YOUNGSTOWN, Ohio – An affiliate of the company developing the Chill-Can complex paid just $10,000 in six years toward a sponsorship agreement it signed with Youngstown State University worth hundreds of thousands of dollars, according to documents obtained by The Business Journal.
As of mid-July, West Coast Chill Inc., a separate but affiliated company with Joseph Co. International, owed $300,000 in unpaid athletic sponsorship dues to YSU – a balance that had accrued since July 2014. Mitchell Joseph, an alumnus of YSU and chairman and CEO of West Coast Chill and Joseph Co., signed the agreement.
Two weeks after The Business Journal filed a records request with YSU seeking documents related to West Coast Chill’s sponsorship agreements, the company made its first major installment payment.
The Business Journal filed the public records request July 15, seeking documents related to contracts between YSU and California-based Joseph Co., Nevada-based West Coast Chill, and Mitchell Joseph.
On July 31, West Coast Chill paid $100,000 toward its balance and outlined a payment plan, according to a letter from Joseph to Ron Strollo, YSU director of athletics. Under the plan, the company has promised to pay YSU another $100,000 in October and the $100,000 balance in December.
“We try to build relationships and not strong-arm them too much,” Strollo says. “We normally wouldn’t let it go to this point.”
According to the contract, West Coast Chill was to pay YSU $51,250 per year for a comprehensive sponsorship package to promote the company’s non-caffeinated energy drink. The agreement was signed July 17, 2014, and good for two years, with the option to renew each year for the next 10 years. Years three through 10 would include a 5% increase annually, the agreement stipulates.
The agreement included permanent signage at Stambaugh Stadium, signage at YSU’s new softball field, auxiliary scoreboard and media table advertising in Beeghly Center, website advertising and full-page color ads in YSU’s football and basketball programs. Live promotional spots and 30-second commercials aired during football and basketball radio broadcasts were also included in the deal.
And West Coast Chill would receive membership in the Penguin Club for football and basketball games, as well as hospitality and advertising rights to Penguin Club events.
The university also agreed to sell West Coast Chill products at all on-campus athletic facilities and select Penguin Club events. And, YSU said it would endow an athletics scholarship in the name of the Joseph family, which would be housed at the YSU Foundation. According to records, the company paid $10,000 toward the scholarship in 2017.
“It was one of our biggest sponsorships,” Strollo says.
But the energy drink failed to catch on in Ohio and the company stopped selling the product in 2016, Joseph says. Still, West Coast Chill renewed its sponsorship contract with YSU until this year.
“The areas of retailing and promotion ended up becoming more problematic since the brand was not well received in the Youngstown area,” Joseph tells The Business Journal.
Joseph also began to market another energy drink tailored specifically to YSU, Penguin Punch. The publicity effort included outfitting Jeeps with the Pete the Penguin logo and mock cans of the beverage. In September 2019, two Penguin Punch Jeeps were parked just outside the ticket gates on the south side of Stambaugh Stadium during a home opener Penguins football game, promoting the new product and Chill-Can.
Yet Penguin Punch was never produced for the university and not sold at YSU sporting events, according to Strollo.
Strollo says the athletics department sent invoices twice a year to West Coast Chill but the bills were never paid. He adds while Joseph was errant on his payments, his company and Joseph personally contributed in other ways to help the university, which is often weighed against corporate obligations.
According to YSU associate general counsel Gregory Morgione, Joseph or his related companies tendered a $25,000 payment in 2015 to the YSU Foundation toward the “Get it Done” campaign and another $7,500 payment to the YSU Penguin Club for its Football Champions Group.
Joseph paid the expenses for Major League Baseball Hall of Famer Johnny Bench to appear at the 2015 YSU First Pitch Baseball Breakfast. He also donated about 100 cases of West Coast Chill and four refrigerators to YSU, the university says.
But according to Joseph, he and his companies have contributed $112,500 in financial assistance to YSU, which he thought could be credited toward the West Coast Chill sponsorship agreement.
Strollo says that Joseph first approached YSU athletics six years ago, just before Jim Tressel was appointed president. With Tressel’s encouragement, Joseph selected a neighborhood on Youngstown’s east side for a $20 million campus that would produce the world’s first self-chilling beverage can.
