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Tuesday, September 14, 2004
ASUC and Ninja Card Finalize Deal
Last night representatives from ASUC Office of the President and from HFG Consulting's Ninja Card reached an agreement over distribution of the new ASUC Ninja Card. The deal, agreed upon in principal but not yet formally signed, would create a profit-sharing model between the ASUC and Ninja Card, which would continue to be controlled by HFG Consulting.
The ASUC will recieve some amount of revenue from each card (currently priced at $10) that is sold, depending on the total number of cards sold on campus. If <5,000 cards are sold, the ASUC will receive 75 cents per card; if 8,000 cards are sold ASUC receives $1.50/card; and at 8,000 cards it becomes $2.00/card. For each card sold by the ASUC directly, there will be an additional $3.00/card for the ASUC.
The new cards should be ready for distribution within a week and half, according to sources involved with the project. The same officials expect sales of around 10,000 ASUC Ninja Cards in the upcoming academic year, with the potential to reap a significant sum of money for the ASUC Treasury.
The deal basically ends up looking more like a licensing agreement than a partnership. It is interesting how much leverage the ASUC has exerted on this cause, especially since their version of the discount card, the ASUC Pirate Card, was months behind schedule due to late arrival of President Leybovich and his staff. The ASUC Pirate Card also had the potential for much more profitability, with the ASUC receiving an estimated 70% of all revenue from the project.
HFG Consulting, run by former ASUC Senator Noah Kagan, comes away with major victory here. They basically eliminated any substantial competition for, at most, 20% of their revenue. The Pirate Card, even entering the game this late, would have had the potential to take much more than that in campus market share.
This deal also raises a number of questions:
What is going to happen with the makers of Pirate Card? Word on the street was that the ASUC had reached an early agreement with the cardmakers to take over operations and give the founders a slice of the profits. However, partnering with the Ninja Card will inevitably invalidate that agreement. How committed (e.g. by contract?) was the ASUC to the Pirate Card? Also, was Pirate Card allowed to make a counter-offer, or was this a possibly biased bid situation?
What will happen to the Ned's deal? Ned's Bookstore is currently offering a deal on the Ninja card, and the ASUC surely would not agree to partner with a card offering a deal at a non-ASUC bookstore. What does the contract look like that Ninja has with Ned's, and can it be abrogated without a problem? Will the ASUC Bookstore take its place on the card?
What other changes will be made to the card? Before the deal, developers of the new ASUC card had made deals to include other businesses on the card. Will these businesses' contracts be valid still, and how will that affect both the card and Cal/Berkeley Business relations?
If there are changes to the card, how will old cards be exchanged for new ones? With at least 2,000 Ninja Cards sold already, this could be a logisitical nightmare.
This deal, at the very least, seems to be a Pyrrhic Victory for the ASUC. Stay tuned for more details as they emerge.
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