial Literacy Program. (UC Berkeley photo by Gretchen Kell)
Over the next few years, Davis – who hadn’t yet learned to manage her money – made some costly mistakes. But the tough lessons she learned aren’t buried in the past. Instead, she freely shares them as one of seven peer mentors for Bears for Financial Success, a financial literacy program for undergraduates that launched at Berkeley during the 2014 spring semester.
“Money troubles make a lot of people feel hopeless. When you can’t afford to live, to pay for rent and food, it’s dehumanizing,” says Davis, 23, a political economy major. “But it’s nothing to be ashamed about. And it’s easier to hear someone close to your age saying, ‘It’ll be OK.’”
A comprehensive new agreement announced today between UC Berkeley and Bank of the West will provide much-needed financial support for this young program, which seeks to grow by adding one-on-one appointments, marketing materials, online tools and services for graduate students.
“To date, we’ve held 95 workshops and reached nearly 2,000 students,” says Claudia Montesano, financial wellness and outreach manager for Berkeley’s Financial Aid and Scholarships office. “Using funds to advertise our services to students on a much larger scale, our numbers will increase significantly.”
The 10-year agreement, which establishes Bank of the West as the “Official Bank of UC Berkeley,” will provide the campus with more than $17 million in revenue to support merit-based scholarships and paid summer internships for students, as well as funding for priority programs like Bears for Financial Success and the UC Berkeley Food Pantry. An additional $13 million will be provided for operational support for an on-campus branch and ATMs, as well as tailored banking products and services that include discounted mortgages for staff and faculty. The bank’s announcement was made this morning.
“This is a ‘best-in-class’ partnership, the most comprehensive one we’ve seen between a bank and a university,” says A.J. Maestas, president of Navigate Research, the Chicago-based company that helped Berkeley analyze the value of an agreement of this caliber and then build it. “Many focus on the basics — affinity cards and growing checking accounts — and not as much on the financial well-being of students, faculty, staff and alumni.”
A shared mission
For many years, various Berkeley departments and units have entered independently into contracts with financial institutions. The new relationship with Bank of the West, which has sponsored Cal Athletics for more than 20 years, “brings together those efforts to streamline business operations and provide better services to our campus community,” says John Wilton, Berkeley’s vice chancellor for administration and finance. “At a time when about 13 percent of our funding comes from the state, this is one example of the university’s broader strategy to generate new revenue to support our public mission.”
The UC Berkeley Food Pantry will benefit from the campus’s new relationship with Bank of the West. (UC Berkeley photo by Cailey Cotner)
The University Partnership Program (UPP), which guides and oversees agreements between Berkeley and prospective partners, created the Banking Working Group to select an official campus bank. The 11-member group of faculty, staff and student representatives chose Bank of the West through a competitive proposal process and after research into the downsides of school-bank partnerships.
Solly Fulp, executive director of university business partnerships and services for Berkeley, says students played a major role in the process. “They were involved every step along the way and made it very clear that protecting student interests should be the highest priority,” he explains. “Our banking partner will not receive any guaranteed business based on new accounts opened and will never market credit card products to students.”
During negotiations, the working group’s student representatives strongly advocated for Berkeley’s financial literacy and food security programs to benefit from the relationship. “We were very moved by the students’ concern for their peers’ well-being, and those values resonated with Bank of the West’s philanthropic mission in the community,” says Andy Harmening, vice chairman of consumer banking at Bank of the West.
“Food security and financial literacy are some of the foundations upon which students’ academic and extracurricular endeavors are built,” says Rodolfo Mendoza-Denton, professor of psychology, who was not a member of the Banking Working Group. He helped create a 13-part video series sponsored by the Office of the Vice Chancellor for Undergraduate Education about student wellness in areas such as sleep, financial literacy, nutrition, mental health and exercise.
“Not all students come to Cal with the same resources to face challenges around money and food,” he adds. “It’s great to see the university seeking to support programs around these issues, and promoting wellness more generally.”
With revenue from the banking relationship, the UC Berkeley Food Security Committee will expand its reach. “Since 2010, one in every five Berkeley students has reported in the UC Undergraduate Experience Survey having to skip a meal to save money,” says Ruben E. Canedo, a Berkeley research and mobilization coordinator for the campus’s Centers for Educational Equality and Excellence who leads that committee.
