‘Pouring Rights’: Pay One Way or Another

Tom Philpott reported for Mother Jones on how, since the early 1990s, public schools have been selling “pouring rights” to corporations, with Pepsi and Coke being the biggest players. In this arrangement, the company in question buys the exclusive right to sell beverages in the schools’ vending machines, snack bars, and stores (and, of course, at sporting events). He quoted a typical pouring-rights agreement, made with the school district in Rockford, Ill. — a 10-year contract for which Coca-Cola initially ponied up $4 million, and promised an additional $350,000 per year.

Along with actual product sales, such contracts extend the right to advertise profusely, which adds another level to the distress felt by critics of these arrangements. But the income makes possible the purchase of gym uniforms, field trips, and such classroom aids as the SMART Board, a combination of whiteboard and computer.

What’s not to like?

But wait. What happens if, for instance, all sugary drinks are banned from schools by federal law? Are the 10-year contracts grandfathered in, so that some school districts legally keep soda available while in others it is forbidden? Is that why a long-term agreement was engineered in the first place, to sidestep such a contingency? Or would the school, if halfway through such a contract, have to stop allowing the sale of sugar-sweetened beverages and refund some or all of the payment?

Last time, Childhood Obesity News looked at the situation in Seattle, where for years transportation, school publications, social events, and athletic uniforms had been paid for by the profits from vending machines. In 2004, the city’s schools adopted food health standards that were even stricter than any state or federal law at the time. This had a catastrophic effect on the budget of the Associated Student Body organizations. The school board promised to make up the difference, but it didn’t have any money either. Seattle Times education reporter Brian M. Rosenthal wrote:

Board members apologized to the students for failing to live up to their promise of refunding lost revenue. They said their tight budget makes it impossible to repay the money now, but they pledged to explore revising the ban.

How large a difference did the Seattle ban make? Back in 2001, the schools took in $214,000 from vending-machine sales. In 2011, after several years of strict rules, the vending-machine profit for the entire city’s school system had shrunk to $17,000. That should be good news! The difference represents $197,000 worth of junk food that wasn’t eaten. We should rejoice over all the obesity that was prevented by the city’s introduction of strict rules.

But as Rosenthal pointed out, just because it wasn’t available in the vending machines does not mean all that junk food remained uneaten. Many schools don’t require students to stay on campus all day, and they can easily walk to nearby convenience stores and gas stations where the full array of junk food is available. Tons of unhealthful food and drink are still consumed, and a lot of money is still being spent, but the income goes to those businesses rather than to the student organizations.

Is there a net gain in obesity avoidance? What about all the kids who stayed off sports teams because they couldn’t afford the gear? Didn’t they get fatter? What about the kids who didn’t have enrichment classes and after-school activities to provide them with intellectual stimulation and group fun? Probably a lot of them spent their time playing video games, feeding their faces, and getting fat. That’s the curse of unintended consequences.

Your responses and feedback are welcome!

Source: “80 Percent of Public Schools Have Contracts With Coke or Pepsi,” MotherJones.com, 08/15/12
Source: “School board may ease ban on junk food,” SeattleTimes.com, 12/11/11
Image by Mike Licht