SBJ/January 7 - 13, 2002/Special Report
Whats in a name? Less than before
Published January 7, 2002
American Airlines Center opened
in September with sports most
expensive arena naming deal.
Since a stadium or arena naming-rights deal is seen by many as nothing more than the most expensive outdoor advertising available, it follows that as the ad market crashed in 2001, so did the market for sports facility entitlements.
While Reliant Energy signed the biggest deal ever at $300 million over 30 years for the stadium that will house a new NFL team in Houston, an adjoining arena and the nearby Astrodome, others didn't fare so well. Pittsburgh's new Heinz Field went for a relatively low $57 million over 20 years.
Every marketer knows the recession of the past year or so will end, but marketing expenditures are always the first to go, and that's true for short-term and long-term expenditures like naming-rights deals.
"There's not a board of directors in the country that's going to approve spending $100 million on anything new right now," said E.J. Narcise, executive vice president of teams, leagues and venues at Clear Channel, which is winding down its representation of naming-rights clients. "The smoke has to clear on the entire economy before there is much of a naming-rights business again."
Naming deals were already lagging before the tragedies of Sept. 11. After that fateful day, "Unfortunately, it gave them an excuse to say no and came at the end of a bad year so people were already looking for reasons to cut budget," said Frank Vuono, co-founder of 16W Marketing in East Rutherford, N.J., which is selling naming rights to the stadium that houses the St. Louis Rams. "Now you really have to be dealing directly with a CEO, someone who can think long term."
Surely the stadium boom of the '90s is slowing; still, there are 10 stadiums or arenas destined to host major league teams under construction in the United States. Six already have naming-rights deals. That leaves the four facilities without deals wondering if they'll be left holding the bag. Not necessarily, but the new reality is that now naming rights will have to be an artfully crafted combination of branding and business-to-business opportunities.
"Naming rights themselves will always be important, but we've reached the point where they are only part of an overall deal, and in many cases not necessarily the most important part," said Dave Buck, vice president of advertising sales and marketing for the Philadelphia Phillies. For example, at the Phillies' new park, scheduled to open in 2004, Buck can offer prospective clients Phillies media and ballpark technology rights, among other things, because they are controlled by the team.
The shift from branding play to a way to acquire new business is what those selling naming rights say will keep the business alive.
"Properties are becoming more sophisticated about what they are offering, and sponsors are becoming more sophisticated about what they want," said David Cope, co-founder of Gilco Sports & Entertainment Marketing in Bethesda, Md., who had a hand in the naming-rights deals for PSINet Stadium, FedEx Field and the MCI Center. "You need to show how companies can leverage naming rights into direct return on investment."
Business-to-business companies need brand awareness and often can cover the cost of the deal by acquiring business with naming rights. Such was the case with Comcast's deal for the new arena at the University of Maryland. Packaged with naming rights was a deal to wire the campus for cable and Internet access.
There increasingly have been conflicts between the media covering events and the name of the facility itself. Some examples from the past year were NBC refusing to call the former Charlotte Motor Speedway the Lowe's Motor Speedway unless Lowe's bought advertising time during the track's race broadcasts. Fox also refused to call Denver's hockey arena the Pepsi Center during the NHL All-Star Game broadcast, in deference to a league deal with Coke. Expect more of those kinds of conflicts. Given that media deals are often five years or less while naming-rights deals usually last 20 years or more, it's difficult, if not impossible, to harmonize the two.
"The media mentions are nice," said Rick Horrow of Horrow Sports Ventures, the facility development consultant to the NFL, "but there's no way anyone can guarantee them."
The other problem is when a name doesn't stick, which is usually true in the case of established venues like the former Candlestick Park, or more recently, when the Denver Broncos brought their old Mile High name to the new Invesco Field. The resulting publicity often gives new sponsors more exposure than they expected. Certainly few people knew what 3Com Corp. was before the manufacturer of computer bridges and routers put its name on Candlestick Park.
"The controversy about Invesco Field got picked up so far outside of Denver, it's hard for me to view that as anything but positive," said Kathy Carter of Envision, currently selling title rights to the Louisiana Superdome and Toronto's Skydome.
The Phillies' new stadium and a new facility for the Philadelphia Eagles are likely to set a benchmark. Intriguingly, they will compete for sponsors' dollars. Still, the holy grail for the industry is proposed new facilities in New York City, which does not have a major league venue bearing a corporate name. The deal for the new ballparks is tentative.
"The way the industry goes will all depend on New York," Carter said. "Like everything else in media and marketing, there's New York, L.A. and then everything else. You have to think it would break all records."