The University Bookstore will generate an estimated $800,000 in commission for OU this year, said Burr Millsap, associate vice-president for administrative affairs.
According to the contract with Follett Higher Education Group, Inc., the university makes a commission from the revenue generated by bookstore sales. The contract stipulates a graduated commission rate ranging from 9.1 percent of sales up to $10 million to 10.1 percent of sales up to $15 million. The university is guaranteed $625,000 the first three years of the contract, and up to $150,000 more the following three years. The current contract with Follett began in April.
The funds do not go toward the general education fund for the university. Instead, Chris Kuwitzky, OU's chief financial officer, said the commission pays the debt service for building the space the bookstore occupies.
Other universities, such as Oklahoma State, run their own bookstores. At OSU, the students can charge their books to their bursar's account, said Jeff Nett, owner of Hall of Fame Booktrader in Stillwater. He said this gives the university an advantage and forces the off-campus stores to lower their prices.
Kuwitzky said OU ran its own bookstore until around 1990. Because the bookstore was not running profitably this way, he said the operation was contracted out, first to Barnes and Noble and then to Follett in 1996. Follett's contract was renewed again in April after open bidding.
"Among the responses received as the result of a formal competitive process,Follett's proposal was determined to represent [the] best value to the university," Millsap said. He also said the university decided to contract out the bookstore "to provide students with a state-of-the-art bookstore, to provide more buy-back markets, and to take advantage of a supplier market that has become effective and efficient in providing students the related products and services."
The contract also stipulates, "Follett will charge industry standard, competitive and fair prices." Specifically, the University Bookstore cannot charge more than the publisher's list price or a 23 percent gross margin for books. Used books cannot be sold for more than 75 percent of the new textbook selling prices. The bookstore must purchase a student's used books at the end of the semester that have not been adopted for the next semester at wholesale prices.
Gameday sales also generate a 22 percent commission for the athletic department. No one from the athletic department was available to comment on the estimated revenue this year from this commission.
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