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SBD/February 1, 2011/FacilitiesPrint All
Five days before the Super Bowl will be played at a stadium without a corporate name, AEG today will announce that it has signed Farmers Insurance to a 30-year, $600M naming-rights deal for a proposed 1.7 million-square-foot, 68,000-seat football stadium in downtown L.A. that has no architect, no site approvals and no NFL team. The proposed billion-dollar stadium will be called Farmers Field. Some of the parties involved in the deal were touting it as the largest naming-rights contract ever. Farmers CMO Kevin Kelso called it an exceptional branding play, especially crucial now, with the always-competitive insurance market spending more than ever on media and sports marketing assets. According to Kantar Media data, ad spending by insurance brands during sports programming grew an eye-opening 36% during the first nine months of '10 compared to the same period in '09. "More than anything, this is a national stage for us," Kelso said. "This is going to put Farmers up as a brand and get exposure at a really high level, and that’s very attractive to us. ... Having our name associated with this will give us a TiVo-proof exposure opportunity." GroupM ESP advised Farmers on the deal, and Greg Luckman, the company’s CEO, said the popularity of the NFL and the value of returning a team to L.A. makes naming rights "an incredibly valuable deal and a breakthrough idea, even in an increasingly competitive and marketing-intensive category, like insurance." Kelso added that the chance to have a stake in reuniting the NFL and L.A. was alluring, as was the opportunity for Farmers, an L.A.-based company, to be part of the city’s continuing downtown economic revitalization, which was started by AEG with the Staples Center/L.A. Live complex. Kelso: "To have the NFL come back to L.A. and for us to be involved in that is just such a huge thing. We saw the potential for this project to revitalize downtown forever and really wanted to be a part of that."
FARMERS ONLY COMPANY REALLY TARGETED: Kelso and Farmers went after the deal with a singular focus after taking a preliminary presentation last June. While some agency sources said they had received feelers about a naming-rights deal last year, AEG Global Partnerships COO Shervin Mirhashemi said, "We literally pitched one company. ... We knew from [Farmers’] initial reaction that they shared the same vision for this project. Once you know that, there’s no reason to fish anywhere else." Under the deal, Farmers gets broad exclusivity in the insurance and brokerage categories; signs inside and outside the complex; video boards; activation areas; branded clubs; and other hospitality. With no team in place, this is a rare naming-rights deal that does not include media other than signage. Farmers also gained insurance business through the deal. Without specifying, Kelso said, "There is a business opportunity here for us from a pure insurance standpoint. AEG is a very significant customer of [parent company] Zurich Insurance already. ... As part of the deal we have agreed to broaden that relationship" (Terry Lefton, THE DAILY).
MORE DETAILS OF THE DEAL: In L.A., Sam Farmer in a front-page piece reports the deal is worth $700M over 30 years, and sources indicated that payments are "starting at $20 million for the first year and escalating incrementally every year after." The stadium has not been built, the site has not been approved and a team has yet to be acquired, and "no money will change hands unless each of those wishes becomes fulfilled." AEG President & CEO Tim Leiweke said that AEG has "had discussions with every NFL team that could potentially move ... although he declined to list them." Farmer notes NFL officials have "made it clear, however, that the L.A. vacancy will not be addressed until the current labor dispute between team owners and players is resolved." Majestic Realty Chair & CEO Ed Roski continues to prepare his stadium site in Industry, Calif., but several team owners and execs "have quietly indicated they prefer the AEG concept to Roski’s." Leiweke said that the Farmers deal "should stand as proof" that AEG Chair Philip Anschutz is "committed to getting the event center built" (L.A. TIMES, 2/1). Mirhashemi last night indicated that money will change hands prior to the stadium opening (Don Muret, SportsBusiness Journal).
LOOKING FOR MORE PARTNERS: AEG President of Global Partnerships Todd Goldstein said that the company is "seeking as many as a dozen additional founding sponsors for Farmers Field, in an effort to secure much of the funding for the project in place during the approvals process." He added that AEG would "make the stadium a destination for major concerts and college football games in addition to the NFL" (WALL STREET JOURNAL, 2/1).