This year’s food pantry fund, he adds, will provide emergency food assistance to students who have exhausted their financial aid packages. It also will pay for fresh produce for the pantry, which opened in 2014-15 and has had more than 2,500 student visits.
In future years, Canedo says the pantry likely will serve double or triple the number of students it now supports. He aims to build the program to include a comprehensive food security nutrition model that will include a full-time instructor who will teach courses, train peer advocates to teach students about nutrition and how to shop and cook on a budget, and produce high quality assessment and impact data.
Sixty percent of Berkeley undergraduates finish college without any debt, and of those who do leave with debt, the average cumulative loan debt is $17,964 – 30 percent lower than the national average for four-year public universities.
At a financial literacy fair this fall at a Berkeley residence hall, a peer mentor shares information and resources with her fellow students. (UC Berkeley photo by Josephine Wu)
Yet, Berkeley students still worry about money. Seventy-two percent of students in the 2014 National Student Wellness Study indicated financial stress, says Montesano, and students at Berkeley report the same, and at a similar rate.
“Many students haven’t been introduced to basic personal finance concepts and, even if they have, they don’t necessarily put them in practice,” she says. “As a result, our financial aid office assists those students who run out of money by the end of the semester and are in a state of emergency. This is one of the driving forces behind our holistic approach to educating our students, not just about financial aid, but about finances in general. Teaching students these skills while they are at Berkeley can prepare them for life post-Berkeley.”
Peer mentor Davis knows that anxiety well. While a freshman at Santa Monica College – she later transferred to Berkeley – Davis dropped classes after her mother’s job loss, in order to save money and look for work. Her wages were low, so she applied for credit cards, only to rack up debt.
“I ignored the bills, and the debt collectors started calling,” says Davis. “It was very stressful, and my schoolwork really suffered. I hit rock bottom and thought, ‘If I don’t dig myself out, no one will. I wish someone would have been there to tell me what to do.”
Using personal stories and self-deprecating humor, Davis today educates her fellow undergraduates about credit cards, creating a budget, identity theft, saving and banking, and moving out of the dorms. “I once lived with a family that charged me $200 to rent their living room, but it turns out it wasn’t legal,” she says. “Your name needs to be on the lease or you can be kicked out.”
The Bears for Financial Success peer mentors “bring energy to a topic that is not typically exciting for students,” says Montesano. “I often hear students at a presentation bring up something they’ve struggled with, and our peers can say, ‘Me, too. I’ve done the same thing.’”
“My favorite part of mentoring is making a connection with a student,” agrees Davis. “It can be embarrassing to talk to someone who has everything together when you don’t.” She adds that she also has experienced food insecurity, and that “you can’t continue to function, being stressed and hungry.”
“Just setting a long-term goal – like raising your credit score, or building $5,000 in savings – is an important step,” says Davis. “Mine was to be the first person in my immediate family to finish college.”
When buying and selling real estate, stock in a company, or automobiles, information is everywhere. Each of those industries involve transparent transactions where both parties can analyze exactly what is being sold in the marketplace and at what price. This allows for easy comparisons and relatively straightforward cost-benefit decisions. Buying and selling sponsorships tends to be a bit more challenging.
The costs and benefits of these transactions are typically not made public, aside from larger multi-year sponsorships, which are often misreported. This lack of information forces the market to make a lot of assumptions – or flat-out guesses – when it comes to which benefits to include in certain deals, and what price should be paid. It also makes comparisons challenge. If a buyer is looking at similar sponsorships with two teams in different markets (or even different sports), it’s often difficult to know which is priced more fairly.
