A record naming-rights deal? Bank on it
Seizing the biggest naming-rights deal in sports was a combination of clear-cut strategy and “plain old luck,” said Dave Hopkinson, chief commercial officer for Maple Leaf Sports & Entertainment.
Company officials announced last week that Scotiabank had signed a 20-year deal valued at $639 million to take over naming rights at Air Canada Centre, home of the Toronto Maple Leafs and Toronto Raptors. The name Scotiabank Arena will become official July 1.
Both the total amount and annual value of about $32 million tops the list of naming rights in North America, ahead of MetLife Stadium and Chase Center, the Golden State Warriors’ arena opening in 2019, according to SportsBusiness Journal research. It also tops Chase Bank’s long-term marketing deal at Madison Square Garden, valued at $30 million a year.
Strategically, MLSE, which owns both the Leafs and Raptors, had its eyes on securing the most lucrative deal in the big leagues, Hopkinson said. To make that happen, Maple Leaf Sports purposely let agreements reach the expiration point for both Air Canada’s old naming-rights deal and Scotiabank’s sponsorship with the Leafs, which had been in place for the past six years. (The Raptors’ banking sponsor is BMO, which has one year remaining on its deal. The future of that relationship is unclear.)
MLSE saw fierce competition for exposure in the local marketplace among the five biggest banks. Scotiabank has its name on two other Canada arenas and has been an NHL sponsor for 10 years. Its competitor BMO holds naming rights to BMO Field, home of MLS’s Toronto FC, another Maple Leaf Sports property.
“We felt if we didn’t get the right terms we wanted with Air Canada, we had a strong upper hand to find another deal,” Hopkinson said. “We had a very good sense of what the market would bear and based on intelligence from other interested parties, we felt we could set a new record.”
Under the terms of Scotiabank’s old deal with the Leafs, the bank had the right to pursue the arena’s naming rights in case Air Canada did not extend its original 20-year deal, valued at a little more than $1.5 million a year.
|The home of the Toronto Raptors and Maple Leafs landed a 20-year, $639 million deal with Scotiabank.
Air Canada’s decision triggered negotiations for naming rights between Scotiabank and MLSE that began in January and wrapped up in mid-August, punctuated by “eight hard days of negotiation” at the end, Hopkinson said.
“We had other banks that were very interested in naming rights, but Scotiabank as the incumbent [banking] partner made the most sense for us,” he said.
For Maple Leaf Sports, Hopkinson and Jeff Deline, the group’s vice president of global partnerships, worked on the deal.
Scotiabank’s lead was John Doig, the company’s executive vice president and chief marketing officer, joined by bank executives Clinton Braganza, Jacquie Ryan and Lisa Ferkul.
Brian Cooper, president and CEO of MKTG Canada, consulted for Scotiabank and played a key role in getting the deal done, Hopkinson said.
“This was a generational deal,” said Cooper, who helped negotiate the old Air Canada deal when he worked at MLSE. “They come around once every 20 years, which made the deal even more intensified.”
The deal was driven by both teams’ high profiles as national brands, he said. The Leafs and Raptors sell out most of their games, which are broadcast throughout Canada. In addition, a steady stream of concerts and other live events come through the venue, one of the busiest in North America.
“The Leafs are the most iconic team in the country with the largest fan base,” Cooper said. “Toronto is one of the top three to four markets in North America, and the arena’s address, 40 Bay Street, is in the financial center of Canada.”
The number of assets and activations have yet to be determined, said officials on both sides, but digital content will be a big piece of the deal.
Scotiabank, in the midst of a “major digital revolution,” launched its Digital Factory last year, employing 400 people to market new products for consumers, Hopkinson said. They’ll work with MLSE to improve the fan experience in-arena, he said.
Separately, Scotiabank has committed to donating $1 million annually over the next 20 years to the Maple Leaf Sports & Entertainment Foundation. The money will help fund MLSE LaunchPad, a sports facility with programs geared to at-risk youth.
An interesting provision in the deal prohibits Scotiabank from buying naming rights to other Canada sports facilities beyond its three current agreements. The bank already has its name on the Saddledome, home of the Calgary Flames, and a minor league arena in Halifax. MLSE officials did not want their deal to get lost in the clutter of other agreements, considering the massive scope of the deal in Toronto, Hopkinson said.
“They can’t put their name on any other building in Canada,” he said. “That was really important to us.”