With Save Mart Center naming deal expiring, will Fresno State run out of Pepsi?

The Save Mart Center naming rights deal between the Fresno State Association and Pepsi, which is worth more than $1.5 million per year, expires this year. Will that impact debt service or student services that run through the Association, the non-profit auxiliary that owns the aging on-campus arena?

Fresno State president Saúl Jiménez-Sandoval, bullish as ever on the university’s standing in the San Joaquin Valley and the Bulldogs’ athletics brand, expressed confidence in its marketability.

“I think we’ll have a strong case,” Jiménez-Sandoval said. “We are the one institution in the region that is iconic. When you think of Fresno or the Central Valley for that matter.

“The amount of attention that we get, and the amount of influence that we exert in the region, both symbolically but also through our own alumni network, it is tremendous. We’re a good brand, an excellent brand with whom they want to associate.”

The naming rights contract at the Save Mart Center also includes pouring rights at campus dining facilities, markets and vending machines, which holds significant value. Pepsi holds exclusive rights to distribute its products, which include Pepsi, Mountain Dew, Dr. Pepper, Starry, Gatorade, Aquafina and Life Water. Pepsi also has a partnership with Starbucks to distribute its ready-to-drink canned coffees.

And while attendance at the Bulldogs’ basketball games is down — average attendance is just 3,445 through 10 home games and on pace for a record low — Fresno State is moving to a rebuilding Pac-12 Conference in July, and the arena still draws concerts every year and other non-athletics events.

An extension or new deals only benefits the Fresno State Association, which owns the Save Mart Center and runs campus staples including its bookstores, dining services, student housing and student recreation center.

Net surpluses from those auxiliary operations are directed by Association board policy to reserve accounts that are used to fund long-term capital lease obligations including the on-campus arena, as well as facility improvements and deferred maintenance.

The Association and Pepsi, under terms of the contract, agreed to enter into negotiations to extend the deal no later than 240 days before the end of the term, which would be this spring. If the parties are unable to agree to the terms under which the agreement will be continued 180 days prior to the end of the term, the Association may enter into negotiations with third parties.

The Association also is obligated to notify Pepsi if it were to receive a bona fide offer for beverage rights. Pepsi, within 30 days of such notice, may notify the Association that it is willing to enter into an extension of the agreement for the term in such notice.

The Fresno State Association granted Pepsi the exclusive right to designate the name of the arena and a naming party in a contract that was signed in 1999. Pepsi designated Save Mart Supermarkets as the naming party and Save Mart Center as the name of the arena.

Pepsi paid the Association $4 million in pre-opening funding — $250,000 at the signing of the memorandum of understanding, $1.5 million due within 30 days of the execution of the agreement, $1.25 million within 30 days of naming approval by the California State University board of trustees and $1 million within 30 days of groundbreaking on the arena.

It made annual payments most years of $1,565,217, the deal in total is worth $40 million over 23 years.

Pepsi officials could not be reached for comment.

The Association said in November it had paid off $4 million in principal and interest payments that it had previously deferred when under former vice president of administration and chief financial officer Deborah Adishian-Astone. The new payments are scheduled to be about $3.8 million in 2025-26, $4 million in 2026-27, $3 million in 2027-28, and $3 million in 2028-29, and reflect principal and interest only.

It still owes more than $26 million on the arena, which is not scheduled to be paid off until 2031.