To address this issue, Navigate has teamed up with the University of Iowa’s Sport and Recreation Management Program to create the first real attempt to estimate the fair market value of sponsorships across all major US sports leagues to provide both buyers and sellers with an independently produced pricing guide. We call this guide the Sponsorship Value Index (SVI). The SVI places a fair market value on the same bundle of sponsorship elements across every professional sports team. Those elements include:
Two (2) minutes of Digital Signage per game for a full season
One (1) Experiential Space per game for a full season
One (1) Giveaway per season
One (1) Video Board Promotion per game for a full season
One (1) Website Banner Ad for a full season
One (1) Print Program Ad per game for a full season
Two (2) Radio Ads per game for a full season
Two (2) TV Ads per game for a full season
One (1) Static Sign per game for a full season
The goal with selecting these elements for the SVI is to create a diversified mix of sponsorship elements that are consistently provided by professional sports teams. Having these fair market values at the team level allows for several helpful comparisons for sponsorship buyers and sellers that have been impossible until now. For example, here are the results for the Top 5 NFL teams, ranked by Index, if we include all of the elements above. Keep in mind, this mix includes two (2) TV ads per game for a full season, which currently isn’t offered by NFL clubs.
New York Giants
New York Jets
San Francisco 49ers
We’ve disguised the actual fair market values in this example, but the Index results show that the Chicago Bears have the highest SVI for the given sponsorship elements above, and the Dallas Cowboys have a SVI that is 93% of the Bears, with the New York Giants coming in third at 90%, and so on. This breakout shows the potential value of a team like the Chicago Bears, if local TV advertising would be made available during NFL broadcasts.
If, however, we remove the TV element from the SVI to be more reflective of actual NFL sponsorship packages, the new Top 5 NFL teams, ranked by Index, looks very different.
Green Bay Packers
New England Patriots
Based on these Index values, the Dallas Cowboys have the highest SVI in the NFL, with the Chicago Bears in second at 77% of the value of the Cowboys. In this example, the gap between the first and second highest values is 23 percentage points, which is quite a bit higher than the 7 percentage point gap in the initial breakout above. In addition, teams in smaller markets, such as the Green Bay Packers, Philadelphia Eagles and New England Patriots provide a very high level of sponsor value due to strong local support. This type of flexibility in the analysis allows for easy customized comparisons across all teams and leagues by slightly adjusting the element mix.
One additional example of the flexibility of the SVI is to adjust the figures to reflect only sponsorship elements that can be viewed within your seat when attending games. These assets include Digital Signage, Static Signage and Video Board Promotions. The adjusted Index values below reveal a new Top 5 for the NFL.
New York Giants
New York Jets
New England Patriots
You’ll see that the Chicago Bears are no longer listed in this mix, but the Washington Redskins move into the Top 5 due to their strong in-stadium support and the premium value placed on the fans within the attractive Washington DC demographic area.
What are ways that a buyer can use this information?
For a quick example, let’s assume that a brand was given a $500,000 proposal from the Dallas Cowboys to be a sponsor, and the elements offered in their package aligned pretty well with the SVI when removing the TV elements (second example above). This analysis would predict that the same sponsorship with the Chicago Bears would cost $385,000 (77% of the Cowboys). If the brand believes that their money is better spent on a sponsorship in the Chicago market than the Dallas market, they will have a solid estimate of what they should be paying, and may want to reach out to the Bears to see if the inventory is available there. This insight, along with element specific breakouts and the same information for every team in every market, will give brands unprecedented fair market value insights to quickly and accurately compare their sponsorship options.
How can this information help a team?
Again, let’s assume a hypothetical example where the New England Patriots are trying to sell a $300,000 sponsorship to a brand that is trying to decide whether to do a similar sponsorship with the Green Bay Packers instead. The Patriots could use the SVI in the second example above to explain that the Bears deal would likely cost the brand $338,000, or an incremental $38,000 per year. The Patriots could also use the full SVI database to compare the fair market values of specific elements, or even compare similar packages across other teams in the New England market that the brand may be considering, such as the Boston Celtics or the Boston Bruins.
Of course, a large caveat here is that sports sponsorships are not yet purchased and sold in an efficient marketplace, and the supply is not aligned with the demand, so the information concluded from analyzing our SVI database will not always be directly actionable. But, the results and the process should add clarity and direction to a marketplace that has proven to be extremely difficult on both sides.
For more information about Navigate’s Sponsorship Valuation Index, please contact Navigate Research by calling 312-762-7474, or via e-mail at email@example.com.