IF YOU BUILD IT, WILL THEY COME? While it is unusual for a venue to sell naming rights before breaking ground, it is not unprecedented. Barclays in '07 purchased naming rights at the Nets’ planned Brooklyn arena. After numerous delays, Barclays Center is now scheduled to open in '12. What is curious is that the Farmers Field deal was consummated without a team as a building tenant. Considering how tortured the attempt to return an NFL franchise to L.A. has been, the confidence exhibited by both parties that an NFL team will play in Farmers Field is either a remarkable display of bravado or an indication that the deal for another NFL team to move there is fait accompli. So, a leading question is if Farmers pays the same whether or not an NFL team plays on its field. Sources said one clause in the deal has them paying more if a second NFL team moves in. Is it then logical to assume they would pay a lower rate for no NFL team? "The contract addresses a number of contingencies," Kelso said. "The reality is there’s very little likelihood that an NFL team is not going to come into this stadium when it’s built. I am not worried about that." Kelso said he and other Farmers execs met with senior NFL league officials early in the process. "We came away from those conversations wanting to do the deal, so draw your own conclusions," he said.
GETTING AN EARLY START: Kelso said another strong appeal to Farmers was getting in early so as to "influence design and make sure it’s not just signage but an experience that will help people understand your brand and hopefully come out of there wanting to buy products from you." As for any impact on the two new NFL stadiums that are already open but are without naming rights, in New Jersey and Texas, Mirhashemi said, "Bringing football back to L.A. is a unique storyline that goes along with this particular project, but we believe this deal will confirm that naming rights work" (Lefton).
STADIUM NOT IN THE CLEAR YET: ESPN L.A.’s Arash Markazi reported even with the Farmers deal in place, AEG still has "several hurdles to clear before they can begin construction." The company must pass an "environmental impact review, complete the entitlement process and come to a long-term land lease agreement with the city." AEG also is asking L.A. for $350M in bonds that would "help build a new extension to the convention center that would replace the torn down West Hall and additional parking units" (ESPNLA.com, 1/31).
WE ARE FARMERS: DAILY VARIETY’s Stuart Levine reports Farmers "has been ponying more sponsorship coin in and around L.A. recently," including a three-year deal to rename the ATP World Tour 250 the Farmers Classic through '12. The company also title sponsors the just-completed PGA Tour event in San Diego (DAILY VARIETY, 2/1).
At $600M over 30 years, the L.A. stadium naming-rights deal for Farmers Insurance becomes the largest such deal in place in U.S. sports as measured by total price. Barclays Center, the planned new home of the Nets, is not listed but has a deal valued at $400M over 20 years (THE DAILY).
TOTAL YEARS ANNUALLY EXPIRESCiti FieldQueens, N.Y.$400M20$20.0M2028Reliant Stadium*Houston $310M 31 $10.0M 2032Gillette Stadium**Foxboro, Mass. $240M 15 $8.0M 2031FedExFieldLandover, Md. $205M 27 $7.59M 2025Minute Maid ParkHouston $178M 28 $6.36M 2029University of Phoenix StadiumGlendale, Ariz. $154.5M 20 $7.72M 2025Bank of America StadiumCharlotte $140M 20 $7.0M 2023Lincoln Financial FieldPhiladelphia $139.6M 20 $6.98M 2022Lucas Oil StadiumIndianapolis $121.5M 20 $6.07M 2027Invesco Field at Mile HighDenver $120M 20 $6.0M 2021
NOTES: * = Reliant has the naming rights to the entire Reliant Park, which also includes Reliant Arena. ** = Includes 15-year extension signed in '10.
49ers President & CEO Jed York "has the challenge of coming up with a state-of-the-art stadium design for perhaps the world's most technologically discerning fan base -- in the heart of the Silicon Valley," according to Sam Farmer of the L.A. TIMES. While "heaping praise on Dallas Cowboys owner Jerry Jones and his palatial new stadium -- one that features a colossal high-definition video screen -- York said that's not his vision for a 49ers stadium." York: "Everything for us is micro, not macro. In the Silicon Valley, we want to know: What you can do on your smartphone? Our approach is, why build a $50-million scoreboard as opposed to enabling 65,000 people to have scoreboards in their hands that are interactive?" Farmer noted NFL stadiums in the future will likely include "sufficient wireless bandwidth so everyone in the stadium can stream video of the game." In addition, they will boast "in-stadium cameras allowing fans to pick their desired feeds," and "self-contained entertainment centers" at each seat. The NFL "needs to continually enhance its in-stadium experience because football has become such a phenomenal TV game," and for York, "that means thinking big while thinking smaller." He said, "The way we've approached it is we've said we're not going to be the biggest stadium and we're not going to be the most expensive stadium. But we're going to be the smartest stadium" (L.A. TIMES, 1/31).
