Carbonated Cash

Drink up, kids. Keep those soda dollars coming.

Late in the fall, the Center for Science in the Public Interest released a "Liquid Candy" study warning that soaring soft drink consumption by kids constitutes a very real long-term health threat.

Forty years ago, kids drank twice as much milk as cola. Now the reverse is true. Researchers linked the results of soda guzzling -- gulping down the equivalent of nine teaspoons of sugar in some brands -- to higher obesity rates in children. They predicted a host of eventual health problems, including widespread bone-ravaging osteoporosis and the potential for kidney stones and heart conditions.

Larger soda containers and aggressive marketing by cola makers are likely to keep the sizzle-and-pop sales soaring ever higher, the center said.

Even before that report was unveiled in Washington, D.C., Houston-area school districts were keenly aware of cola consumption by students. They had been engaged in sometimes intense discussions with cola manufacturers about that very subject. But nutrition wasn't part of the negotiations. Net profits were.

Administrators welcomed the arrival of the great school cola wars to this region. Giants Coca-Cola and PepsiCo, as well as smaller rivals, sought exclusive rights to peddle their brands of pop to pupils. Houston ISD has yet to make an agreement, but this year seven other area school districts signed soda makers to ten-year contracts for a collective $58.6 million in anticipated revenues.

Values of those contracts could climb significantly higher. Under the terms, the more colas that districts can get students to guzzle on campus, the greater the financial gains through commissions will be.

Big contracts have brought the issue of sodas in schools full circle. As late as the 1960s, many districts had complete bans against colas on campus, except for, perhaps, in teachers lounges. By the 1970s, limited vending machine operations had made their way into schools. A Spring Branch student of the early '70s recalls an effort by the district to remove the machines. Student protests brought the machines back to stay.

Now the big cola contracts are Economics 101 lessons about supply and demand: Districts have a captive audience of thousands and a need for cash; soft drink makers have cash and a need for future consumers.

Recent contracts show Coke is the real thing with the Spring Branch district ($10.3 million) and the Katy district ($7.8 million). The Pepsi generation found itself in Conroe ($10 million), Aldine ($12.8 million), Klein ($10.7 million) and Spring ($5.6 million), and Dr Pepper is in with Galena Park ($1.4 million).

Spring Branch's pact with Coca-Cola is typical of the deals between districts and cola makers. It calls for Coke to pay the district $10.3 million over the next ten years. That total includes an up-front "bonus" of $2.5 million upon signing.

For the district to get its full commission cut on vending sales, it has to push at least 1.91 million Coke-brand drinks to kids -- 79,865 cases -- in each year of the contract. That averages 2.6 cases consumed yearly for each of the district's 29,744 students, from first-grader to senior.

Of course, consumption rates vary widely among students. At current prices, the average beverage bill per student would range from $35.40 to $48.30.

In the contract, exclusive means just that. Whether frozen or thawed, hot or cold, or juice or sugar-based, nothing is to be sold unless it is in the Coke family. The few exceptions are coffee and tea, milk, fresh-squeezed juice or "water drawn from the public water supply."

Accessibility is equally important. Spring Branch pledged to make all carbonated and noncarbonated Coke products available at least six hours a day for middle and high school students and to allow Coke to maintain 185 vending machines. For concessionaire sales, Coke-approved cups must be used.

The terms of the contract leave Coke competitors flat. They permit no side deals for sponsorships, endorsements or other "ambush marketing." Not even the ads, signs or emblems of competitors are permitted "anywhere on the campuses, including locker rooms, sidelines and players' benches."

In return for banishing other brands from the schools, the district says the payments from Coke would average $29 per student per year, assuming the kids gulp down that baseline 1.91 million in drinks.

Fees to the district include $14,000 for four stadium scoreboards, $5,000 to become a sponsor at Memorial High School and $1,000 for student scholarships.

But the $2.5 million signing "bonus" -- which is actually only an advance on fees to be paid later in the contract -- is the biggest lure. Administrators say it alone is worth 3.5 cents on the district's tax rate of $1.82 per $100 in valuation. The district earmarked the funds for a fine arts center and technology improvements.

That kind of bonanza makes district officials proud of the pact. Brandon Coleman, Spring Branch board president, says more commercial ventures may be ahead.

"If Michael Dell came to me today and said, 'I'll put Dell computers in all your computer labs, as long as you name them all Dell Computer Labs,' you bet I would," Coleman says. "I'll do anything that furthers the goals of the district and of the patrons of this district, and if we can do that without infringing on people's rights or the educational process, we'll do that."

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