Monday, November 13, 2006

If I can make it there, I'll make it anywhere, it’s up to you, New York, New York


The New York Mets will break ground today in Queen’s for their new $600 million, 45,000 seat stadium set to open at the start of the 2009 baseball season. The Mets according to published reports will use the groundbreaking ceremony to announce a multi-year corporate naming rights agreement with Citigroup, naming the facility Citified, an agreement that will establish a new industry benchmark for a naming rights agreement.

The annual rights fees paid by the New York based financial company is expected to be worth at least $20 million annually, be for a term of 20-years, and include an option to extend the agreement to 35-years. Over the life of the agreement, the Mets stand to generate between $400 and $650 million from the sponsorship agreement. The agreement will obliterate the $10 million annual fee Reliant Energy pays the Houston Texans to call the home of the Texans Reliant Stadium.

The Bonham Group, a Denver-based company, which specializes in securing corporate naming rights agreements for arenas and stadiums last week, released their annual report. According to the report through October, there have been 11 naming rights deals for the "Big Five" sports (Major League Baseball, the NFL, NBA, NHL and MLS). That brings the total value of naming rights deals in North America to more than $4 billion. And that was before today’s Big Deal of the Day, and last week’s $40 million naming rights agreement Dick's Sporting Goods reached with the Colorado Rapids for the MLS teams’ new soccer specific stadium being built in Denver.

The Mets establishing the highest annual sponsorship fee paid to a sports team in corporate stadium/arena naming rights has to be regarded as a positive step forward for MLB. Prior to today’s agreement, only one of the top ten most valuable naming rights deals belonged to a Major League Baseball stadium naming rights agreement, the $170 million, 28-year agreement with the Houston Astros, a little more than $6 million annually.

The Biz of Baseball.com’s Paul Swydan asked Dean Bonham, President of the Bonham Group why before today’s record setting Citigroup – New York Mets agreement, Bonham believed MLB teams lagged behind other leagues (notably the National Football League) and teams in generating sponsorship naming rights agreements.

“Many of the major markets – Boston, LA, Chicago & New York – haven’t had new ballparks built during this span. Only the White Sox built a new park during this time and did not name it initially. As for the value overall, baseball’s TV deals and media are much more regional than the NBA and NFL deals. Also, NFL stadiums and NBA/NHL arenas are more flexible venue as to the events they can potentially host. New ballparks are designed for baseball and there is no demand to host other events of great value.” Bonham told Biz of Baseball.com.

Bonham believes the sports industry could be the dawn of an even greater era when it comes to generating significant rights from corporations to place their companies name on a sports facility.

“There is a new frontier in facility naming rights, and it entails going above and beyond the customary exposure and hospitality benefits and integrating the sponsor in such a way that its key constituencies (fans, clients, prospects, employees) have an opportunity to interact with the company, the team and the facility in unique, exciting and mutually-satisfying ways. That’s the general idea; if I get more specific, I’ll have to charge you (or kill you),” Bonham told the Biz of Baseball.com

As big and important as the Mets agreement with Citigroup will be, many believe Wasserman Media marketing, the naming rights for the yet to be built Giants/Jets stadium located in The Meadowlands, minutes from the heart of Manhattan, will negotiate the biggest stadium/arena rights deal ever.

The new 82,500-seat New Meadowlands Stadium, scheduled for completion in time for the 2010 football season, will be located just north and east of the site of the current Giants Stadium at the Meadowlands Sports Complex in East Rutherford, N.J. The Giants and Jets ownership families have formed a joint venture to build the new stadium as 50-50 partners, working together to create the NFL's premier sports and entertainment facility. The new stadium is being 100 percent privately financed by the two joint venture partners.

"The New Meadowlands Stadium arguably represents the most unique opportunity in the nascent history of naming rights," said Casey Wasserman, Chairman and CEO of WMG. "Combining the power of the NFL and its reach with two of the greatest sports teams creates an unparalleled platform for a marketer to align itself with the most prominent media, entertainment and sports destination in the world."

New York Giants Chairman Steve Tisch said, "Our overall objective is to create a strong identity for the stadium and environs as a world-class sports and entertainment facility. Wasserman Media Group has the experience and background to help us explore all the alternatives we have and to make the important decisions about how best to achieve our goals by associating ourselves with dynamic and exciting sponsorship, marketing and naming partners."

Woody Johnson, Chairman and CEO of the Jets, said, "This marks another important step as we work to build the premier football stadium and entertainment complex in the NFL. Wasserman Media Group will expand and enhance our vision to make the New Meadowlands Complex the most innovative and memorable spectator environment in professional sports. We welcome them as partners in this process and look forward to working together in the coming months and years."

John Mara, President and CEO of the Giants, said, "We look forward to establishing mutually beneficial affiliations and relationships that will serve to enhance the prestige and image of what promises to be a truly extraordinary facility. We expect to secure a naming partnership arrangement that reflects the unique nature of the opportunity."

New York Jets President Jay Cross said, "Designed from a fan perspective, this facility will transform the game day experience for our fans through cutting-edge technology and new amenities. We look forward to engaging potential sponsors and marketing partners who are as excited as we are about a project which will boast the best entertainment experience in the NFL."

"Given the strength and heritage of the Jets and Giants, coupled with the appeal and size of the market they serve, we anticipate there will be monumental interest in this historic opportunity," said Jeff Knapple, President, WMG Marketing. "We look forward to helping the teams realize the potential for a select partner to fully utilize this extraordinary marketing platform."

