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Industry Insights

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.

Pac-12 Stock Report

Navigate Research - Monday, February 05, 2018
Originally published February 1, 2018 at 11:09 am Updated February 1, 2018 at 10:48 pm
Seattle Times
By Jon Wilner
Bay Area News Group

Pac-12 Stock Report

↑ Rising: Washington recruiting.

Silly us. We thought the Huskies had everything wrapped up in December. Turns out, Chris “No Drama” Petersen isn’t quite finished.
Consider two recent developments:
The first came late last week, when Concord De La Salle’s Tuli Letuligasenoa, one of the top defensive tackle prospects in the west and a USC commit, announced he would visit UW.
The second came Wednesday, when Julius Irvin, a 4-star cornerback from Anaheim, picked the Huskies over USC and Arkansas … err, make that Alabama.
Washington over USC and Alabama.
The Huskies’ 20-player class currently stands No. 2 in the conference and No. 12 in the nation. And it will get even better if Letuligasenoa signs next week.

↑ Rising: Bobby Hurley
The third-year Arizona State coach was awarded a modest contract extension but a hefty salary increase this week. Hurley and the Sun Devils visit the Huskies Thursday at 8 p.m.
Per a detailed report by, Hurley will receive a $700,000 raise in July, pushing his base pay to $2.1 million.
Allow me to provide some context on Hurley’s $2.1 million:
Roy Williams makes $2.09 million.
Yep, the ASU coach who has never won an NCAA tournament game stands to earn more than the North Carolina coach who has won three national titles.
Now, it’s entirely possible that Williams has received a raise since his $2.09 million was reported in the USA Today salary database, and that his base for 2018-19 will exceed Hurley’s.
So let’s heap more context onto the pile. (Figures courtesy of USA Today)
ASU’s Bobby Hurley: $2.1 million - Sweet 16 or better: zero times
Gonzaga’s Mark Few: $1.6 million - Sweet 16 or better: seven times
Xavier’s Chris Mack: $1.4 million - Sweet 16 or better: four times
Miami’s Jim Larranaga: $1.3 million - Sweet 16 or better: three times
Notre Dame’s Mike Brey: $970,00 - Sweet 16 or better: three times

The Hotline doesn’t begrudge Hurley a dime: Make whatever you can make. (Did we mention that he has annual six-figure bumps? No? Well, he has annual six-figure bumps.)
But is it fiscally responsible to pay a coach with no NCAA wins — and no current suitors — like he’s been to the Final Four?
Ultimately, fiscal responsibility is whatever ASU athletic director Ray Anderson and president Michael Crow say it is.
Even if their definition is, well, unique.

↑ Rising: Pac-12 football alumni.
No conference … not the Big Ten, not the ACC, not even the SEC … has more players on the Super Bowl active rosters than the Pac-12.
We won’t list them all, because there are 21, but one note on the topic:
Of all teams, Arizona produced the starting quarterback: Philadelphia’s Nick Foles.
I say that because the Wildcats, over the decades, have produced exactly one modern-era NFL quarterback: That would be Philadelphia’s Nick Foles.
(He was drafted by the former Eagles coach who is also a former Oregon coach and is the current UCLA coach.)
Arizona also claims a non-quarterback of some renown: Patriots tight end Rob Gronkowski.
And people call it a basketball school.

↓ Falling: United Airlines Memorial Coliseum
Perhaps it feels and sounds so damn wrong because we’re not used to iconic stadiums being renamed.
The Rose Bowl remains the Rose Bowl.
Yankee Stadium isn’t Bank of America Stadium.
Lambeau Field isn’t Got Milk Field.
If it’s a new facility, that’s one thing.
If it’s a basketball arena, that’s one thing.
But to rename an iconic outdoor venue like the Los Angeles Memorial Coliseum?
From a business standpoint, the idea of selling naming rights makes sense.
The deal is worth $69 million over 16 years, which averages out to $4.3 million annually.
The cost of the Coliseum renovation is pegged at $270 million. I don’t know how the debt is structured, but let’s keep it simple and assume $9 million per year for 30 years.
The naming rights will pay almost half the annual debt service.

