Soda Contracts Could Rings Up Additional Revenue for Schools

Soda Contracts Could Rings Up Additional Revenue for Schools

No Market for Planetariums

The revenue streams the Fairfax County School Board had hoped could provide the school system with much needed funds have slowed to a trickle.

Based on the findings of DD Marketing, an independent consultant hired in June to explore additional revenue options, school-system staff concluded that the only viable choice is an exclusive beverage contract. In all, the firm was asked to explore three areas: beverage contracts, naming rights for the nine planetariums and corporate-sponsorship signage at the schools.

"In terms of signage, with sufficient effort over a number of years, we could see some revenue. As a result, we recommend not to pursue this option. As for the planetaria, there is no value to those either. DD Marketing said we'd only get grants. It seems like there is nothing to pursue," said Dean Tistadt, assistant superintendent of the Department of General Services.

As for the beverage contract, the marketing firm made three recommendations: no change to the current policy; to pursue an exclusive "rights-fee" contract that would allow one company to distribute its soda in the county schools; or third, to pursue an exclusive "rights-fee," "product-pricing," "commissions" contract which would give the company the exclusive right to sell its soda products, but would split the sales with the school system.

"Our recommendation is to either stay the same or to pursue an exclusive contract on our own," Tistadt said. "To have staff go to Coke or Pepsi and ask how big a check they want to write to the School Board to be the only one."

The school system prohibits vending-machine sales of beverages or snacks before or during the school day. The school system provides its own bottled water, so any beverage contract would be for soda only.

DD MARKETING'S REPORT said the school-system's snack and beverage profits from machines located outside of school cafeterias, as the policy current stands, raises more than $933,000 and the net profit from beverages alone is more than $609,000. In addition, the money generated by vending machines located inside those cafeterias provided a net profit of $111,000 last year. The money generated, with the exception of the machines inside cafeterias which Food and Nutrition Services keeps, is split equally between the school-system's food services and a system-wide general fund.

If the school system was to pursue an exclusive beverage contract with food services remaining as the distributor and schools staff providing the machine maintenance, net profits could increase to $1.6 million annually, a gain of $900,000 the report concludes. The revenue would continue to be split. Booster and other school-related clubs would become part of the contract. Currently, the clubs are free to make their own arrangements for obtaining beverages.

The other option has the school system hiring a consultant to seek out a contract that gives a company exclusive rights and responsibility for stocking and maintaining the machines. In addition, the school system would receive a commission on the sale of the soda with the consultant overseeing the management and audit of the contract. The firm estimated net profits would increase to $2.5 million to $3 million annually.

"If we go with option three, the perception would be we benefit more if the kids drink more," Tistadt said. "Also option three assumes we could save money on labor costs. Based on pervious contracts where Coke didn't have the staff to maintain our machines properly, I don't believe it. I think the numbers are inflated."

In addition, Tistadt said the rights-fee, commission contract would result in 13 employees in vendor services losing their jobs and a reduction in hours for 81 school-based employees who are responsible for the machines' maintenance in addition to their other duties.

WHILE THE STAFF disregarded the possibility of corporate signage, the DD report did not. It concluded the school system could, either through a hired consultant or a joint relationship between schools' student activities and athletics directors and the Office of Business/Industry Relations, solicit sponsorship from large corporations. The boosters, it said, could seek out small corporate sponsorships. The moneys raised could be divided evenly among the high schools, with the consultant, should one be hired, generally receiving up to 25 percent of the commissions. The report estimates revenue could start at $300,000 and grow to $500,000 within five years.

It was dismissed as a possibility because of the amount of work that would be required by staff if done in-house, because of the negative community reaction expected and because the revenue is relatively minor. In addition, staff concluded a centralized adverting effort could impact individual schools' efforts to secure sponsorship.

"We also don't want to step on any toes," said Alan Leis, deputy superintendent, referring to the deals athletic directors and booster clubs arrange on their own.

The report was even less optimistic about generating revenue for the planetariums. It concluded sponsorship would not be desirable from a corporate point-of-view because of the limited exposure and small venues. The school-system could seek sponsorship from corporations and donors from a philanthropic standpoint, it said.

Staff agreed with the report, but not all the School Board members were willing to throw in the towel on the planetariums just yet.

"Are there any plans with the school system to solicit donations, grants, to create a Friends of?" said School Board member Christian Braunlich (Lee).

Leis said the general feeling among staff was not to devote a lot of time to something that might not be worth while. The planetarium directors, however, are free to pursue these avenues on their own.