With US economic demand slumping, exports (up 15.5 per cent in March) are keeping the economy afloat. So great is the demand for US products, thanks to the weak dollar, shippers are complaining that there's a shortage of empty containers.
Exports of a product that doesn't have to be packed onto seagoing boxes are also rising. Naming rights – for universities, libraries, and sports teams – have always been a great revenue source for prestigious outfits. Status-hungry rich people and corporations will pay top dollar to associate their name with a prestigious place or organisation. In March, Stephen Schwarzman of the Blackstone Group donated $US100 million to the New York Public Library in exchange for having the midtown Manhattan landmark renamed for him. (The lion statues outside will retain their own names.)
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 a major export. The trend is most evident in sports. Last year, Barclays PLC, the big British bank, paid a reported $US400 million as part of a deal with the New Jersey Nets in which it acquired naming rights for the arena Frank Gehry is designing for the team in downtown Brooklyn.
Other interesting manifestations can be seen in the groves of academe, where 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), "US higher education still has a sterling international brand," said 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 such as 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 $US180 billion but a minuscule public profile in America. In late April, Vale announced it was establishing the Vale-Columbia Centre on Sustainable International Investment at Columbia University, "to promote learning, teaching, policy-oriented research and practical work within the foreign direct investment (FDI)." In exchange for making a FDI of $US1.5 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 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," said Scott Jaschik, a founder and editor of Inside Higher Ed. That is to say, the presidents are 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, à la Schwarzman, and more interested in associating themselves with programs or scholarships – as Vale did. In the past year, for example, the University of Chicago's Harris School of Public Policy Studies has 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 about the future of the field," said Peter Frumkin.
Some deep-pocketed foreigners are still investing in bricks and mortar and thus creating a demand for exports of academic expertise. Saudi Arabia is building a massive university de novo, the King Abdullah University of Science and Technology, which is slated to open in 2009. Last month, KAUST announced a $25 million, five-year deal with Cornell to create a joint centre on nanomaterials science and technology, with Cornell professors advising on curricular 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 and storied history of roguish characters – American and foreign – using university donations to burnish their reputations, from John D. Rockefeller on. And when universities hook up with foreign donors, they'd be well-advised to conduct extra due diligence. In the 1980s, American University thought it had tapped into a new vein of cash when it secured a $5 million pledge from Saudi businessman Adnan Khashoggi to finance construction of the Adnan Khashoggi Sports and Convocation Centre. But Khashoggi's name was removed from the building when he was implicated in the Iran-Contra scandal and failed to make good on his pledged donation.
This might make a good case study for Joe Haslag, an economist at the University of Missouri. He holds the Kenneth Lay chair in economics.