Location, Location, Location – the sports naming rights bar is raised again thanks to the Big Apple
The Atlantic Yards, planned for a 22-acre site near Downtown Brooklyn, includes 6,400 rental apartments and condominiums, office towers and a boutique hotel, in addition to the arena. The project was approved by the state last month. The arena serves as the center-piece for the Atlantic Yards project. Bruce Ratner paid $300 million to buy the Nets in 2003; it’s unimaginable to think that less than four years later the Nets (who have never been considered one of the NBA’s marquee franchises) would secure a record arena naming rights sponsorship agreement.
According to a New York Times report: the protestors were accusing Barclays of participating in the state’s attempt to use eminent domain to condemn property for the project. They also said Barclays profited from the slave trade yet is aligned with Bruce Ratner, who is marketing his team to African-American fans. A company spokesman said Barclays had not been involved in slavery.
This was the first and it won’t be the last time the controversial real estate project, with the Nets arena seen as a key to the entire project, has drawn critical attention. Two weeks ago on January 10, a group of tenants currently residing on the land earmarked for the $4 billion project filed a lawsuit against the Empire State Development Corporation, the state agency that is prepared to seize properties on behalf of Forest City, Ratner’s Company (the Nets are owned by Bruce Ratner) for the project. The Empire State Development Corporation is prepared to cite ‘eminent domain’ (The power of the federal or state government to take private property for a public purpose, even if the property owner objects). Protestors, seizing land and upset populous – nothing was going to bother anyone associated with last week’s momentous announcement.
"Barclays is thrilled to partner with the Nets in this exciting endeavor. We are delighted to put our name to a development that will be a visual and economic landmark in the renaissance of Brooklyn," said Robert E. Diamond, Jr., President, Barclays PLC. "This opportunity brings together economic prosperity for Brooklyn and the chance to participate, in a unique way, in the cultural and sporting life of New York."
In addition to the agreement, Barclays has also agreed to partner with the Nets in the Nets-Barclays Sports Alliance, a non-profit organization whose goal is to promote athletics, education and personal development among young people in Brooklyn. The alliance will, as its first objective, repair and renovate basketball courts and other sports facilities throughout the borough, as well as sponsor amateur athletic tournaments and clinics for Brooklyn's youth.
This initiative mirrors the Barclays Spaces for Sports program in the UK, which helps local communities transform neglected land into the sporting facilities they want -- from skateboard parks to soccer fields or multi-use game areas. So far Barclays has opened more than 100 community sports sites across the UK.
"We are very proud to be a partner with Barclays, a prestigious company that exemplifies and shares our commitment to excellence, leadership and success," said Bruce Ratner, President and CEO of FCRC and Chairman of the Nets. "We believe this partnership marks an important moment in Brooklyn's history and its place on the international stage. With this essential investment in Atlantic Yards and the borough, we are now one step closer to our goal of bringing thousands of jobs, mixed-income housing, and, of course, a world-class arena and franchise to Brooklyn."
"We are excited that one of the most respected global financial services companies has chosen to partner with an NBA team to demonstrate its commitment to the United States market as well as its desire to make a difference in the communities where it operates," said NBA Commissioner David Stern.
"This partnership is a defining moment for the Nets business and brand," said Brett Yormark, President & CEO of Nets Sports and Entertainment. "It truly strengthens our position as a leading sports and entertainment franchise. We could not be more pleased than to have a partner as distinguished and well-respected as Barclays."
Sports are a significant part of the Barclays worldwide sponsorship portfolio, which includes The Barclays, the PGA TOUR event at the Westchester Country Club scheduled for August 20-26 this year. In addition, Barclays sponsors The Barclays Scottish Open golf tournament at Loch Lomond, the Barclays Singapore Open golf tournament and the Barclays Premiership, the world's leading soccer league.
How big a dollar deal is this? Consider the most expensive arena naming-rights deal before the Barclays Center, the 20-year, $182 million Philips Arena deal in Atlanta. And that deal was made it 1999. Earlier this month Prudential Insurance put their name on the New Jersey Devils arena set to open in Newark in September. The Prudential Center moniker will cost Prudential an estimated $105 million over the lifetime of the agreement, making the $400 million Barclays agreed to pay the Nets that much more remarkable. Geographically the two facilities will be within 20 miles of each other. Either Prudential is getting a great deal or Barclays paid far too much.
