IOWA CITY, Iowa -- The University of Iowa athletics department has quietly given the company managing its sports marketing efforts a contract extension through 2026 and the right to sell the name of its basketball court in exchange for guaranteed payments totaling $114 million, contract documents show.
Missouri-based Learfield Communications Inc. beat out several other firms in a competitive bidding process in 2006 for a 10-year contract to exclusively broadcast Iowa athletic events on the radio, negotiate corporate sponsorship agreements and generate other advertising and marketing income. Iowa was guaranteed $55.1 million under that deal.
But in a move that escaped public scrutiny, Iowa agreed in November 2009 to extend the contract by 10 years while giving Learfield the ability to sell the naming rights to the court of Carver-Hawkeye Arena and the Outdoor Club at Kinnick Stadium, according to records released to The Associated Press. Mediacom, the cable television and Internet provider, earlier this year secured the naming rights to both spaces for terms that have not been released.
Long-term agreements and contract extensions are common in college sports marketing, but the length of Iowa's deal seems unusual even by those standards. Indiana, for instance, and Learfield announced this year they reached a 10-year extension through 2021. Wisconsin won approval in 2007 from its governing board for a deal with Learfield through 2019.
Sports marketing has also come under fresh scrutiny in Iowa.
Iowa and Iowa State were heavily criticized over the new Cy-Hawk football rivalry trophy that depicted a farm family gathered around a basket of corn. It was designed under a sponsorship agreement with the Iowa Corn Growers Association, and then scrapped after a backlash from fans.
Iowa last week renewed a partnership with the Iowa Lottery for a football-themed promotion involving a $2 scratch ticket despite criticism from some faculty members and NCAA guidelines discouraging gambling ads. And the Iowa Farm Bureau last month reached a wide-ranging, five-year marketing and licensing agreement with Iowa to promote the "America Needs Farmers" brand at a time when its president also leads Iowa's governing board.
Iowa has refused to release the terms of those agreements as well as the naming rights deal with Mediacom, arguing they are not subject to public records law because they are between sponsors and Learfield even though the school sets the guidelines for sponsorships.
The university's purchasing policy requires competitive bidding on service contracts worth more than $25,000 and contracts to have specific end dates. But the policy also allows the school to include provisions to extend contracts past the original term, and the 2006 deal with Learfield had a clause allowing an extension to be negotiated at any time before 2014.
Contracts do not need approval from the Iowa Board of Regents, which delegates purchasing authority to the universities.
Iowa associate athletics director Rick Klatt said the long-term extension with Learfield was necessary to sell to Mediacom the naming rights to help pay for the recently completed $47 million renovation of Carver-Hawkeye, which built a new practice gym and workout center and made other improvements. He said the guaranteed annual payments, which comprise about 7 percent of the department's $75 million budget, helped the department plan for the future free of general university funding.
Klatt conceded the business of college sports could change drastically by 2026 but said the department was confident in the performance of Learfield, which manages sports marketing for more than 50 colleges.
"We're looking at a partner we've worked with for over two decades, one of the leaders in the industry nationally," he said. "They haven't missed a payment yet, if you want to get crass about it."
The contract gives Learfield, which does business in Iowa City as Hawkeye Sports Properties, the exclusive right to broadcast Iowa athletics events on the radio, produce coaches' shows, negotiate sponsorships and sell advertising. Learfield gets revenue from ads on the department's website, on scoreboards and stadium signs, game programs and even on coaches' headsets. The Lottery contract, released last week, shows Learfield now sells postings on Iowa's Twitter and Facebook pages and ad space in e-mail blasts to fans.
In exchange, the athletics department is guaranteed annual payments that will rise from $5.8 million this year to $8 million in 2026. If Learfield generates revenue above certain target levels, the two sides will split anything above that amount.
Klatt said Iowa was comfortable renewing its partnership with the Lottery. He said it was important Iowa's two other public universities were participating and added the university does not agree with NCAA's anti-gambling position because the Lottery is a state agency.
Iowa and the Lottery ended their relationship in 2007 after the NCAA sent letters criticizing Iowa for partnering with gambling interests, which is discouraged but not banned. Iowa's contract extension with Learfield called for the school to receive $69,000 less from Learfield every year it did not have a sponsorship with the Lottery.
Klatt said he was comfortable the Farm Bureau did not receive any favorable treatment in the "America Needs Farmers" agreement in which the university will promote farmers everywhere from inside the stadium to its Web site and license ANF-themed apparel. He said president Craig Lang, who appeared last month at a news conference to announce the agreement, was not involved in negotiations. Lang became president of the Iowa Board of Regents, which governs Iowa, in July and has said he abstained from the deal.
Klatt said the multi-pronged Farm Bureau agreement represented the increasing complexity of corporate sponsorships, which now go far beyond a simple 30-second radio ad.
"They want a relationship with the Hawkeyes that is alive on the radio, that is alive on game day and that is alive someplace else," he said. "It's the multiple layers of marketing that they want."