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Volume 21 No. 2


Players joined team and Levi’s execs to celebrate the deal last week.
The San Francisco 49ers received fair value for selling naming rights to Levi Strauss & Co. for their new stadium, considering the club’s asking price was much higher several years ago, consultants familiar with the negotiations say.

Last week, officials with the 49ers and Levi’s announced a 20-year, $220 million deal for Levi’s Stadium, the $1.2 billion facility under construction in Santa Clara. The deal, carrying an annual value of $11 million, ranks No. 1 in the NFL for a one-team building and is second-highest in the NFL behind MetLife Stadium, home of the Jets and Giants, according to SportsBusiness Journal research. MetLife’s agreement is valued at a minimum of $17 million a year.

Consultant Rob Yowell studied naming rights for the team seven years ago while working for The Bonham Group. Yowell, now president of Gemini Sports Group, came up with a value of $15 million to $20 million based on hospitality assets, signage, perceived value of the NFL brand association with the 49ers, comparable deals and the anticipation of hosting the Super Bowl and a college bowl game.

That, however, was before the recession hit.

“When we ran the numbers on it, we were at a time and place where those numbers could’ve been achieved,” Yowell said. “To get $11 million a year is not a bad deal today. Levi’s is a marquee brand, a local firm and a big win for the 49ers. It’s not like those deals are falling out of the sky.”

The team hired CAA Sports in April 2011 to consult on naming rights, and together they started with a range of $15 million to $20 million a year, CAA Sports co-head Michael Levine said.

The 49ers reduced their initial asking price in part because they had six founding partners on board, Levine said. Those multiyear deals are valued in the seven figures annually.

“The nice thing about where the 49ers ended up is that the project had such a strong level of success that they were in position to open the stadium without a naming-rights partner,” he said.

A bonus was Levi’s taking ownership of apparel, a nontraditional category compared with banking and carbonated beverages, Levine said, which enables the 49ers to sign deals to fill those other platforms.

“It doesn’t preclude us from going out and bringing in other partners,” said Jed York, the 49ers CEO.

The naming-rights deal originated at a mid-December dinner with York and Levi Strauss President and CEO Charles “Chip” Bergh. A mutual friend arranged the evening to introduce the two Bay Area leaders, who met at Spruce, a restaurant in the Presidio Heights neighborhood of San Francisco. Over multiple courses, Bergh, a vegan, and York, who ordered the duck, began discussing the prospect of striking a long-term deal.

They discovered that, in one respect, a partnership would be as fitting as a favorite pair of jeans: The Niners were the first big league club to call the Bay Area home, and Levi’s, a 144-year-old company, clothed the original 49ers, the miners of the mid-1800s Gold Rush for whom the NFL team is named.

York knew the challenges associated with signing a long-term naming-rights deal. His family, owner of the 49ers, saw two naming-rights deals come and go at Candlestick Park, the team’s current home. Those long-gone agreements with 3Com and Monster were in the back of York’s mind as he broke bread with Bergh.

It helped the 49ers that Bergh had been down this path before, York said. Before taking over Levi Strauss in 2011, Bergh spent 28 years with Procter & Gamble, and he was part of negotiations on the extension of P&G brand Gillette’s naming-rights deal for the New England Patriots’ stadium.

“It was a fun night. … We were trying to feel each other out,” York said. “He knew the value of naming rights and how it worked in dealing with the Patriots. It helped speed things up when you would ordinarily have to sell and convince somebody. He knew what worked.”

York and Bergh were “like-minded CEOs” sharing a vision in innovation and sustainability at the stadium over the course of a 20-year marriage, said John Vidalin, the 49ers’ chief sales officer, who was involved in the negotiations.

The talks intensified over the last four months; meanwhile, the football team’s timing was impeccable. As discussions continued with Levi’s, the 49ers marched through the playoffs on their way to February’s Super Bowl.

Construction continues at the $1.2 billion stadium, scheduled to open in August 2014.
About two months ago, Levi Strauss & Co. hired Wasserman Media Group to evaluate the terms to ensure that the brand got what it paid for, said James Curleigh, president of the Levi’s brand.

