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."

It was the school districts that approached Coca-Cola about exclusive soft drink contracts, not the other way around, Coca-Cola spokeswoman Debbie Moody says.

Moody says the exclusive agreement merely takes the previous contracts with individual schools and extends them to the entire district.

Moody and Coleman note that colleges have long had exclusive promotional agreements with soda companies.

"It's easy to understand. School districts are reaching out to local business," Moody says. "They have to find computer equipment or scholarships, or supplement education needs, and they contact us. My local bottlers have always had a strong relationship with these school districts ... We are partners with the schools now."

Critics wonder if the new wave of "partnerships" is actually an unholy alliance that will undermine the traditional independence enjoyed by education. Some of them describe the contracts as districts selling students out to the highest bidder, regardless of the health consequences.

State Representative Scott Hochberg of Houston, the chief number cruncher behind last session's school finance legislation, is troubled by the thought of principals and administrators forced into the role of fundraisers.

"Does this harm education?" Hochberg asks. "And if there is nothing wrong with it, then maybe we should do it everywhere. I can just see it: the Fuddrucker's State Capitol Building. What a concept."

George Scott of the Tax Research Association questions whether these multimillion-dollar contracts might not create long-term funding disparities among school districts as cola companies go after the more affluent districts and shun others.

Houston ISD is currently negotiating a cola contract, although the less affluent urban districts have been far less successful in securing contracts than have better-off suburban districts. Fort Worth ISD threw out a cola contract earlier in the year because it wasn't lucrative enough.

"School districts are talking up these contracts, but I think they're really overrated," says one administrator, who asked for anonymity. "My numbers showed the money, either way, is practically the same. The only difference is that you get to see it earlier in the exclusive contract."

The Center for Commercial-Free Public Education, based in Oakland, California, has been one of the most ardent critics of soft drink contracts. Executive director Mercedes Graham said the advertiser often ties more cola consumption to bigger financial incentives.

"Sure, these contracts are lucrative, but what price do we set on our kids?" Graham asks. "Do we sell them out for $100 million? For $10 million? Or do we sell them out for $1,000 apiece? Where do we plan to draw the line?"

Despite the hefty contract sums, some health authorities say students later may pay substantially for overdoing the pause that refreshes now.

In its Liquid Candy report, issued in late October, the nonprofit Center for Science in the Public Interest warns that too many kids are replacing the enriching benefits of milk with soft drinks.

An epidemic of osteoporosis could be looming, because youngsters are losing their needed calcium intake. Bone mass typically peaks by age 20. It is too late after that, especially for women, to "catch up" with calcium-rich products, the center said.

The national Soft Drink Association describes colas as containing 90 percent water and natural sugars, but CSPI disputes that sweet outlook. A typical canned nondiet soda contains as much as nine teaspoons of sugar and is loaded with calories. High-sugar diets can promote everything from heart disease to tooth decay. Add to that the woes of the heavy soda drinkers: nervousness, rapid heartbeat and irritability.

That irritability showed itself in another way in the Spring Branch district, even though its soda contract gained approval with little fanfare and virtually no opposition.

Within days of the agreement, Coca-Cola had stripped Memorial High School of non-Coke vending machines. It replaced cans with larger and more expensive bottles and boosted the price on remaining canned soft drinks.

Senior Raha Naddaf and her fellow staff members on the Anvil student newspaper labeled the forced monopoly "a sellout to big corporations" and a way for the school district to use the spending habits of high school students "as a profit-making mechanism." "We predicted they would raise the prices on soft drinks in our editorial, and they did," Naddaf says. "They talk about the money that will come out of this deal, but we're not going to see any of it. If it's our money, we should be seeing some benefits from it."

There was a brief petition drive to try to bring Pepsi and Dr Pepper back to campus. Others spoke of setting up a table at lunch to hand out free Dr Peppers.

That flurry of frustration has now been largely forgotten, although references still can be heard occasionally in Naddaf's government class. Students say there ought to be a separation between Coke and state.

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