A great article by Robert Klara in Adweek gets right to the heart of the matter: “The University of Phoenix has an accountability problem that predates the Super Bowl and will almost certainly outlast it: the issue of corporate responsibility, or investing school funds in teachers and classes, not advertising and naming rights.”
The school does not have a traditional campus, nor does it have any sports teams. It does, however, have a great deal more money for marketing than many colleges, because the University of Phoenix is a for-profit institution.
That fact may explain why, in 2006, the school was in a position to part with $155 million to put its name over the stadium door.
Of course, back then, that deal didn’t raise as many eyebrows as it’s likely to now. Thanks to a period of intense scrutiny that started with a Senate investigation of for-profit colleges that began in 2010, the for-profit educational sector has come under considerable fire in the last four years, both on Capitol Hill and in the media. An array of critics has alleged that schools like the University of Phoenix turn out comparatively few graduates while saddling enrollees with crushing student-loan debt. And that raises a prickly question: Will this high-profile naming-rights deal, one that will bring the University of Phoenix Stadium into millions of American living rooms, backfire as a piece of marketing?
“I’m sure they’re having anxious moments right now,” speculates Abu Noaman, CEO of academic marketing consultancy Elliance. “They’ve already gotten reprimanded by the Department of Education, saying you’re taking a disproportionately large share of federal aid, not graduating enough students, and [the graduates] aren’t finding the jobs you’re promising them. The question is: Why is [the University of Phoenix] squandering money on a sponsorship instead of serving students and graduating more of them?”
It’s a good question. Add your voice to the petition.
Football fans saw the school’s name on TV during the 2008 Super Bowl, but that was before the federal government started turning up the heat. In 2010, the U.S. Senate Committee on Health, Education, Labor & Pensions, chaired by Sen. Tom Harkin (D-Iowa), began an extensive investigation of the for-profit higher-education industry. Its findings, released in 2012, were particularly damning for the University of Phoenix. Harkin’s investigators found that the school derived 88.7 percent of its 2010 revenues from federal student-loan programs, even as it spent nearly three times as much on marketing compared with instruction, while its dropout rate was over 66 percent.
In October of last year, the Department of Education responded by cracking down on the for-profit education sector. “Career colleges must be a stepping stone to the middle class,” U.S. Secretary of Education Arne Duncan announced. “But too many hardworking students find themselves buried in debt with little to show for it.” The new DOE regulations stipulated that a student’s loan debt could not exceed 8 percent of his or her total earnings. Seven days later, the Association of Private Sector Colleges and Universities, a trade group representing over 1,400 for-profit colleges, sued to stop the regulation from taking effect.
This, then, is the fight that’s been playing out in public, and it comes amid a flurry of media stories on the debatable merits of an online education. (One CNN headline read: “For-profit college risk: huge debt, questionable degree.”) Noaman wondered whether the university would have gone ahead with the deal in 2006 had it known the bad publicity storm that was coming. And now that it’s here, this might not be a good time to see a nine-figure naming-rights deal splayed across a state-of-the-art sports complex.
Another good question come from Rex Whisman:
“When I saw that the University of Phoenix had been granted naming rights to the stadium, it was a bit confusing for me at the time, because we’re used to seeing corporate logos there…[and] why would a college that has no athletic department be paying $155 million to put their name on a stadium?”
These days especially, Whisman continued, “most people have a real or perceived concern about the deep pockets of for-profit institutions, thinking they’re only in it for the revenue.” The University of Phoenix is “almost boasting about its profits, saying they’ve got 155 million extra dollars lying around to invest in a stadium.” (Apollo Education Group reported a net income of nearly $205 million for fiscal year 2014.)
So what’s likely to happen when nearly half of American households tune in to the Big Game and see the University of Phoenix naming rights deal in high resolution? “There’s going to be some kind of backlash,” Elliance’s Noaman ventured, “but not necessarily from their customers. I think it’ll happen from society at large. It’ll be policymakers who come down hard on them.”
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