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Commentary: Welcome to U.S. Widget Stadium
Fenway Park, Mile High Stadium, and Lambeau Field are sports household names--hallowed fields on which Ted Williams, John Elway, and Bart Starr made history. They also have something else in common: All three stadiums--and their venerable names--could soon pass into history, with new, corporate-sponsored sports palaces in their stead.
That may be troubling news for fans, many of whom have elevated nostalgia to art. But it's all part of the game for Corporate America. Given the skyrocketing costs of operating pro teams and the drive for new stadiums, selling--actually, leasing--the name of a stadium or arena is an important component in today's financial sports puzzles. "This is not the same league that it was in the '60s when Vince Lombardi was here," says Paul F. Jardin, mayor of Green Bay, Wis., where a $295 million renovation of the National Football League Packers stadium is scheduled to be completed by fall, 2003. "We have to take advantage of the financial realities of the NFL and sports in general, and selling the name of our field is one of those realities."
And how. After two decades of dealmaking, the sports landscape is littered with corporate names: Arco Arena (Sacramento), 3Com Park (San Francisco), the RCA Dome (Indianapolis), Continental Airlines Arena (New Jersey), and others. And even as the price of these deals escalates--SFX Sports Group, which brokers naming-rights deals, says the average price jumped from $2.73 million annually to $5.58 million from 1997 to 1999--companies are scrambling to get their names on the remaining stadiums. On Aug. 23, Internet giant CMGI Inc. agreed to pay $7.6 million a year to name the New England Patriots stadium, scheduled to open in 2002. CMGI, with a relatively low profile for a company its size, sees pro football's network TV exposure as one of the most cost-effective branding investments available. And on Aug. 28, business Internet service provider SAVVIS Communications Corp. bought the naming rights to Kiel Center arena, home of the National Hockey League St. Louis Blues, in a 20-year deal worth more than $70 million in stock and cash.
What's more, these deals are becoming ever more complex. In a much broader linkup between sports and Corporate America, they start with naming the stadium and go on to include wide-ranging product-sponsorship clauses and pledges to use the sponsor as a major supplier. Some deals even make provisions that allow executives to travel with the team. "For the chairman's biggest client," says Kevin Lovitt, vice-president of Cleveland sports marketer IMG, "that can be a once-in-a-lifetime event." ACCESS. The biggest and most complex deal to date is Philips Electronics' 1999 entrance into the new home of Ted Turner's National Basketball Assn. Atlanta Hawks and NHL Thrashers. The 20-year, $185 million agreement includes business and marketing "integration across all the different properties that are [Turner partner] Time Warner," says Jeff Knapple, president and CEO of naming-rights negotiator Envision.
Philips not only gets its name on the $213 million, 20,000-seat arena and use of the facility to showcase its products, but it also earns direct access to sell to all Turner operations and affiliated businesses. That means baseball's Atlanta Braves and, more important, the 400-plus companies under Time Warner Inc.'s umbrella. Philips also gets a line into Coca-Cola, Delta Air Lines, and seven other founding sponsors of the arena, according to Michael Mandas, Philips' director of strategic business development.
Among the other goodies for Philips: First consideration when Turner, which is in the midst of $1.2 billion worth of construction projects in Atlanta, goes shopping for electronics or other Philips products; the use of Philips' lights at the Warner Bros. film studios; product placements in Warner Bros. films; and the use of Cartoon Network characters to sell Philips products.
For companies, the logic behind these deals is clear. When Chicago-based Bank One Corp. wanted to position itself as a national bank in 1998, it turned to sports. Now, Bank One is paying $66 million over 30 years to name the Arizona Diamondbacks' baseball stadium in Phoenix. And in Indianapolis, where the Hoosier Dome was reborn as the RCA Dome in 1995, Thomson Multimedia Vice-President James A. Gatman says "the Dome has become the cornerstone of our getting broad exposure, with nationally televised Indianapolis Colts games and our products used throughout." Adds SFX Group Vice-President Russell Wallach: "[A naming-rights deal] delivers reach and frequency. There's not a better way to put a footprint on the marketplace."
Still, the impact of these deals on the overall health of corporations is less than clear. In 1996, Pro Player agreed to pay $20 million over 10 years to rename Miami's Joe Robbie Stadium. However, despite the exposure that the maker of licensed sports apparel received from basking in World Series and Super Bowl spotlights over the past few years, parent Fruit of the Loom Inc. declared bankruptcy last December and disbanded its sportswear division.
Today, the name of the Miami stadium is back on the market. And a recent Barron's survey revealed that 17 of the 47 companies that have attached their names to stadiums and arenas have seen their stock decline since, while just 13 have beaten the Standard & Poor's 500-stock index over those periods.NO SALE. Not everyone is out to put a corporate logo on every square inch of property. Consider such prosaic names as Oriole Park at Camden Yards in Baltimore and the Ballpark in Arlington, Tex. And while it's true that Cincinnati Reds owner Carl H. Lindner will pay $75 million over 30 years to name a new ballpark after his Great American Insurance Co., the NFL team next door is passing up the opportunity. Recently, Bengals owner and President Mike Brown helped influence Hamilton County to name its just-opened NFL stadium after his father, pro football pioneer Paul Brown. "It has a better ring to it than `Dollar Sign Stadium,"' says Brown.
Caught in the middle of all this, of course, are the fans, who may acknowledge the realities of modern sports but remain romantics at heart. For them, Dollar Sign Stadium makes as much sense as trading the team's star player because of economics. Sports, they insist, is more than numbers. It's about tradition, and identity. And names.By Skip RozinReturn to top