The Green Machine
June Jones builds a new team for the New Economy.
In a darkened hallway at the Plaza Club in downtown Honolulu, June Jones and Jim Donovan are discussing whether they should have the restaurant and banquet facility’s waitstaff replace the cans of Coca-Cola at their media gathering with Pepsi. It’s a lighthearted and slightly odd conversation for head coach and assistant athletic director to have but it is probably one that the two will have more often from now on. That is because just minutes earlier the two had learned from their new head of sports marketing, superagent Leigh Steinberg, that the Pepsi-Cola Company had agreed to a three-year deal with the University of Hawaii in which the soft drink maker would sponsor all the school’s sports teams, except football. It is a deal worth $960,000 in cash and products, with the university receiving $160,000 in 2000 and $100,000 in 2001 and 2002.
With those kinds of numbers, it is surprising that the two weren’t talking about champagne instead of soft drinks.
Pepsi or Coke, McDonald’s or Burger King, Reebok or Nike. Welcome to the new world of University of Hawaii athletics.
June 22nd, the day of the big announcement, was also the first official day on the job as UH’s sports marketing head for Steinberg. And what a day it was. Steinberg also announced that six weeks before he and his staff at the Newport
Beach-based Steinberg Moorad and Dunn Sports Management began selling corporate sponsorships for all eight of UH’s home football games. The sponsorships range in cost from $75,000 to $130,000. By June 22nd, Steinberg had sold four sponsorships worth a total of $355,000. The firm would collect three more a little more than three weeks later, pushing the figure to $580,000, over 10 times the amount of money the university had received through corporate sponsorships the year before.
In addition, earlier in June, Steinberg had secured a $300,000 deal with Reebok to provide apparel, shoes and cash. The agreement, one of the basic building blocks for a sports client, was seven times more valuable than the previous one the university had made with Nike.
“We live in an era of branding and, with 160 television stations demanding programming, content provision,” says Steinberg. “Hawaii and the athletic department can step in and lead the way. That is exciting.”
Things are happening fast in Manoa Valley, but this phenomenon is no overnight sensation. The remaking and remarketing of the University of Hawaii predated the football team’s WAC championship season, its Oahu Bowl victory, even its first win of the season.
In what has become part of island sports legend, June Jones, then interim but soon-to-be-named head coach of the San Diego Chargers, met with UH officials and unexpectedly agreed to take on the job of a team that was on a record losing streak. The decision shocked the NFL, Hawaii fans and maybe even the coach himself.
“That night, Leigh and I talked for an hour, maybe an hour and a half, about different things I needed to do in Hawaii and all the possibilities,” says Jones. “But I had so many things to think about, so many things to do.”
But it didn’t take long for Jones to see the untapped potential that was Hawaii—its strategic location in the middle of the Pacific and the steady stream of millions of potential UH fans, also known as tourists. After only a month on the job, Steinberg’s message took hold on the coach and the two met again, this time at the Ihilani Hotel, where Steinberg was staying during Pro Bowl Week. There the pair began mapping out a vision for the university’s athletic program.
“I knew that if we got some excitement and did it right we would have a tremendous potential for generating revenues,” says Jones.
The concept of bringing in a private company to market a collegiate athletic program isn’t as revolutionary as it seems, even in Hawaii’s own conference. According to UH Athletic Director Hugh Yoshida, WAC members San Jose State and SMU have a similar agreement with a firm called Host Communications. Soon to be conference defector TCU works with ESPN in a similar arrangement. But in those cases, the agreements augment the efforts of the schools’ in-house marketing departments. In UH’s case, Steinberg and company replaced the school’s marketing department, which was “rightsized” last year.
“I think that in the last decade outsourcing marketing efforts has really caught on,” says Yoshida. “Athletic programs on the national level have been looking for creative ways to generate more income to stay competitive.”
|“We live in an era of branding and content provision. Hawaii and the athletic department can step in and lead the way.” – Leigh Steinberg|
“The marketing agreement is a bit unique with Leigh, but obviously well thought out,” adds Allen Appleby, president and CEO of General Sports and Entertainment, a national sports marketing firm based in Detroit, Mich. “The school has really benefited from the relationships that Leigh and his group have developed over the years.”
According to Appleby, who was an executive with the NBA’s Detroit Pistons before starting his own firm, UH could raise more than $2 million per year in marketing sponsorships, and he believes other schools will follow UH’s lead after they discover the value of their “brand.” He also believes that college markets could provide stiff competition to their pro compatriots.
“In my opinion, colleges have a distinct advantage in value over their pro sports counterparts,” Appleby. “I mean no one ever went to the UniversityofPistonsorTimberwolves.”
Yoshida expects to raise approximately $1.2 million in sponsorships this fiscal year, more than double the business the school did last year. And eventually he hopes to increase the athletic department’s budget to somewhere near $20 million, from a little more than $16 million today. Those numbers would put the school at the top of the heap in the WAC. But we aren’t talking big time, not yet anyway. To put things into perspective, the University of Texas’ athletic department annual budget is a Texas-sized $43 million.
However, what is really eye opening about the recent developments on campus isn’t the gross revenues or even the traumatic logo change (see sidebar on Page 20). What is revolutionary is the new thinking that is emanating from Lower Campus.
Jones and Steinberg, their vocabulary distinctively New Economy, are looking far beyond the sidelines, breaking down old assumptions and business models. Steinberg believes that Hawaii, with its unique name and image recognition, could soon leave the WAC and go independent a la Notre Dame, playing games up and down the West Coast as well as in Japan, Korea, Australia, New Zealand and beyond. In conventional thinking, that move would mean athletic and financial suicide. But in the new millennium and the New Economy, where consumerism knows no boundaries, it may soon be a necessity.
“We need to be creative and clever in identifying ways we can go. There is really no limit to where we can take this,” insists Steinberg. “Tokyo, Taipei, Seoul and Sydney. What if we start playing games there? Why not hold the Rainbow Classic abroad and why not promote the Islands while we are there?”
“When I first came back to Hawaii, I was amazed that we didn’t have UH apparel in Waikiki. We should be there,” adds Jones. “Many Japanese visitors and visitors from all over the world love to watch American football. If we do a good job we could become their team and the opportunity of television and merchandising revenues is exciting.”
To kickstart interest in Japan, Jones plans on recruiting a player from Japan next year and signing up at least one for every succeeding year. Because of the improved level of play in Japan, Jones feels that he will find a skilled player who could make the team.
If the flap over the new logo is any indication, Jones and Co. will have their work cut out for them. Changing the team and its uniforms was one thing. Changing the way people think of collegiate sports is something entirely different. But Jones is undeterred.
“You will never make everyone happy but you can’t stop what you are doing,” says Jones. “You have to have a vision of where you want to be. Without that you stay status quo. Is this the wave of the future? I don’t know. But this is our wave.”