On Jan. 24, Indiana University Health replaced Clarian Health as the name of the joint effort between Indiana University and Methodist Health Group Inc. for the management of Methodist Hospital, University Hospital and Riley Hospital for Children.
For 144 years, the state of Indiana has invested taxpayer dollars to create a pre-eminent academic institution, providing funds for the creation of schools of medicine, law, nursing, business, arts and humanities. On June 7, 1852, Indiana University was recognized as the “university of the state.” In 1867, the state of Indiana passed legislation that established the annual appropriation for the university.
The taxpayers of Indiana have provided funding to Indiana University every year since then. Consistent taxpayer support and effective leadership have created a pre-eminent institution with strong brand awareness and significant brand equity within Indiana and beyond. Academic excellence at Indiana University has been complemented by athletic success, notably in swimming, soccer, track and field, rugby and basketball. I learned the value of the Indiana University brand after graduating from IU and entering the job market for the first time.
However, what was noticeably absent from the announcement of the naming-rights deal of Indiana University Health was the consideration paid by Methodist Health Group Inc. to Indiana University for the use of the brand we the taxpayers nurtured and funded.
This naming-rights deal raises a host of important policy questions that should be addressed. Primary among those considerations: Who has the right to give away a state asset, as the IU name is, for what reasons and under what terms?
In a knowledge-based economy, intellectual property and the rights associated with it represent tremendous market value. In an economic recession, when our elected officials are reducing state funding for higher education, the public should rightly be concerned about how naming-rights deals are structured, how the value of those rights are determined, and the consideration offered in those deals.
Our taxpayer-funded football stadium is known as Lucas Oil Stadium. In that naming-rights deal, the business entity committed to a long-term contract with annual payments for the permission to affix its name to the stadium. Conseco entered into a similar contractual relationship at the Fieldhouse. Pepsi and Toyota did so as well at the State Fairgrounds. Astute businessmen and businesswomen can establish a fair market value for naming rights and, the state could establish a fair market value for a hospital system’s use of the IU name.
Clearly, the billions of dollars invested by Indiana taxpayers in Indiana University over the last 144 years created the brand equity Methodist Health Group coveted. A fair deal allowing for the use of the Indiana University name could help alleviate the impact of state budget cuts on the university. The budget cuts as proposed by the state will hurt the state long term. A naming-rights deal also could provide taxpayers with some return on their investment in a great university.
Indiana taxpayers have funded leading academic institutions whose value is represented in their name, their faculty, their academic programs, their sports programs and their graduates. These state assets should be cherished and protected. However, like all assets, they have a value that can be realized.
On the surface, this particular transaction seems to have allowed a valuable state asset to be undervalued. It is now incumbent on our policymakers to evaluate this transaction and consider legislation that creates a process for others to license state intangible assets.•
Williams is an Indianapolis-based entrepreneur and businessman, who is active in many community organizations.