SBD/Issue 59/Facilities & Venues

Mercedes Buys Naming Rights To New NBA/AEG Arena In Shanghai

Mercedes' 10-Year Naming-Rights Deal
For Shanghai Arena A First In China
The joint NBA/AEG venture has "sold China's first arena naming-rights deal to Mercedes-Benz, an agreement that puts the luxury automaker's name atop the new Shanghai arena," according to Lombardo & Muret of SPORTSBUSINESS JOURNAL. Financial terms of the 10-year deal were not disclosed, but AEG said that it is "commensurate with other naming-rights contracts it has done." An industry source estimated the deal at about $6M annually. The Shanghai arena will open next year as the city hosts the World Expo, with AEG and the NBA to "take over management of the 18,000-seat multipurpose facility in 2011." The Shanghai development also includes a "six-screen movie theater, an ice skating rink, a bowling alley, a live music club and 20,000 square meters of retail space." Shanghai Oriental Pearl Group also is an investor in the project. Mercedes will receive "typical in-arena signs" as part of the agreement, as well as a "sales center built within the facility" and cars on display throughout the arena concourses. Discussions also are "under way for the manufacturer's high-end Maybach brand to sponsor" the arena's exclusive "Chairman's Club" (SPORTSBUSINESS JOURNAL, 12/7 issue). 

ASIA MAJOR: NBA Int'l President Heidi Ueberroth indicated that "preseason NBA games and other basketball events such as WNBA games will be held at the Mercedes center," which will be "about the same size" as Staples Center and MSG. Ueberroth: "This is absolutely an NBA-level arena." AEG President & CEO Tim Leiweke said that the company will "manage and book the facility," and he expects that it "will be used mostly for sporting competitions and regional and national Chinese entertainment acts." He contends that the arena's "saucer design by Shanghai Xian Dai Architectural Design Group Co. will catch attention." Leiweke: "This is going to be one of the most famous, if not the most famous, arena designs in the world" (L.A. TIMES, 12/7). In N.Y., Richard Sandomir reports the deal is worth $75-100M over its 10-year contract length. The size and location of the deal are "significant because the recession has rendered the naming-rights market dormant." Mercedes said that buying the naming rights is "part of a plan to help develop arts and sports in China." But Sandomir notes it is "also a strategy to continue to sell cars in a crucial market." Mercedes-Benz China President & CEO Klaus Maier said the automaker's 50,700 vehicle sales in China through the first nine months of this year are up 55%, making it the "fastest growing luxury brand in the market." But Helios Partners President Chris Renner questioned "whether Mercedes-Benz could get full value out of its investment" in the Shanghai arena. Renner: "It's going to require 50 to 60 big events for it to get their return on investment. What works in L.A. with the Staples Center doesn't necessarily work in Beijing or Shanghai and they're slowly learning that" (N.Y. TIMES, 12/7).

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