Could USC have gotten more? On the surface, it might seem that way:
Washington, with an assist from the shrewd negotiators at Navigate Research, sold Husky Stadium naming rights to Alaska Airlines for $41 million over 10 years.
So Washington is collecting $4.1 million annually for the naming rights to a stadium that’s in the 14th largest market and has never hosted a Summer Olympics, while USC is collecting $4.3 million annually for the naming rights to a stadium in the second-largest market that has hosted two Summer Olympics.
That said, the deals are not identical — the Huskies’ agreement with Alaska, for example, includes sponsorship of an Athletic Village on campus — so definitive conclusions are probably unwise.

Unless your conclusion is that United Airlines Memorial Coliseum won’t ever, ever sound right.

Can college athletics continue to spend like this?

Navigate Research - Monday, April 18, 2016

Erik BradySteve Berkowitz and Jodi Upton

Source: USA TODAY 3:24 p.m. EDT April 17, 2016

Bubble, in a sports context, typically refers to college basketball teams with middling résumés, or perhaps the sort of gum that comes with trading cards. Economist Andrew Zimbalist suggests college sports may be facing a bubble of a different sort, the kind that goes — pop!

Total revenue for the 50 public schools in the Power Five conferences rose by $304 million in 2015, but spending rose by $332 million from the year before, according to a USA TODAY Sports analysis of financial information that schools annually report to the NCAA. At the 178 public schools in Division I conferences outside the Power Five, revenue increased by $199 million, but spending rose by $218 million.Revenues in college sports are rising, and have been for decades, thanks largely to TV rights fees for football and men’s basketball. But expenses are rising even more: Athletics departments typically spend more money than they generate. By the NCAA’s reckoning, fewer than two dozen public schools can cover their annual operating expenses without money from university coffers, government sources or student fees.

(Louisville and Rutgers are removed from the computations because they moved to Power Five conferences during the time frame. The analysis is based on documents acquired in conjunction with the Sports Capital Journalism Program at Indiana University-Purdue University Indianapolis and the Grady Sports Media Program at theUniversity of Georgia.)

DATABASE: Schools' expense, revenue details

Zimbalist says this kind of spending is not sustainable, and he thinks litigation of some stripe — courts deciding players can be paid beyond their scholarships, for instance — could cause the bubble to burst. Among the other potential wildcards are an ongoing lawsuit pertaining to athlete compensation limits that seeks hundreds of millions in damages, concussion lawsuits, or a change in the National Labor Relations Board’s position on college athletes unionizing.

“There are big-time things leading it to pop,” says Zimbalist, a professor of economics at Smith College and author of Unpaid Professionals: Commercialization and Conflict in Big-Time College Sports. “It’s an unstable situation.”

Jeffrey Orleans, an attorney who specializes in higher education law with a focus on athletics governance and administration, says it’s a bit like the killer asteroid theory: Something could fall from the sky and blow up college sports’ economic model.

“There’s so much out there that it’s hard to feel comfortable,” he says. “On the other hand, it could be like the Cold War. For 50 years we had all kinds of ways the world could have blown to hell, and somehow we survived it.”

NCAA president Mark Emmert says the very fact that so few athletics programs are self-sufficient demonstrates their worth in terms of building community and providing opportunity.

“A very small number of the 1,100 (NCAA members) have a positive cash flow on college sports, so those schools are making a decision that having a successful athletic program is valuable to them despite the fact they have to subsidize it with institutional money,” Emmert says. “The same thing is true for a lot of academic programs. So every school has to sit down and say, 'What is this worth to us?’ ”

Kansas State president Kirk Schulz, chair of the NCAA board of governors, believes the bubble metaphor is overwrought.

“I’ve heard that now for the last 20 years and I don’t want to be skeptical and say nothing like that could happen that would ever change the direction of intercollegiate sports,” Schulz says. But he compares it to predictions of a bubble in higher education where prospective students would one day decide that degrees for ever-higher tuition just aren’t worth it anymore.

COLLEGE BASKETBALL: Coaches' salaries

“And guess what? We all have record numbers of people who want to come and pay these tuition rates and get these degrees from our institutions,” Schulz says. “So I’m a little skeptical about the gloom and doom of a bubble that’s going to burst and everything is going to go south.”

Even so, Schulz agrees that athletics departments cannot continue to outspend revenue indefinitely. He blames the building of more and more buildings.

“I worry that we put ourselves in this mode where whatever we have right now is not good enough,” he says. “We’ve always got to build something bigger and better with more school colors and more logos. And I don’t think it is sustainable.”

