What’s in a name? As much as $20 million a year. That’s what some sports teams can take in these days for the naming rights to their ballparks or arenas — although these are generally complicated, multi-year deals known as “partnerships.”
Now, even Forest City Ratner, the principal owner of the National Basketball Association’s Nets, has set up a division to act as a broker for venues looking to market their marquee space. Ratner’s Brooklyn Sports & Entertainment group announced plans for the brokerage early last month — and in a sizeable coming-out party, the group handled the bidding process for the Izod Center at the request of the New Jersey Sports and Exposition Authority.
In that deal, Phillips-Van Heusen beat out two other apparel companies, Rocawear and Southpole, to put its Izod brand on the former Continental Airlines Arena at the Meadowlands, the venue that the Nets and the New Jersey Devils hockey team are vacating.
The deal for the Izod Center is still being finalized, but the preppy clothier agreed to kick in $1.4 million annually while the Nets still play at the arena — and $750,000 per year after that for at least five years, with increases tied to inflation, according to Mark Stefanacci, chief operating officer of the New Jersey Sports and Exposition Authority, the arena’s owner.
The former naming rights holder, Continental, had paid $1.3 million annually in a combination of cash and bartered airline tickets for its 12-year deal.
Multi-use, multi-dollars
The value of rights — money that goes to the venue, sometimes with a cut to the team — changes as venues change. Instead of just putting up a ballpark, developers are now creating mixed-use destinations designed to draw people year-round — not just on game days. More eyeballs, the theory goes, make naming rights more valuable. “We’ve moved into an era of mall sports,” says James Santomier, director of the sport management program at Sacred Heart University’s business school. “You’re not going to see individual venues anymore. It’s going to be connected to offices and retail and residential and all those things.”
A sweeping mixed-use redevelopment is planned, for example, for the forlorn Willets Point industrial district adjacent to the New York Mets’ new ballpark in Queens. The replacement for Shea Stadium, set to open in 2009, will be named Citi Field, the result of a November 2006 deal that has Citigroup paying a reported $20 million annually for 20 years.
The 17-building Frank Gehry complex at Ratner’s Atlantic Yards, meanwhile, will include 6,400 residential units, 336,000 square feet of office space, 247,000 square feet of retail and a 180-room hotel.
This January, Barclays offered $400 million (over 20 years) to name the planned Nets arena at the center of that development.
Banks love naming rights — called “sponsorship partnerships” — because they can install their ATMs throughout the venues they sponsor. Brands try to capture fan eyeballs in all sorts of ways. One of Izod’s corporate marketing opportunities tied to the Nets deal will be to provide $500,000 worth of apparel, over the course of five years, for the arena staff.
Other recent sales in the metro area underscore how valuable the space on New York area venues has become. Prudential Financial agreed to a reported $105 million over 20 years for the naming rights to the $375 million Devils hockey arena opening this season in downtown Newark.
To developers, naming-rights dollars are not pure profit after the fact, but necessary revenue — so a savvy developer tries to maximize opportunities for not just signage, but also media exposure. Since brands are promoted during game broadcasts, venues in top media markets can command higher rates for naming rights.
Franchises that show the majority of their games on regional cable networks, as the Mets do on SportsNet New York, can bring even more value to stadium branding.
“It’s all about eyeballs and deep pockets,” said attorney Adam Klein, a partner at Chicago-based Katten Muchin Rosenman LLP, a firm that has advised on many naming rights and sponsorship deals. “A place like Shea, now Citi Field, Prudential or Barclays, that’s going to attract a lot of people — there’s the eyeballs. And a number of them have good purchasing power — there’s the pockets.”
Breaking the record?
Now, with ground broken on the $1.3 billion Meadowlands stadium that the Giants and Jets will share, the next naming rights deal could surpass last year’s record sums. (The joint venture the teams set up to build the 82,500-seat venue retained Wasserman Media Group last year to market the rights to sponsors.) While no deal has been announced, and the teams are not expected to take the field until 2010, the stage is set for what could be the biggest naming rights sale yet.
Football stadiums often draw more money for branding than other sports venues, partly because they have more seats and more national television exposure than ballparks or arenas. (Before Citi Field, the highest sum paid for stadium naming rights was the $300 million over 30 years that Reliant Energy paid in 2000 for a Houston complex.) The new Meadowlands stadium will host two NFL teams in a prime media market, along with international soccer and big-name concerts like Bruce Springsteen. Factor in the $2 billion Xanadu entertainment, retail and office development planned next door, and deal watchers think the stadium’s naming rights could top even the Nets’ and Mets’ princely sums.
The Jets and Giants declined to speculate on any potential deal, but offered this statement instead: “The ownership of the two teams believe that they have the most unique and most valuable naming rights opportunity in sports.”