With domestic demand slumping, exports (up 15.5 percent in March from last year) are keeping the economy afloat. So great is the demand for U.S. products, thanks to the weak dollar, shippers complain there's a shortage of the empty containers that used to pile up near ports. Fortunately, exports of a product that doesn't have to be packed onto oceangoing boxes are also rising. Naming rights—for universities, libraries and sports teams—have always been a great source of revenues for prestigious outfits. Appeal to the vanity of status-hungry rich people or CEOs, and they'll pay top dollar to have their names associated with yours. Stephen Schwarzman of the Blackstone Group in March donated $100 million to the New York Public Library in exchange for having his (long) name inscribed in the midtown Manhattan landmark building (the lions will retain their own names). But as the geography of global wealth rapidly shifts—with rich American institutions becoming suddenly poorer and impressive pockets of wealth bulging around the globe—naming rights have quickly evolved into what might be considered a new category of export. The trend is most evident in sports. Last year, Barclays PLC, the big British bank, reportedly paid $400 million as part of a deal with the New Jersey Nets in which the bank acquired naming rights for the team's new arena in Brooklyn.
But more interesting manifestations can be seen in the bucolic groves of academe, in which industrialists, financiers and corporations each year swap billions in cash for prestige. While the American brand may be tarnished in foreign policy (Iraq), financial management (subprime) and even basketball (the 2004 Olympics), "U.S. higher education still has a sterling international brand," says Peter Frumkin, professor of public affairs at the University of Texas. "People love to have their names associated with leading research universities."
It was true of 19th-century steel magnates like Andrew Carnegie. And it's true of 21st-century steel magnates. The Brazilian company Vale, the world's second largest iron-ore miner, has a mammoth market capitalization of about $180 billion, but a minuscule public profile in America. In late April, Vale announced it was establishing the ValeColumbia Center on Sustainable International Investment at Columbia University "to promote learning, teaching, policy-oriented research and practical work within the foreign direct investment (FDI) area." In exchange for making an FDI of $1.5 million, Vale gets its name on an Ivy League institute and its executives get to rub shoulders with bigwigs like Jeffrey Sachs, head of Columbia's Earth Institute.
Just as companies seeking to boost sales must dispatch emissaries to foreign markets, university development has expanded far beyond reading the Forbes 400. "American university presidents today are all over the place in China, India, the Persian Gulf, doing the same things that presidents did when they went to Silicon Valley in the 1990s," says Scott Jaschik, a founder and editor of Inside Higher Ed. Which is to say buttering up alumni and shmoozing with rich locals whose children are shopping for college.
The purchasers of naming rights, especially those from emerging markets who are seeking a greater role on the global stage, are less interested in imprinting their names on buildings, á la Schwarzman, and more interested in associating themselves with programs, or scholarships—as Vale did. In the past year, the University of Chicago's Harris School of Public Policy Studies announced the creation of new fellowships or scholarships endowed by the Lebanese Mikati Foundation and the prime minister of Dubai. "Doing so positions you as a thought leader and as part of the global conversation," says Peter Frumkin, far more than planting your name on a cafeteria.
When they sell naming rights, some universities are also exporting expertise along with the brand. Saudi Arabia's government is building a massive university, the King Abdullah University of Science and Technology (KAUST), which is slated to open in 2009. Last month, KAUST announced a $25 million, five-year deal with Cornell to create a joint center on nanomaterials science and technology in Saudi Arabia, with Cornell professors advising on curriculum development. KAUST has struck similar partnerships with Stanford and Texas A&M.
Exporting naming rights can be problematic for universities, of course. There's a long history of roguish characters—American and foreign—using university donations to burnish their reputations, from John D. Rockefeller on down. And when universities hook up with foreign donors, they'd be well advised to conduct extra due diligence. In the 1980s, American University secured a $5 million pledge from Saudi businessman Adnan Khashoggi to finance construction of the Adnan Khashoggi Sports and Convocation Center. But when the arms dealer was implicated in the Iran-contra scandal and failed to make good on his commitment, the university had to seek new donors. The episode might make a good case study for economist Joe Haslag of the University of Missouri. He occupies the Kenneth L. Lay Chair in International Economics.