And let’s remember the New York Mets and Citigroup announced a twenty year naming rights agreement that will 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 Mets/Citigroup agreement obliterated the $10 million annual fee Reliant Energy pays the Houston Texans to call the home of the Texans Reliant Stadium.
Last year there where 13 major arena/naming naming rights agreements for the "Big Five" sports (Major League Baseball, the NFL, NBA, NHL and MLS) negotiated. The sum for those 13 sponsorship agreements naming rights deals in North America was more than $4.5 billion. 2007 has offered an impressive start with the Nets and Devils agreements with more than $505 million.
“To have an international investment bank without a major local presence to invest the way they are in the image of Brooklyn and the image of New York just is a remarkable vote of confidence,” New York City’s deputy mayor for economic development, Daniel L. Doctoroff said. “The idea of using Brooklyn and New York to build a global brand is one that we think is a very wise investment.”
Barclays’ lack of market awareness in the United States played a key role in the Nets search for a major corporation who might be interested in paying significant dollars for their arenas naming rights. Brian Schecter, an analyst who tracks naming rights for Kagan Research told the New York Times the deal made perfect senses.
“It strikes me as a nice price tag,” he said. “What makes this deal even more lucrative is that it’s basically a basketball-centric arena.” (Philips Arena is home to both the NHL’s Atlanta Thrashers and the NBA’s Atlanta Hawks)
Brett Yormark, the president of Nets Sports & Entertainment, made it clear in seeking a major sponsor for the Nets new arena he targeted Barclays as a possible naming rights buyer, with a New York-based fashion company, a bank and two telecommunciations corporations. With the arenas projected cost now pegged at $637 million the $400 million will go a long way towards paying a significant share of the arena’s capital construction costs.
“We said: ‘Who needs a game changer here? Who’s got a footprint here, but isn’t big enough?’ and Barclays was on the list,” he said in a New York Times report. “As we scoured financial institutions we saw Barclays needed a game changer, that they don’t have as big a presence or brand recognition here as in the U.K. And we saw that it got involved with the Barclays Classic in Westchester.”
As big and important as the Nets agreement with Barclays 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 the three recent stadium/arena New York area agreements is 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.
"I think the Jets and Giants right now are licking their chops," Michael Kelley, a senior VP for the Bonham Group, a consulting firm with vast experience in naming rights told New York Newsday.
Best guess? "With people seeing 20 million for the Mets and Nets, they could get up to 30 million," he said. "The question is who can afford that? There's a small handful of companies that can."
Deep pockets are a must. Said Kelley: "All these numbers have been blowing the cap off what everyone thought they'd go for."
Jeff Knapple, the president of WMG Marketing said to The New York Times: “We’ve watched with a keen eye toward what the Mets and the Nets have done. It’s an indication of the power of the New York marketplace and its position in the nation and the world.”
Knapple negotiated the most expensive arena naming-rights deal before the Barclays Center, the 20-year, $182 million Philips Arena deal in Atlanta.
“Philips was a massive leap above Staples Center, and it’s held for seven, nearly eight years,” he said.
The key isn’t the teams that are playing in the facilities, the key isn’t the leagues or the number of teams using those facilities, and it really is location and timing. Yormark, the Nets President did his homework and found Barclays a British based company who believes they can generate greater market awareness through a sports naming rights agreement. Is it possible, if not likely probable Barclays may be involved in helping to provide some of the financing for the $4 billion Atlantic Yards project? If nothing else the awareness could serve as a catalyst to the many businesses looking to find a bank to help put together their needed financing.
The New York market had, until 1996, barely entered the naming-rights world except for the Continental Airlines, 12-year, $29-million deal to rename Brendan Byrne Arena in the Meadowlands. Now, a combined $800 million is going to the Nets and the Mets. And in a deal announced earlier this month, Prudential Financial will spend $105.3 million to name the Devils’ new arena in Newark for 20 years. In less than two months three separate stadium/arena naming rights agreements in the Greater New York area have generated close to $1 billion in sponsorship fees. That’s the power of location, location, location.
For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The New York Times