Is the University of Florida still profiting from Gatorade?

In September 1965, ten freshman members of the University of Florida's Gators football team volunteered to let the school's kidney disease expert, Robert Cade, evaluate their hydration levels during practices. He took urine samples, interviewed the players, and even requested to measure their rectal temperatures during games.

The players agreed to all of Cade's requests except the last. Upon reviewing his findings, Cade concluded that the intense heat, combined with insufficient hydration, led to players with dangerously low electrolyte levels like sodium and potassium, often losing between six to nine pounds of water per practice session, and in some cases, even 15 to 20 pounds during games. Cade believed that players were suffering from low blood volume and blood sugar levels. Many were hospitalized after pushing themselves too hard without consuming enough water, which had traditionally been thought of as a way to toughen them up. Those who stayed on the field were undoubtedly not performing at their best.

Cade combined water, sugar, salt, and lemon juice into a drink, instructing the players to consume it to maintain electrolyte balance. By 1967, the Gators were all drinking 'Gatorade,' and incidents of heat stroke dramatically decreased. In 1966, the Gators finished with a 9-2 record; the team became famous for their newfound stamina in the second half, which sparked a revolution in sports science. Decades later, with major marketing backing, Gatorade became synonymous with both professional and amateur sports, helping athletes replenish electrolytes lost during intense physical activity. In 2013, an estimated 632 million cases were sold.

Given that the sports drink was created on the Gators' playing field and invented by a University of Florida staff member, it's clear why both Cade's estate (he passed away in 2007) and the university continue to receive a portion of royalties from its sales—an agreement that still stands today. However, if it were up to them, the university would be claiming all of the profits.

Once Cade and his team finalized the Gatorade formula, he approached the head of sponsored research at the university to discuss the possibility of negotiating the drink's rights (Cade was asking for $10,000) and exploring the option of selling it to a national distributor. According to Cade, UF officials weren't interested, leading him to strike a deal with beverage company Stokely Van-Camp in 1967.

Stokely's offer to Cade and his colleagues—who would later be known as the Gatorade Trust—was a $25,000 cash payment, a $5,000 bonus, and a five-cent royalty for each gallon of Gatorade sold. When the University of Florida realized they had underestimated the brand's potential and were losing out on profits, they allegedly told Cade that the rights to the drink were theirs.

"Go to hell," Cade responded, a remark that sparked years of legal battles.

Although Cade was employed by the university, the funding for his research actually came from the government—specifically, the Department of Health. He also cleverly avoided signing an agreement that would have made his inventions the property of the school. As a result, and given that both parties expected an ongoing and expensive legal battle, they reached a federal decision in 1972. The Gatorade Trust would keep receiving its royalties, while the university would take 20 percent of the proceeds.

At first, that meant the university received one cent for each gallon of Gatorade sold, a small fraction of the five-cent royalty owed to the Trust. In September 1973, after the first year of the agreement, UF earned $115,296 in royalties, which they allocated toward kidney research and marine science.

That was a significant amount, but it paled in comparison to the sums that would follow in the decades ahead. When Stokely Van-Camp was acquired by Quaker Oats in 1983, they launched a major promotional campaign that featured Gatorade in commercials and sponsored teams. Coaches were showered with Gatorade after major victories. When PepsiCo purchased Quaker for $13.4 billion in 2000, they used their marketing power to further boost the brand.

As a result, both the Gatorade Trust and UF have profited enormously. By 2015, the Trust had earned over $1 billion in royalties, with 20 percent—around $281 million—going to UF. The original five-cent per gallon formula was replaced with a percentage: between 1.9 percent and 3.6 percent, depending on annual sales of Gatorade, according to ESPN's Darren Rovell, with the university receiving a fifth of that. The funds have been used to support the school's Genetics Institute, the Whitney Marine Laboratory in St. Augustine, and to provide seed money for grants.

The university clearly has a strong connection to the drink, but that sometimes creates conflicts with other marketing agreements. In 2016, when the University of Florida’s women’s basketball team participated in the NCAA Tournament, which was sponsored by Powerade, a competing sports drink by Coca-Cola, the players found a way to stay loyal to their beverage. They poured Gatorade into Powerade bottles and cups as a compromise. The drink that was born on campus—one that has brought them nearly $300 million to date—always takes precedence.