Tuesday, October 18, 2011

UA throws secrecy over Coke deal

Posted By on Tue, Oct 18, 2011 at 10:31 AM

COKE ZERO: The University of Arkansas wont reveal what Coke pays for such things as this placement on UA athletics website.
  • COKE ZERO: The University of Arkansas won't reveal what Coke pays for such things as this placement on UA athletics website.

The University of Central Arkansas' attempt to wring some presidential home renovation money out of Aramark, its food service vendor, has earned deserved attention. Through it all, has been heard the occasional mutter about a desire for similar scrutiny of deals elsewhere, such as at the University of Arkansas.

What, for example, does Coca-Cola pay for a 10-year contract for exclusive beverage sale rights and sponsorship privileges at the University of Arkansas, including UA athletics? After some back and forth, it's clear that the University of Arkansas intends to keep a significant portion of that arrangement — specifically the money — mostly a secret.

It's an affront to public accountability, though it continues a UA pattern.

It's time to think about drinks. The current Coke contract ends next June. A committee is said to be drafting an RFP for a new beverage contract. It's not yet known if the RFP will be given to select parties or openly advertised. I've requested a copy of it when prepared.

Meanwhile, here's the 2002 contract. It has provided about $1 million a year for nine years to the UA in beverage agreement payments, according to a university spokesman, but this isn't the whole story.

Scroll down to Part IV, where sponsorships and specific financial promises are covered, and you'll find an ocean of black ink obscuring payment requirements. Here, the UA claims a "competitive advantage" exemption from the FOI. It's a perversion of the FOI built on an erroneous ruling by Judge Chris Piazza in an FOI case the Arkansas Times brought against the UA years ago. It was, as I've noted before, a decision which FOI expert Leon Holmes, then attorney for newspapers but now a federal judge, found wanting in an interview about our case.

The University uses this bogus exemption to protect — not itself — but Coca-Cola. In our earlier case, where we sought the terms had UA agreed to in accepting $300 million from the Walton family, the university protected the Waltons desire for secrecy of its requirements for its gift, no more or less. The UA argued the university's sale price would put it at a competitive disadvantage in seeking contributions. But, as Holmes noted then, that element of the law is intended to protect trade secrets and the like of businesses doing business with the government, not to protect the government from public disclosure of what it promises in return for money. The university suffers no disadvantage because it is neither a competitor nor bidder. Does the state grant secrecy to the amount spent by any other outside contractor besides those dealing with the UA Athletic Department?

By NOT disclosing the details of the University beverage rights contract, the university actually harms itself. Full disclosure of past contracts might well make bidding higher on future contracts. It's so secret the UA has even blacked out the number of preferred parking spaces Coke gets at athletic events and the amount paid to the Walton Business School for an annual case study. Nor are details available on minimum payments on such things as exclusive vending rights on campus.

Big as this beverage deal is, it's dwarfed by the no-bid, no-RFP manner in which the University of Athletic Department put its entire marketing operation in the hands of ISP Sports (since purchased by a larger media marketer). When Athletic Director Jeff Long today announces his ambitious sports facilities building plan — built on Coca-Cola and ISP and other revenues — some tough sports reporter might want to ask about the specific amounts of money received for selling rights to the state's publicly owned university and what was granted in return. Doesn't look like a good day for sunshine, however.

UPDATE: More information from the UA:

UA spokesman Steve Voorhies says the $1 million a year represents the sum of all payments to the UA under various portions of the contract with Coke — for on-campus sales, sports concessions, sports sponsorships and the like. And he further defends the competitive exemption claim:

Yes, those are the total payments. The competitive advantage exemption is being invoked by both Coca-Cola and the university. In short, Coke bids for other sponsorship agreements at other institutions, and the release of the various allocated values the company assigns for various rights under the agreement would be harmful to the company. Similarly, the university would experience competitive harm by the release of such information because bidders would be reluctant to provide sensitive information that would be accessible to other companies, and the university is competing against colleges and universities for the sponsorship support. We have provided you with the total money paid to the University under the agreement, and the university is not hiding any "secret payments."

The university, as I've said, would be advantaged by an open process on values assigned to Razorback sponsorships and the rest, not harmed, even if it were subject to the FOI exemption, which I still don't believe it is.

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