Does the University of Florida Still Make Money Off Gatorade?
In September 1965, 10 freshmen players on the University of Florida's Gators football team agreed to let the school's kidney disease specialist, Robert Cade, assess their hydration levels during practices. He took urine samples. He interviewed athletes. He asked to take their rectal temperature during games.
The players agreed to all but the last request. In analyzing his results, Cade discovered that the wilting heat, coupled with a lack of hydration, resulted in subjects who were very low on electrolytes like sodium and potassium, sometimes losing six to nine pounds of water per practice session—with some footballers having anecdotes of 15 to 20 pounds lost during games. Cade felt that players suffered from low blood volume and low blood sugar. Many, in fact, were being hospitalized after overexerting themselves without drinking enough water, traditionally seen as a way of building toughness in players. Those who remained on field were surely not playing up to their potential.
Cade mixed water, sugar, salt, and lemon juice, then ordered them to drink the solution to keep their bodies in balance. By 1967, the Gators were all consuming "Gatorade," and incidences of heat stroke fell sharply. The Gators secured a 9-2 record in 1966; the team became renowned for their renewed energy during the second half, and ignited a transformation in sports science. Decades later and backed by a massive promotional machine, Gatorade has permeated both professional sports and amateur athletics alike, replenishing electrolytes lost during physical activity. Roughly 632 million cases were sold in 2013 alone.
With the sports drink having been born on the Gators's playing field and invented by a University of Florida employee, it's not hard to see why both Cade's estate (he died in 2007) and the school get a percentage of royalties from sales, an agreement that's still in place today. But if they had their way, the university would be getting all of it.
After Cade and his co-researchers finalized Gatorade’s formula, Cade approached the school's head of sponsored research to see if they wanted to come to an arrangement over the rights to the drink (Cade wanted $10,000) and determine if they wanted to try and sell it to a national distributor. According to Cade, University of Florida (UF) officials weren't interested, so he struck a deal with beverage maker Stokely Van-Camp in 1967.
Stokely's offer was for Cade and his cohorts—now known as the Gatorade Trust—to receive a $25,000 cash payment, a $5000 bonus, and a five-cent royalty on each gallon of Gatorade sold. When UF realized that they had been shortsighted in assessing the brand's mass market appeal—and that they were missing out on profits—they allegedly told Cade that the drink belonged to them.
"Go to hell," Cade responded, a statement that kicked off several years of litigation.
While Cade was a university employee, funds for his work actually came from the government—specifically, the Department of Health. He also managed to avoid signing an agreement solidifying his inventions as school property. For these reasons, and because both sides anticipated an endless and costly legal jiu-jitsu match in their futures, the two accepted a federal ruling in 1972. The Gatorade Trust would continue to receive their royalties, and the school would take 20 percent of the disbursement.
Initially, that meant one cent for every gallon of Gatorade sold, a fraction of the five cents owed to the Trust. In September 1973, following the first full year of the agreement, UF made $115,296 in royalties and earmarked the funds for kidney research and marine science.
That's a considerable sum, but it's nothing compared to what poured out in the decades to come. When Stokely Van-Camp was purchased by Quaker Oats in 1983, they kicked off a heavy promotional campaign that highlighted Gatorade in commercials and sponsored teams. Coaches began getting doused with jugs full of Gatorade following big victories. When PepsiCo bought Quaker for $13.4 billion in 2000, they leveraged their marketing muscle to further engender the brand.
Consequently, both the Gatorade Trust and UF have profited immensely. As of 2015, the Trust had earned well over $1 billion in royalties, with 20 percent, or about $281 million, going to UF. The five-cent per gallon formula has been replaced by a percentage: between 1.9 percent and 3.6 percent depending on how much Gatorade is sold annually, according to ESPN's Darren Rovell, with the University taking a fifth of that. The funds have been invested in the school's Genetics Institute, the Whitney Marine Laboratory in St. Augustine, and to help disperse seed money for grants.
The school naturally has an affinity for the stuff, but that can occasionally come into conflict with other marketing deals. In 2016, the University of Florida’s women's basketball team played in the NCAA Tournament, which was sponsored by Powerade, a competing sports drink made by Coca-Cola. As a compromise, the players dumped their Gatorade into Powerade bottles and cups. The beverage born on campus—one that's netted them nearly $300 million to date—always comes first.
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