SBJ/20100201/This Week's News

Energy firm buys naming rights to Philly MLS venue

Energy company PPL Corp. is finalizing a 10-year, $20 million naming-rights deal with MLS expansion team Philadelphia Union, some five months before the first match at what will be PPL Park, a new $120 million soccer stadium just outside of Philadelphia in Chester, Pa.

The deal, which is expected to be unveiled this week, is valued at $2 million annually, depending on the Union’s ability to fulfill key metrics. It comes on the heels of Sun Life’s recent naming-rights agreement with the Miami Dolphins and suggests a significant thaw in what was a frozen naming-rights business.

Allentown-based PPL becomes the fifth energy company to sign a naming-rights agreement in the U.S. (see chart). With Pennsylvania deregulating the energy market earlier this year, PPL is hopeful the naming rights will raise brand awareness. “It offers increased brand recognition,” said Gene Alessandrini, PPL senior vice president of marketing. “The questions we asked internally were if this could improve sales and brand recognition. We saw a good return on investment.”

One of the most intriguing aspects about this deal is that while it includes a lot of consumer marketing inventory, it is designed to reach business customers. So there are hospitality, events and experiences designed to reach business decision-makers. PPL also was intrigued that the stadium is part of a renewal project for the Chester waterfront.

The Union’s $120M stadium being built in
Chester, Pa., will be known as PPL Park.

“They invest a lot of money into their local marketplaces,” said Nick Sakiewicz, CEO and operating partner of Keystone Sports & Entertainment, owner of the Philadelphia Union. “That’s really important when you’re trying to build a stadium and revitalize a waterfront.”

Like many of the recent MLS expansion franchises, the Union is debuting with a strong showing. It already has close to 10,000 season tickets sold in what will be an 18,500-person venue.

“From a sponsorship standpoint, this [energy deregulation] will introduce numerous potential new sponsors to sports,” said Larry Weil, whose Dallas-based Branded Energy consultancy specializes in energy marketing. “Dozens of retail electric providers may decide to enter the newly opened Philadelphia markets. [But] it is a fairly complicated landscape. Each state has its own version of deregulation.”

PPL’s deal includes TV and radio advertising, signage positions around the venue and on top of the stadium marquee, along with an “iconic naming-rights placement” at the main gate. It also receives field-board signs, concourse signage and grassroots, community programs and sponsorship rights with the Delaware Youth Soccer and Eastern Pennsylvania Youth Soccer, which represent almost 200,000 registered youth players and their families in the region.

The Union began its search for a naming-rights partner at the worst possible time — late 2008. Financial services, long a reliable source for deals, were immediately cut from consideration. “We’d call them and they would say, ‘Are you crazy?’” Sakiewicz said.

MLS Naming-Rights Deals
Facility MLS tenant(s) # of years Price
Home Depot Center Los Angeles Galaxy & Chivas USA 10 $70 million
Dick’s Sporting Goods Park Colorado Rapids 20 $30 million
Pizza Hut Park FC Dallas 21 $30 million
Red Bull Arena New York Red Bulls NA $30 million
BMO Field Toronto FC 10 $23.7 million
Rio Tinto Stadium Real Salt Lake 10-15 $15-$20 million
Toyota Park Chicago Fire 10 $7.5 million
Energy Company Naming-Rights Deals
Facility Tenant(s) # of years Price
Reliant Stadium Houston Texans 31 $310 million
Consol Energy Center Pittsburgh Penguins 21 $84-$104 million
Xcel Energy Center Minnesota Wild & Swarm 25 $75 million
EnergySolutions Arena Utah Jazz 10 NA
NA: Not available or not applicable
Source: SportsBusiness Journal research

Working with their Los Angeles-based sales agency Premier Partnerships, the sales team, led by Rob Parker, the Union’s vice president of corporate sales, identified several categories where companies might be open to a deal, regardless of the recession. One of the early pitches was to Coke, which turned down the naming rights but will soon be announced as the soft drink sponsor. Waste Management had some initial interest in touting the stadium as a model “green” facility. However, there was concern that if Waste Management took naming rights, fans would call the stadium “the dump.” Philadelphia-based Sunoco was interested enough that graphics were prepared depicting the facility as Sunoco Station. Under Armour also was curious, which would have led to an interesting conflict with Adidas, the league’s biggest sponsor. Other companies looking at the deal were Amway, which also has a jersey deal with the MLS San Jose Earthquakes, and Sony, which was pitched but talks ended after Panasonic signed a lower-level team sponsorship.

The eventual sale began with a cold call. The Union’s offices are in a rehabbed power plant, which prompted officials to look into the energy category. The state was deregulating energy beginning in 2010, so branding would become important. Among the companies contacted were PECO, which was Philadelphia Electric when it generated power from the plant which now houses the team. Also contacted were Allegheny Energy, UGI Energy Services and Suez Energy.

Allison Howard, Premier’s senior director of corporate partnerships, made a blind call to PPL on May 7. Terry Crupi, manager of natural gas marketing, and Annette Durnack, senior marketing manager, returned her call the next day. There was enough initial interest to prompt a 45-minute conversation.

PPL followed up by visiting the Union offices for a preliminary meeting last spring. Even at those early stages, “The energy in those meetings was tangible,” Howard said.

The Union initially wanted a 15-year deal, but PPL preferred a shorter, 10-year term. The two discussed PPL becoming a jersey partner, but the jersey had more national appeal and PPL is a regional company. Other than the usual back and forth over terms, Sakiewicz said one of the most detailed discussions was over category rights. At one point, the energy category was defined so broadly, it included gasoline. When finalized, the category was defined as energy provider, including electricity, natural gas and coal; energy provider and exploration; and energy-related products and services.

The parties met at PPL’s offices in Allentown last November and shook hands on a deal in principle. In mid-December, Sakiewicz and Alessandrini closed the deal over chicken sandwiches in a cafe within the renovated power plant. The office joke at that point was whether Howard, eight-plus months pregnant, would deliver before the deal.

For the record, Ronan James Howard was born Dec. 8. Sakiewicz was expecting to sign the final documents late last week.

“They’ll be splattering their brand all across the marketplace with us, and we’re excited,” Sakiewicz said. “The fact that they have the same mind-set we do is important, because that doesn’t always happen.”

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