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What's
in a stadium name? By
Jonathan J. Higuera The
Arizona Republic
The
Arizona Cardinals' wait for a new stadium is just about over,
but they'll have to show a little more patience to land a
multimillion-dollar corporate naming rights deal.
It's an important source of revenue to the team. The Cardinals
would rather have an agreement in place sooner rather than
later and actively are talking to several companies about
acquiring the rights to the $355 million facility.
"We're not going to make any deal," Cardinals
spokesman Mark Dalton said. "We want to get the best deal
for the long term."
Cardinals officials
won't discuss which companies they are talking to or what they
are seeking in any agreement. But they and other sports
marketing experts acknowledge the final value should be
enhanced by the fact that college football will hold its
national championship game at the stadium in January, the
Super Bowl will be played there in 2008 and other major
events, including a possible Final Four men's college
basketball event, will be held there.
"It's not uncommon in evaluating a deal to have special
events of one kind or another factored into the value,"
said Don Hinchey, vice president for the Bonham Group, a
sports consulting group based in Denver.
The Bonham Group has been involved in 10 naming rights deals
and helps teams and corporations analyze the value of those
deals.
Cardinal officials point to the Seattle Seahawks stadium, now
called Qwest Field. That stadium was completed and opened in
2002, but it didn't become Qwest Field until 2004.
Glendale Arena, home of the Valley's professional hockey team,
the Phoenix Coyotes since 2003, still hasn't consummated a
naming rights deal.
"There is only a relatively small number of naming rights
opportunities at any one time," Hinchey said. "And
they are being picked up as highly prized marketing
opportunities.
"We're talking big-ticket deals. It's not an impulse
buy," he said.
The lack of naming rights partner may have already cost the
Cardinals revenue, says David Broughton, research director at Sports
Business Journal, a trade covering sports business.
"Six of the last seven NFL stadiums have opened with a
corporate name already on it," Broughton said. "It's
a technologically interesting building.
"A company should have had their name on it years ago . .
. Long term, somebody lost out on a couple of years of
exposure."
Big
deals
In the National
Football League, naming rights revenues are not subject to the
league's revenue-sharing agreement and thus have become an
even more valuable income stream for the teams involved.
The biggest NFL deals to date were completed in 2000 and 1999.
Reliant Stadium where the Houston Texans play, which cost
Reliant Energy about $10 million a year for 32 years. The
naming rights extend to three other facilities, including the
Reliant Astrodome.
In 1999, FedEx Corp. paid $205 million for 27 years for the
naming rights to the Washington Redskins home field in
Landover
,
Md.
The market has cooled a bit since then, and some are wondering
if the Cardinals will be able to match recent NFL naming
rights deals such as the 10-year, $30 million deal the
Tennessee Titans reached with Louisiana-Pacific Corp., a maker
of building products in Nashville. It will pay $3 million
annually to call the Titans' stadium LP Field.
It also may not be able to match the $122 million, 20-year
deal, or about $6 million a year, the Indianapolis Colts
reached with Lucas Oil earlier this year to call its new field
Lucas Oil Stadium. That stadium is scheduled to be completed
in 2008.
The Cardinals have not had the on-the-field success of those
two teams, but the media exposure and buzz its new facility
and the Valley's growth may have some companies interested.
Other factors could keep it from being the kind of blockbuster
deal on the level of Houston or
Washington
,
D.C.
For one, metro
Phoenix
ranks as the 14th-largest metro area in the nation, compared
with seventh and eighth for Houston and D.C. Also, Cardinals
fan attendance ranked last out of 32 teams in 2005.
Who's
in play?
The price of these
deals depends on several factors, including the prestige of an
organization, the size of the market and the desire by any
corporation to make a heavy marketing investment in that area.
For many of the companies, the deals are more than just a
straight advertising play. For example, the Seahawks-Qwest
deal requires the Seahawks to use Qwest telecommunications
service. Other ventures owned by business ventures involving
Seahawks owner Paul Allen also could be required to use Qwest
services.
The Valley's relative lack of corporate headquarters makes it
less likely for a local company to buy the rights.
Of the 16 naming rights deals for NFL stadiums, all the
corporations have revenues in the billions. For example, the
Detroit Lions play at Ford Field and the Carolina Panthers
play at Bank of America Stadium. Both of those corporations
are based in those cities.
Across the NFL naming rights deals are dominated by financial
firms (Lincoln Financial, Edward Jones, Raymond Jones, Invesco),
energy industry firms (Reliant Energy, Lucas Oil) and
telecommunications companies (Qwest, Alltel).
In the Cardinals' case, no companies have come to light as
potential candidates, but that company could surface from
anywhere.
Several local firms with strong sports advertising and
promotions budgets have ruled themselves out. Both Arizona
Public Service Co. and Salt River Project said they are not
pursuing naming rights deals for Cardinals Stadium.
APS has come under fire this past year for seeking rate
increases while spending millions for advertising and
promotional deals with local sports franchises. SRP already
spends more than a half-million dollars annually on
advertising and promotions deals with the Cardinals.
"When you look at why a company might be interested, you
think of a company that wants to go from zero to 60 miles per
hour and immediately make a big splash in the local
community," said Scott Harelson, an SRP spokesman.
"We have the equity of 100 years of being around here, so
there's not that urgency."
Fresh
candidates
Greg Fisher, a
partner in Campbell Fisher Design, a
Phoenix
sports marketing firm, said that there are marketing metrics
that show the number of mentions an arena or stadium gets is
much more than it could ever buy on an individual basis.
"I don't know if you can ever replace that kind of media
exposure with PR," Fisher said. "It's a good
long-term play."
But the return on investment can be a tricky thing to
calculate, says Sports Business Journal's Broughton.
"The real question isn't exposure or impressions, but how
does that translate into people going out and buying your
product."
With new national and international corporations stepping into
the picture, they've apparently found it to be an effective
strategy. Just last week, Honda announced its first sports
naming rights deal for the Arrowhead Pond in
Anaheim
.
It's also a good long-term play for the team, which benefits
from an immediate revenue boost. That revenue can be used to
help a team land marquee players, improve its facilities or
any other way it deems important.
In retrospect, the $26 million, 30-year agreement originally
made by America West Airlines, which has since become US
Airways, for naming rights to the Phoenix Suns home arena in
1992 seems like quite a bargain.
A new 10-year deal was renegotiated last year after the
airlines' merger. Terms were not disclosed.
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