A SAN FRANCISCO TREAT? In S.F., John Cote reported Mayor Ed Lee is "not giving up on the 49ers leaving the city for Santa Clara just yet, and he wants to get a sense of what's going on in Jed York's head." Lee did "not promise he can persuade the team to accept a deal on the table here for $100 million from a private developer to build a new stadium at a redeveloped Hunters Point shipyard." He "didn't even say he could restart negotiations." But he "wants to talk with York." Lee: "I think there have got to be other discussions with Mr. York and his team about their approach to that area." A 49ers official said York and Lee are trying to plan a meeting "sometime soon" (S.F. CHRONICLE, 1/31).
MLS will hold its '11 All-Star Game at Red Bull Arena in Harrison, N.J., on July 27 at 8:30pm ET. AT&T will return as title sponsor of the event, which was held in Houston in '10. The league has not named which club the MLS All-Stars will face in the game, saying the opponent will be a “high-profile international club.” Previous opponents have included Manchester United, Chelsea and Chivas de Guadalajara. The game marks the third time the N.Y. market has hosted MLS’ mid-season celebration -- Giants Stadium hosted the '96 and '97 All-Star games.
Stuart Blumberg, Chair of a committee spearheading the renovation design of the Miami Beach Convention Center, said that two Florida state senators “have agreed to sponsor a bill that would help fund the center renovation through a hotel tax increase while excluding the Dolphins from any of the money raised.” Blumberg said that the proposal “would allow Miami-Dade commissioners to increase a hotel tax” from 3% to 4%. He added that “additional language he presented to the senators restricts the use of CDT funds to 'publicly owned or operated, and not-for-profit' organizations, excluding private organizations such as the Dolphins.” In Miami, David Smiley noted by presenting a bill that “separates the two projects, Blumberg may have complicated the Dolphins’ push to secure public funding for a proposed $225 million renovation to Sun Life Stadium” (MIAMI HERALD, 1/31).
CASH BACK: In Houston, Bradley Olson reports the city is “poised to strike a 30-year deal giving back $3 million in projected sales tax to the Houston Dynamo as they prepare to construct their $60 million stadium.” City officials said that the tax rebate “always has been a part of the deal that kept the team from leaving Houston.” The deal “will make the city and county owners of a new sports stadium for which they did not have to pay.” Houston Chief Development Officer Andy Icken, a “primary negotiator for the city on the deal,” said that it “mirrors sales tax rebates the city gave the Houston Texans when it negotiated over the future Reliant Stadium” (HOUSTON CHRONICLE, 2/1).
LOST IN THE TREES: Twins President Dave St. Peter on Friday said that the trees beyond the centerfield wall at Target Field are “coming out as part of a plan to help hitters see pitches better.” In Minneapolis, La Velle Neal noted the trees “were considered a key feature” of the new ballpark. But as the venue's first season progressed, players “began to mention that the trees swaying in the breeze interfered with their ability to lock in on pitches.” In addition, the batter’s eye -- the “huge wall behind the trees -- will be worked on to reduce glare that hitters pointed out throughout the season” (Minneapolis STAR TRIBUNE, 1/29).
MONEY TALKS: In Lexington, Jerry Tipton noted in the “first week of pondering Lexington Mayor Jim Gray's decision to first look at renovating Rupp Arena rather than building a new downtown facility, one factor seemingly overrides all: Cost.” A renovation would cost “significantly less than a construction of a new arena.” Tipton: “But how much less? And can Rupp Arena be retrofitted … to add luxury suites, club seating and any other revenue-generating desires of the University of Kentucky athletics department?” UK Board of Trustee faculty rep Joe Peek “liked the renovation idea,” and believes that Rupp Arena “should be preserved in a renovated form because it carries a mystique like baseball's Wrigley Field or Fenway Park.” Peek said that UK “had more pressing needs than a new basketball arena,” including $200M in maintenance that has been deferred (LEXINGTON HERALD-LEADER, 1/30).