Officials on both sides worked hard to get a deal done in time to announce it on Levi’s Community Day on May 8. It was important to Levi’s corporate that the naming-rights deal be part of the annual event, in which employees volunteer for charitable causes worldwide, Vidalin said.

The deal comes just before the NFL is scheduled to announce the site of the 2016 Super Bowl, on May 21. The 49ers and Santa Clara submitted a bid and are the front-runner for the game, the 50th anniversary edition.

Levi’s Stadium is set to open in August 2014. “Getting a deal done now makes it more powerful for the brand,” Yowell said. “Levi’s can now spend the next few years building equity. It’s the same thing as what Staples did in Los Angeles — it came out of the ground as Staples Center.”

Levi’s inventory includes prominent exterior and interior signs, including signs atop the two end zone scoreboards; two midfield suites; and naming rights to Club 501, a club lounge named after its signature jeans brand.

Sourdough Sam, the 49ers bushy-faced mascot, and the team’s cheerleaders will be decked out in Levi’s apparel, Vidalin said.

Other creative programs are in development, including platforms tied to mobile devices with technology that has yet to be invented, Levi’s Curleigh said.

“We don’t want to lock ourselves into anything specific right now,” York said. “We have a year to activate where we can launch some trial balloons to see how we can have fun with this.”

Levi Strauss & Co., which also has its name on the Levi’s Landing section in right field at San Francisco’s AT&T Park, was among more than 100 companies the 49ers met with over the past two years to discuss naming rights and other partnerships, Levine said. The list was cut down to about 30 firms, team officials said.

In addition to the six founding partners, five of which are related to technology, the 49ers plan to sell two more tech deals in addition to filling the automotive, banking and credit card categories, York said.

Some industry observers were surprised that the 49ers did not sign a tech firm to naming rights considering they sit in the heart of Silicon Valley.

“Technology companies aren’t looking at 20-year deals,” Yowell said. “Ten years makes them hyperventilate. They don’t know if they’re going to be around that long. Levi’s has been around for more than 100 years. What’s another 20?”

Editor's note: This story is revised from the print edition.

Get ready for another Brooklyn-to-Los Angeles connection, but without the emotional scars over a team bolting for the West Coast.

Barclays Center, home of the Brooklyn Nets, has signed a three-year deal with USC Sports Properties for hospitality and advertising during Southern Cal football games at the Los Angeles Memorial Coliseum.

The agreement, valued in the low to mid-six figures annually, gives Barclays Center officials the opportunity to entertain at two games a season in one of four temporary suites set up in the stadium’s east end zone.

A rendering shows the new suite plan for the end zone at Los Angeles Memorial Coliseum.
Driving the deal for Barclays Center, which is partially owned by the Nets, is the ability for arena officials to entertain decision-makers on the West Coast involved in booking concert tours and other special events, said Barclays Center CEO Brett Yormark. That might include agents, promoters and artist managers.

Barclays Center will get 35 suite tickets a game, pregame sideline access for its guests and a presence at the midfield coin toss for those two games, said Dan Shell, vice president and general manager of USC Sports Properties, the Pac-12 school’s multimedia rights holder.

The games have not been determined but could include one midseason game plus games against Stanford or UCLA, the two best home dates in 2013, Shell said.

The deal also covers advertisements in Southern Cal game programs and brand exposure on the stadium’s video board. The activation elements tied to that portion of the agreement are still in development, Yormark said.

Barclays Center, which the Nets manage in tandem with AEG Facilities, a Los Angeles firm, is on track to book about 230 public and private events in its first year of operation, and Yormark wants to build on those numbers with more shows as the facility enters its second year in September.

The deal originated over a breakfast meeting earlier this year in Los Angeles during which Yormark, Shell and Steve Lopes, Southern Cal senior associate athletic director, met to discuss how to continue building the portfolio of nonconference college basketball games at Barclays Center.

The conversation turned to developing stronger relationships with the entertainment industry in general. As the concept evolved, Barclays Center’s research showed Southern Cal football is a big draw for the talent industry involved in booking arenas and stadiums.