Will TV revenue continue to rise?

Schools’ figures for the 2014-15 fiscal year were affected by changes in the methodology they are supposed to follow in compiling certain revenues and expenses for the NCAA. Among the Power Five conferences, the revenue increase was driven in part by an influx of bowl money from the inaugural College Football Playoff and theSEC Network’s debut. The amounts generated by those enterprises are likely to keep rising, but not nearly as sharply as they did in 2015.

Meanwhile, the expanding expense side of the ledger will be under additional pressure from scholarships based on the cost of attendance, which didn’t begin hitting athletics department budgets until the beginning of fiscal 2016.

Still, A.J. Maestas thinks an elite portion of the Power Five schools will continue to do quite well because their revenues have room to rise even more. He is president and founder of Navigate, a firm that measures marketing investments in sports and entertainment.

“If you take a look at affinity, passion, ratings and licensing — all the metrics that would be highly correlated with revenue — and you picture a bar chart that compares the NBA to college basketball and the NFL to college football, the college versions would be below the pro versions, but not by nearly as much as people might think,” Maestas says. “But if you look at revenue, it is radically below."

Matt Balvanz, Navigate’s vice president of analytics, says the firm is projecting the NCAA’s top 25 athletics programs can expect revenue to grow by 116% in the next 10 years. By contrast, the firm predicts revenue growth of 63% in the NFL and NBA, 55% in the NHL and 48% in Major League Baseball.

But how will TV revenue keep going up in a world where cord-cutters are leaving cable TV and cord-shavers are opting out of high-priced sports channels where they can?

“No matter how tough things are at ESPN right now, nobody ever cuts their way to greatness,” Maestas says. “We see signs that consumers are willing to pay … for premium content, and college football is premium content.”

Neal Pilson is a former president of CBS Sports and founder and president of a consulting company specializing in sports television, media and marketing. He says skeptics “have been predicting a bubble in TV rights” since the mid-1980s — and he should know. He was one of them.

“The (then) president of CBS Sports, to whom you are speaking, predicted rights fees would go down because there just wasn’t enough business to support the rights fees we were paying,” Pilson says. “He was wrong, obviously. Shortly after, he and his network paid $1 billion for the NCAA tournament. And everything has progressed in one direction since then."

The progression took another leap forward last week, when CBS Sports and Turner paid $8.8 billion for an additional eight years of the tournament, through 2032. “It tells us,” Pilson says, “that the appetite and interest in major sports properties is a fixed part of our TV sports culture.”

Pilson points out many of the conference TV rights packages are wrapped up for years, with a significant exception. The Big Ten Conference’s deals, expiring in 2017 and under negotiation now, are “going to be a bellwether, a gut check,” he says. “If there’s a bubble, we’re going to see it in the negotiations coming up.”

Bearable for Bearcats

Navigate’s projections of high revenue growth are only for the top 25 programs. What about everybody else, particularly those schools outside the Power Five?

“It’s going to be a challenge, obviously, with costs increasing if you are not in that top tier,” Balvanz says. “It’s going to be really tough to find those trigger points to maximize revenue. It’s going to force them to be more and more creative.”

On a dollar basis, Cincinnati’s athletics program is one of the most heavily subsidized at a Division I public school, receiving nearly $23.2 million from the university in 2015. But it also is being creative in cutting costs. Omar Banks, the department’s chief financial officer, says revenues are expected to decline in future years for complicated reasons having to do with the breakup of the old Big East, UC’s tenure in the American Athletic Conference and how units of revenue from the NCAA men's basketball tournament are being distributed.

Cincinnati has instituted rules banning plane travel for non-conference games, saving “a couple hundred thousand dollars,” and capped per diems at $45, saving upwards of $75,000, he says. The department’s operating expenses rose from $25.2 million in 2005 to $59.5 million in 2013, not adjusting for inflation. Its expenses have decreased since ($55.4 million in 2014 and $51.7 million in 2015).

In 2015, USA TODAY Sports found, there were 21 public-school athletics departments that spent at least $100 million – more than double the number at that level in 2012.

“Those schools, when they amass their surpluses, they’re creating this new demand for high-priced coaches,” says Banks, president of the College Athletics Business Management Association. “They can probably weather the storm much better than we can.”

