27 Sep Jon Cartu Decides Collapse of latest naming rights deal helps put focus on UN…
The pizza deal turned into a case of indigestion. Now, the dream that followed it with so much fanfare and promise has devolved into a something of a nightmare complete with dueling lawyers and accountants.
The bottom line is that after dancing with WisePies Pizza and Dreamstyle Remodeling over the past five years, the cash-strapped University of New Mexico Athletics Department is now 0-2 in its efforts to parlay naming rights for its prize facility – the legendary Pit – into a much-needed major revenue source.
Three years into what was supposed to be a 10-year, $10 million naming rights agreement with Dreamstyle for both the iconic basketball arena and the football stadium across the street, the deal is off. Workers removed all exterior signage on Sept. 18 – a move both sides agreed should happen.
In the context of the cash-strapped department’s current budget challenges (and for that matter UNM overall), it also adds weight to the question raised by UNM Regent Rob Schwartz, who asks whether it’s time to “reconsider the role of athletics at UNM.”
Although the signs have been taken down, Larry Chavez, owner and CEO of Dreamstyle, says he remains hopeful the parties can resolve their disagreement over what is owed on the naming rights deal that was announced in May 2017.
“We’re troubled by a lot of this,” Chavez said. “We’d still like to help the university, but we’d like to know where the money went and where any future money would go.” Both sides agree Dreamstyle has paid at least $1.5 million, but UNM believes the company owes an additional $1.9 million to get current. Chavez disagrees. He has offered $7 million to continue the deal – an offer UNM has rejected.
As for the earlier naming rights deal with WisePies Pizza, it’s fair to say it was controversial from the start. Critics complained the company got a big bang for the announcement while putting only $100,000 up front. Then there were stories about WisePies tax liens and other problems as that startup struggled to expand to a national footprint. Etc.
That chapter ended in 2017 when then-UNM Athletics Director Paul Krebs – who is facing criminal charges filed by the Attorney General’s Office over spending and recordkeeping for a golf trip to Scotland – said WisePies graciously stepped aside to allow UNM to enter a better deal with Dreamstyle.
It didn’t take long for disagreements to surface, stemming in part from the role played by Learfield Sports under a now-ended arrangement to market the UNM brand.
Enter the lawyers.
UNM General Counsel Loretta Martinez in a letter to Dreamstyle’s lawyers in July indicated the university was considering litigation and Chavez’s new $7 million offer “entirely ignores the $1.9 million Dreamstyle owes for the past three years.” Her letter said the Dreamstyle offer showed a “pattern of promising something in the future, but failing to come through for UNM’s student athletes.”
Those are the legal equivalent of “fightin’ words” – not exactly conciliatory “we can work it out” language in dealing with a major Albuquerque company and Lobo booster.
Chavez as far back as 2018 in a letter to UNM President Garnett Stokes said he wanted to be sure his money wasn’t being used to pay off old debts and there seemed to be discrepancies in where the money was showing up on the athletic department budget vs. where he had been told it was going.
If the parties can’t sort this out, presumably the courts will.
But all this couldn’t come at a worse time for cash-strapped UNM athletics as the COVID-19 pandemic has put football on hold until at least late October and Gov. Michelle Lujan Grisham has said no fans will be allowed. Prospects are dim that fans will be allowed for the basketball season, as well.
That translates into little or no revenue without much of a drop in expenses for things like coaches’ salaries and student-athlete expenses in a department that had a $3.6 million deficit last fiscal year. While COVID played a role in that, athletics has struggled for years to eliminate red ink.
The situation is sufficiently dire that Schwartz, a law professor, argues it’s time to question whether “we can have a program of the magnitude that we do now.”
He made that point on the losing side of a regents debate to ask the Legislature for an extra $1 million to help with COVID-related shortfalls in athletics. “I think we are sending a message by seeking $1 million for athletics and essentially nothing for the formal academic programs and salaries,” he said. The board’s student regent, Melissa Henry, voted with Schwartz.
Regents President Doug Brown responded with an op-ed in last Sunday’s Journal defending athletics and its importance to both the university and the community, arguing athletics plays a vital and constructive role for what he said was a “net expenditure of about one-tenth of 1% of the university’s total budget.”
Presumably that includes Health Sciences, but before we call athletics spending minimal it should be noted its current budget is about $32 million. In New Mexico, that’s real money, and the argument by Schwartz that UNM needs to put a higher relative priority on academics no doubt will resonate on main campus.
Schwartz, it should be noted, had nothing but praise for Athletics Director Eddie Nuñez and his management of the department. And business deals go south. It happens. But the demise of the Dreamstyle namings rights agreement makes it even tougher for UNM Athletics to break even in today’s challenging environment. And like it or not, it helps bring the academics vs. athletics debate back to the front burner.
Perhaps now is the time to seriously address that question. And for the governor and legislative leadership to weigh in.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.