“We’re treating Barclays Center as a national brand and one that we need to promote,” Yormark said. “New York and L.A. are the two content hubs. We’re going to L.A. to reinforce the message. This platform helps communicate our brand and also lets us thank our partners out there.”

For USC Sports Properties — which is owned by Fox Sports and manages marketing and media rights for USC sports — the deal generates revenue and brings more exposure to the temporary suites it sells for Southern Cal football as an all-inclusive premium ticket package, Shell said.

Last year was the first season that the group marketed the temporary double-decker suites, which are similar to the corporate chalets at golf tournaments. USC Sports Properties will replace the six units it used last season with four new, larger suites that individually can accommodate up to 70 people.

In its bid to win Nassau County’s request for proposals to develop the Nassau Coliseum property on Long Island, the group led by Barclays Center developer Bruce Ratner believes it has an ace up its sleeve: It has pledged that the New York Islanders, who are leaving Nassau for Brooklyn in 2015, would return to play six regular-season games each season at the new-look coliseum.

Overview of the bidders
A rundown of the groups competing for the development contract for the Nassau Coliseum property on Long Island:

Rendering from the Forest City Ratner Group.

Nassau Events Center: Coalition led by New York City-based real estate magnate Bruce Ratner, who developed Barclays Center through his Forest City Enterprises. The group includes Ratner’s Forest City Ratner Cos., Jay-Z’s Roc Nation, Legends Hospitality, Guggenheim Partners, Live Nation, architects SHoP and Gensler, and Hunt Construction. Goldman Sachs would provide underwriting and financial advisory services. The group’s plans call for the New York Islanders, the coliseum’s current tenant who will relocate to the Barclays Center in 2015, returning to Long Island to play six homes games per year. The Brooklyn Nets, the Barclays Center’s primary tenant, would play one preseason game per year there.

Rendering from the MSG group.
Madison Square Garden Co.: Led by Hank Ratner, this group owns and operates numerous entertainment properties including the famous arena, the NBA New York Knicks, NHL New York Rangers and WNBA New York Liberty. The partnership for the Nassau project includes developer The Cordish Cos., BBB Architects, RXR Realty and Jones Lang LaSalle. Ratner has said one of MSG’s professional sports franchises could relocate to the renovated coliseum: the Liberty, the AHL Connecticut Whale or the NBA Development League Erie Bayhawks. The Knicks and Rangers would hold practices at the facility, as well.

New York Sports and Entertainment: Group led by Long Island developer Bernard Shereck, a former Canadian hockey player from Montreal and owner of The Arena of Long Beach (N.Y.), the former practice arena for the MSG-owned New York Rangers. Jim Johnson, former New York Islanders director of sales and marketing, is the point man. The group is partnered with Global Spectrum.

Blumenfeld Development Group: Long Island developer Edward Blumenfeld is working with SMG, the coliseum’s current manager, as well as Mark Rosentraub, a professor of sports management at the University of Michigan.

— David Broughton
Somewhat surprisingly, Barclays Center and Brooklyn Nets CEO Brett Yormark said that if Ratner were to win the development contract, having those six Islanders games at the venue would not change the group’s plans to scale down the coliseum. The Islanders would play in his group’s proposed 13,000-seat, remodeled venue.

In 2015, when the Islanders make their scheduled move to Brooklyn, Barclays Center will gain the label of the NHL’s smallest arena, with capacity of 15,000 for hockey. The Islanders averaged 13,307 fans over 24 home dates during the lockout-abbreviated 2013 regular season. That figure ranked 29th in the league, behind only the Phoenix Coyotes.

“Thirteen thousand works,” said Yormark, who added that he expects the Islanders, with their improvements on the ice, to be a hotter ticket in two years. “Scarcity is a good thing.”

The Barclays Center group, Forest City Ratner, has proposed scaling down the 16,200-seat coliseum to 13,000 seats for games and concerts and 4,000 for family shows. It has three competitors in the RFP: the Madison Square Garden Co. and Long Island developers Edward Blumenfeld (who is working with SMG, the coliseum’s current manager) and Bernard Shereck.

But it is the Barclays Center group that has the Islanders, who completed a 25-year lease agreement in October to play in the Brooklyn arena.