It’s easy to appreciate why everyone associated with the selling of the Giants/Jets stadium naming rights believe they have the Holy Grail of corporate sports naming rights to sell. It begins with an opportunity to showcase your company’s name a minimum of sixteen days each year on national television. It’s reasonable to expect either the Giants or Jets to host playoff games on a regular basis, bringing even more value to whatever company agrees to spend hundreds of millions of dollars in a long-term agreement. It’s likely during the lifetime of the stadium the United States will host at least one World Cup and with a state-of-the art facility located in the shadow of Manhattan. in all likelihood the World Cup final (the most watched event in the world) will be played there.

The Yankees who broke ground on their $800 million stadium in August have no plans to sell the naming rights for the new Yankee Stadium. Give George Steinbrenner credit, it’s another example of how he does business, and realizes what the Yankees brand name is worth. The Yankees would have been able to sell the naming rights to their new stadium for more than $10 million a year. However, renaming Yankee Stadium with a corporate name would sully the Yankees brand, taking away from the big picture philosophy Steinbrenner has always had during his stewardship as Yankees owner.

The new Yankee Stadium has been designed to generate tens of millions of dollars annually in corporate sponsorship naming rights fees. Each gate at the new Yankee Stadium will have its own lead (title) sponsor. The Yankees brand will drive decision makers to buy parts of the stadium for millions of dollars. Assuming the Yankees can meet their goals of what amounts to a series of ‘mini-naming rights deals’, and there is no reason to believe they won’t, the Yankees will easily surpass $10 million in annual corporate naming rights.

The variable in today’s agreement, the yet-to-be signed multi-million annual for the Giants/Jets stadium, and the Yankees knowing full well the tens of millions of dollars they’ll be able to generate without giving up the sanctity of the Yankee Stadium name is the New York market. There is no bigger or more important market. It’s a marketing and sponsorship selling advantage New York based sports franchises have, that other markets know all too well they do not have.

Major League Baseball returned to Washington two years ago. As attractive an opportunity as that might have represented to the D.C. Sports and Entertainment Commission who manages R.F.K. Stadium, where the Nationals will call home for one more season before moving into their $500 million stadium, the Commission has yet to find a corporate naming partner despite numerous reports suggesting the Commission was close to an agreement several times over the last two years. And the Nationals have yet to find a company prepared to invest millions of dollars in their new stadium.

The Superdome hosted the 2002 Super Bowl, the first major sports event played after the tragic events of September 11, 2001. Well before that terrible day, the state of Louisiana signed an agreement to sell the naming rights to the Superdome as a way to raise money to help keep the New Orleans Saints football team from leaving town. The state of Louisiana hired Envision LLC, a Los Angeles based company to sell what couldn’t be sold, the naming rights to the facility hosting a Super Bowl game.

"We thought we had progress with a couple of companies," said Jeff Knapple, president of Envision in a CNN report on the eve of Super Bowl XXXVI. "Unfortunately, we couldn't make the deadline. We'll have to circle the wagons a little bit and let game come and go."

And it wasn’t as if the Super Bowl was the only major event the Superdome hosted during that period, the time before Hurricane Katrina. The Superdome hosted the 2003 Final Four, and the 2004 BCS title game.

"The companies we were speaking to at the end didn't care that much about this particular Super Bowl," Knapple told CNN four years ago. "There's an anticipation we could get the game back in the life of the sponsorship agreement. But I'm not going to delude myself to think there will be no impact. The Super Bowl served a unique role as the marquee sporting event."

Four years later, the worst national disaster in American history, Envision is no longer involved with the selling of the Superdome’s naming rights, the National Football League has taken up that cause, and there still isn’t a company ready to invest in the New Orleans based football stadium.

Frank Vuono, a sports marketing consultant hired by the NFL, is assisting the Saints in recruiting a naming rights partner for the state-owned Superdome. Vuono told USA Today that he believes a naming rights agreement could be worth $4 million-$6 million a year to the state; most new stadium deals average 20 years.

"There's no way the Saints can be long-term viable in New Orleans without more corporate sponsorship," Vuono, who has worked on nine NFL naming rights deals told USA Today. "We're getting good response from five, six corporate sponsors. But when they saw the record ticket sales, it took away the sense of urgency. There's still urgency."

A national company could reap immeasurable goodwill.

"The Superdome naming rights would be the best move a national company could make," Vuono talked about before the Saints returned to the Superdome on September 25. "The Saints' home opener is on a Monday night. All eyes will be on New Orleans and the grand reopening of the Superdome.

"The exposure that company will get will be damn near the equivalent of a Super Bowl. And companies pay $2 million for 30 seconds of advertising during the Super Bowl."

New York Mets owner Fred Wilpon is going to have a great start to his week. He’ll break ground on a $600 million stadium, with a naming rights agreement worth more than $20 million annually, and likely worth as much as $650 million over the lifetime of the agreement. The breakdown for the costs associated with the stadium: $444.4 million for the stadium, and the remainder for infrastructure. $89.7 million in capital funds from the city, and $74.7 million in rent credits from the state. Approximately $440 million from the team, although the Mets have said they expect to spend close to $550 million. When you factor in the hundreds of millions of dollars the Mets will generate from their corporate partnership with Citigroup it’s easy to understand how the Mets are going to make the economics of their stadium work.

Location, location, location. The Superdome hosted the 2002 Super Bowl, the 2003 Final Four, the 2004 BCS Championship Game, and the resurrection of an entire city, and still hasn’t been able to find a company prepared to invest no more than $6 million a year in their naming rights. Is it any wonder why Tom Benson wants to move the Saints? Naming rights have become a critical revenue stream for teams’ today. All one needs to do is compare the New York and New Orleans markets to appreciate how important it is.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: New York Newsday, Biz of Baseball, ballparks.com, The New Orleans Times Picayune and the USA Today.

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