Inside Iowa State: Iowa State University

ONLINE VERSION
May 11, 2001

PRINTED VERSION
May 18, 2001

Campus rejects one-brand beverage concept

by Anne Krapfl
Iowa State will not be a one-pop place. A university committee studying the possibility of an exclusive beverage contract for campus (including key units such as athletics, campus vending, the Memorial Union and campus' largest volume user, the residence department) decided May 8 to reject two proposals for exclusive beverage service. Instead the group recommends that the university pursue service contracts for the core campus with more than a single company. Committee members represent all corners of campus, including students, faculty and staff.

Vice president for business and finance Warren Madden, who appointed the 19-member committee and has accepted its recommendation, said the additional income to Iowa State for signing an exclusive contract was not as high as originally anticipated. He said committee members also expressed concern about the marketing and campus advertising obligations to the university that are part of an exclusive arrangement.

"We have tested the marketplace with an RFP (request for proposal). We've gathered the data and it tells us that continuing with our current arrangements is the way to go," Madden said.

This spring, the committee reviewed two campus beverage service proposals submitted by The Dr. Pepper/Seven Up Bottling Group and Coca-Cola. Their proposals could have brought Iowa State $180,000 to $325,000, respectively, in unrestricted cash every year of a 10-year contract. The proposals also suggested additional, though not guaranteed, commission revenues to Iowa State, if soda and bottled water consumption exceeded pre-determined levels.

Madden noted that the proposed revenues were at the low end of what a consultant predicted for Iowa State a year ago. Staff at Convention Sports & Leisure, Minneapolis, said they believed an exclusive beverage contract would be worth $300,000 to $700,000 a year to the university.

Both proposals included "perks" for the bidding companies -- such things as premium seat tickets to all home Cyclone football, men's basketball and women's basketball games, season passes to Veenker golf course, and tickets to events at the Iowa State Center. The Coke proposal also asked for royalty-free use of all ISU logos, the center ad in programs at all home athletic contests and signs in all campus athletic venues (for example, scoreboard, team chair backs, scorer's table).

Madden said neither of the proposals was acceptable to the committee, primarily because the revenues were not high. The committee's decision then became whether to reject the proposals or begin to negotiate with Dr. Pepper group or Coca Cola representatives to get to a service contract that was acceptable to Iowa State. Committee chair and ISU purchasing manager Arlo Meyer said last fall that soliciting beverage proposals did not obligate the university to sign an exclusive contract.

"We knew companies like this throw everything but the kitchen sink into their proposals. That doesn't mean they expect all that," Madden said.

But, in the end, the committee opted to reject both proposals.

A third national player, Pepsi, did not submit a proposal to Iowa State. Madden said Pepsi representatives have expressed interest in being one of several beverage providers to Iowa State. The Dr. Pepper group's proposal this spring included the option of being one of several providers.

No thanks
One group of faculty earlier had gone on record opposing any exclusive beverage contract for Iowa State. At a joint meeting May 4, the Faculty Senate Resource Policies and Allocations Council and the Committee on University Planning and Budgeting passed a motion recommending that the university stop its efforts to land a campus beverage "monopoly" and develop a beverage program based on low prices and a wide variety of brands and types of drinks.

Lee Fletcher, a faculty appointee to the beverage committee and a member of the faculty senate council, wrote the motion. Fletcher said he opposes the commercialization of campus and the notion of making money by selling beverages at inflated prices to a "captive" campus audience. He said he also believes the companies' demands for things such as football skybox seats and sports camp attendance for children is unethical, even though they are typical provisions in many schools' beverage contracts.

What's next
Current campus beverage contracts expire between June 2002 and 2005 and will be honored, Madden said. In the next few months, purchasing officers will write guidelines for proposals from multiple providers for beverage service on the core campus. He noted that athletic department contracts for the football stadium and Hilton Coliseum don't expire until 2004 and 2005, respectively, and probably will continue to be handled separately.

"We hope to get some more competitive proposals in this process," Madden said.

A decision on multiple beverage providers needs to be made by next June. The beverage committee will assist with the review process, Madden said.