Ratner and Yormark have a working relationship with Islanders owner Charles Wang, who gave his blessing to having his team potentially play six games each season in Nassau starting in 2015-16.

In polling conducted by marketing strategy agency CSE last month for Yormark’s staff to gauge the interest of Long Island fans in the Islanders’ move to Brooklyn, a few participants suggested, “Don’t leave.”

“It’s their team,” Yormark said of the Islanders’ deep fan base on Long Island. “It’s important for the Long Island fan base to stay connected to the Islanders. We also feel that it’s a big differentiator for our group in this bid.”

Yormark said one possible concept for the six Islanders games in Nassau would be to label some of them “heritage nights” and feature historic rivals such as the New York Rangers, Pittsburgh Penguins and Philadelphia Flyers as opponents.

“There’s so much you can do with those games,” Yormark said. “We could also offer a 12-game ticket plan for Long Islanders, with six games at the coliseum and six games in Brooklyn.”

Forest City Ratner’s proposed $229 million project would also feature a 2,000-seat concert venue, a 2,500-seat amphitheater, restaurants, a movie theater and retail space.

Yormark said that he had letters of commitment for more than 100 events and an agreement with an AHL franchise to move to the coliseum but would not divulge details. Islanders owner Wang also owns the Bridgeport (Conn.) Sound Tigers, the Islanders’ AHL affiliate.

Nassau County officials declined to comment. All four bidders are awaiting the next step in the RFP process. There is no timetable for a decision.

The Boston Red Sox were the best team in baseball last week, but paid attendance in April at Fenway Park, where the team recently saw a nearly 10-year sellout streak end, struggled to crack 30,000 even when the sun shined.

Despite an extraordinary 17-game home schedule in April, the Red Sox sold out three times at Fenway, which holds a little more than 37,000 fans. The team remains just barely in MLB’s top 10 for attendance.

The Sox sold out every home game in a sellout streak that lasted from May 2003 until April 10, 2013, but the seeds of the streak’s end were planted last season, the Red Sox’s worst since 1965.

The Red Sox, whose sellout streak ended last month, sold out Fenway three times in April.
The trailing nature of fan enthusiasm was on display last May, when the local newspapers reported on empty Fenway seats that made the word “sellout” ring hollow. Still, Sam Kennedy, Red Sox executive vice president and chief operating officer, said the team was distributing more tickets than the park’s capacity, and giving away only 800 a game on average.

“This is true in all of professional sports,” Kennedy said. “You don’t feel the effects on your attendance in the current year, until the end of the year. You really feel the effects of a negative season or a positive season in the following year, because so many tickets are purchased in the offseason.”

This year, the Red Sox are at the top of their division, and the Red Sox front office has even temporarily dropped the price of beer, but stringing together sellouts has proved tough.

On the secondary market, Red Sox tickets are selling at significant discounts off face value. A $52 ticket for a game last week against the Minnesota Twins was listed on reseller Fenway Ticket King for $34 in the days ahead of the game.

At list prices, Fenway tickets remain the most expensive in baseball. The Sox sport the highest average ticket price of $53.38, edging out the New York Yankees, and again top Team Marketing Report’s MLB Fan Cost Index, which measures the total cost of taking a family to a game.

Even a surge of civic pride did not push Fenway attendance over the sellout limit April 20, the first home game after the Boston Marathon bombings — although it undoubtedly brought out many of the 35,000-plus who paid to see the game.

Playoff appearances by the Boston Bruins and Celtics are also a factor, said Ace Ticket owner Jim Holzman. Fans who have Red Sox tickets have been selling them for as low as half their face value, he said.

If the Red Sox stay hot, fans will start coming through the gates again, said Andrew Zimbalist, a Smith College economist who studies the sport. Baseball attendance is based on emotion, he said, and emotion lags performance.

“Over time, an avidity of fandom builds up, and then it peaks and it’s still responding to things that happened on the team weeks or months ahead of time,” Zimbalist said. “It might hit a bottom on the cycle and the team starts doing well, but the attendance stays on the bottom.”

Galen Moore writes for the Boston Business Journal, an affiliated publication.