Cincinnati’s football team has made a bowl game nine times in the past 10 years, its men’s basketball team has played in the past six NCAA tournaments and its women’s soccer team won the 2015 AAC tournament. But Banks says that even with the cost cutting, if it doesn’t increase revenue from ticket sales and annual fundraising, “we could be looking at the percentage of subsidy that we receive becoming much higher.”

Orleans, a consultant to the reform-minded Knight Commission, says that’s precisely the problem: “I think the schools that are relying on all this external revenue are potentially in a fragile place. What I think is getting less attention is all the schools in Divisions II and III and some in Division I that don’t have access to all these huge revenue streams but whose costs are being driven up by the spending habits that trickle down from the top.”

Combined GDP of Serbia and Estonia

Tom McMillen, executive director of the Division 1A Athletic Directors’ Association, quibbles with the term bubble but says Zimbalist is right that court cases pose a potential threat, including two in which the plaintiffs are seeking an injunction that would lift the NCAA’s new, cost-of-attendance-based limits on athlete compensation.

“There are a lot of challenges,” McMillen says. “The millions of dollars that the conferences and the NCAA are spending defending the model are eating away at dollars that could be put to more productive use. (The athlete-compensation litigation) in particular is existential. It blows up the model of college sports. If that would ever happen, there’d be a race to Congress to get some relief.”

Some members of Congress do not look kindly on the NCAA. Rep. Charles Dent (R-Pa.) is among five members who introduced a bill that would establish a Presidential Commission on Intercollegiate Athletics, which would be required to review and analyze a variety of issues in college athletics, including its financing. The bill would also require schools to provide four-year scholarships, and offer baseline concussion testing for athletes in contact sports.

“The NCAA is simply incapable of reforming itself,” Dent says. “It’s important for us to have a serious conversation about how all these conferences are going to be able to survive in this new system” where the Power Five have more autonomy.

Over the past 11 years for which USA TODAY Sports has compiled their NCAA financial reports, public schools in Division I have spent $71.3 billion on athletics — roughly the combined GDP of Serbia and Estonia. Add in athletics spending at private schools, which don’t have to release their figures publicly, and that’s probably around $100 billion.

Zimbalist says athletics departments simply can’t keep spending so much. “Politically, it’s not sustainable,” he says. “Legally, it’s not sustainable. Economically, it’s not sustainable.”

Zimbalist says he is working to try to get the American Council on Education, a consortium of presidents, and the Association of Governing Boards of Universities andColleges, a consortium of boards of trustees, to support Dent’s bill. He thinks presidents and boards will need to work collectively if they are to forge real change.

“I think that everybody realizes now” that change is coming, he says. “College presidents know they can’t continue financially” the way things are. “Individual presidents can’t do anything. They’ve tried in the past, and all they’ve ended up doing is getting themselves fired.”

Schulz is leaving Kansas State this year for Washington State, where athletics directorBill Moos sent a letter to donors last month acknowledging a departmental budget deficit of more than $13 million for fiscal 2015. That was its second consecutive shortfall of more than $13 million, and came even with the department receiving $6.1 million in subsidies. Moos' letter said, “we continue to work extremely hard to maximize our existing revenue stream as well as identifying and securing innovative new ones.”

Schulz says he can’t say much about all that until he gets there and begins working on it. But he believes that college presidents are going to show more restraint on coaches’ salaries in coming years.

“I think many of us have reached the limit on what we can do on football salaries, for example,” he says. “Can a Kansas State pay a football coach $5 million a year? Probably could, but I’m not sure we’re willing to go that far. … Those are the types of constraint that are going to be there. But I see those as more of a gradual set of changes than this overnight, everybody is deciding to do something. I just don’t think that’s realistic.”

Contributing: Christopher Schnaars, Brent Schrotenboer

Navigate Research assists UC Berkeley in establishing most comprehensive banking partnership of its kind

Navigate Research - Friday, October 30, 2015

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.

UC Berkeley News: Agreement with Bank of the West to benefit student programs

Navigate Research - Friday, October 30, 2015


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.”

Bear pantry

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.

Peer-to-peer connections

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.

three people

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.”

Other resources shared with students at the financial literacy workshops include theStudent Advocate’s OfficeVolunteer Income Tax Assistance Program and UC Berkeley Food Pantry.

“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.”

Berkeley News