The city awarded the project a $1.5 million development grant, plus spent nearly $400,000 in acquiring homes and paying relocation expenses for the remaining residents in the neighborhood and demolishing the structures.
The Chill-Can project has been saddled with delays, as chronicled in May by The Business Journal and ProPublica. Although ground was broken on the project in November 2016, a single can has yet to be produced and just a handful of people have been hired. Joseph has promised to create more than 230 jobs by August 2021. A third building was recently constructed at the site.
In August, The Joseph Co. announced the creation of a patented five-liter “inside pressurized keg system” that it said would be launched with a major beverage label. The Joseph Keg would be mass-produced at the Youngstown site, along with the Chill-Can, the company stated.
In his letter to YSU regarding the $300,000 sponsorship delinquency, Joseph says two announcements identifying a brand-name user for the keg and the Chill-Can would be forthcoming in mid-September. At press time, no such announcement had been made.
Joseph tells The Business Journal that it’s likely the first Chill-Cans would be made for launch “with the proper brand followed by a press release” by December of this year.
Strollo says that YSU and West Coast Chill have mutually agreed to end the current marketing contract. However, the university and Joseph have left open the potential of renewing an agreement once production begins at the Youngstown plant.
“We’re just trying to be a good partner,” Strollo says. “We know what his business could mean to the community and to the university.”
So does Tressel, who remains steadfastly behind the Chill-Can project and Joseph’s vision.
“I think he’s totally up front,” the university president says. “He’s a believer.”
Tressel says there are few investors willing to devote resources toward an aging, dilapidated section of the city that needed rebuilt. “If someone is going to bet on us, I’ve got to be optimistic,” he says.
Late last year, Tressel was asked to join leadership coach John Maxwell for a program in London. Before he left for England, Tressel called Joseph and inquired about one of The Joseph Co.’s subsidiaries, SI Protech, a plastics injection molding firm based about an hour outside London that makes components for the beverage industry. Tressel visited the plant briefly during his trip.
Joseph then arranged a meeting between Tressel and the deputy chancellor of a nearby college, the University of Chichester.
The meeting elicited an idea whereby YSU students and faculty could spend a summer studying and working with SI Protech through Chichester. In exchange, a faculty member and student at Chichester could come to YSU and spend a summer working at the Chill-Can campus once production starts.
Tressel says he first met Joseph in 2011 in Columbus and became reacquainted with him in 2014 when he was named YSU president. That year, he showed Joseph around campus and took him to the top of Stambaugh Stadium, affording a panoramic view of the East Side. Joseph made mention of his plans for a Chill-Can plant, preferably in the Columbus area.
Tressel says Joseph then told him about his family ties to the East Side. “I said, ‘Why don’t you [build your plant] here?’”
Tressel is not concerned about the slow pace of the project, although he wishes it would happen faster. “It’s the long haul that counts,” he says.
In June 2017, about eight months after the plant groundbreaking, Joseph became embroiled in a dispute with Garry Savage, a discredited investment broker with offices in Ohio and Florida. As reported in the August 2020 edition of The Business Journal, a settlement agreement was signed whereby Savage received a license to distribute the Chill-Can product in Florida.
YSU Foundation President Paul McFadden signed as a witness to the settlement agreement, according to the document.
McFadden doesn’t recall witnessing the document, and Joseph says it was merely coincidental that McFadden was visiting Joseph’s offices in California when the settlement agreement was signed.
Tressel says all McFadden did was witness the document for routine notary purposes and his signature doesn’t suggest any business relationships between YSU, its foundation, Joseph and his partners.
As for Joseph’s failure to pay his end of the YSU athletics contract, Tressel says in hindsight, the athletics department should have pushed West Coast Chill to reconsider signing up for another year when the company stopped selling the product in Ohio. On the other hand, he asked Joseph why he would renew an advertising agreement for a product no one could buy.
“He said he wanted to be helpful,” Tressel says.
“The way I look at people in general, if I truly believe their intentions are the right intentions, I can live with things that don’t go perfect,” he reflects. “When I think someone is trying to scam you for personal gain? I have a problem with that.”
Pictured: Mitchell Joseph and a rendering of his plant appeared on the spring 2017 cover of YSU’s alumni magazine.