• San Diego Chargers: Does L.A. even want them? Local fan’s take — Yahoo Contributor
• Naming-rights roundtable: Seeking the next big deal — Sports Business Journal
Chargers stadium week in review: Renovation
Matt Hall, SD Union Tribune
September 20, 2011
http://www.signonsandiego.com/news/2011/sep/19/chargers-stadium-week-in-review/
Last week, a single question seemed to dominate the Chargers stadium debate: Why not renovate the 44-year-old Qualcomm Stadium?
It's something a group of local preservationists has wondered for years and one they recently brought off the backburner. Led by retired architect Jack Carpenter, the group says a renovation that widens concourses, upgrades technology, modernizes locker rooms and adds premium seats, restaurants and bathrooms would cost only about $250 million, or one-fourth the cost of a new stadium in East Village.
They say the remodel would preserve an important piece of local architecture and prevent the team from bolting to Los Angeles. (And it has to be asked: Would this happen at another venue?)
I wrote this about the group Thursday:
The architects have a vision but no drawings, a new manifesto but not the support of the team. Yet they hold out hope.
That’s in part because they speak for a broad constituency. Nearly a decade into the Chargers’ search for a new facility, many San Diegans still suggest that the simplest solution is to renovate the existing stadium.
The Chargers and the Mayor's Office say (and said again Thursday) that they have long moved on from that idea, but judging by a jungle of comments the story generated, others clearly haven't.
For a sample, read the comments at the bottom of my story here or check out my Storify on the subject here.
As an aside, I'm a fan of the range and the tone of the comments on my Qualcomm Stadium story. They seem an indication the Union-Tribune's elimination of anonymous commentators has elevated the debate. Agree? Disagree? Post your thoughts below. (See what I did there.)
I wasn't the only one writing about the Q this past week. Writers ranging from Los Angeles Times columnist T.J. Simers to National Football Authority blogger Michael Scarr weighed in as well.
In this post, Scarr wrote that the Chargers' home is "a bit of a dump" but added, "San Diego may be the best place to watch a professional football game simply because it's unexpected. It can't claim legendary status like Lambeau or Soldier Fields or provide a cutting edge experience like the new palace in Dallas, but the combination of climate, field product and in-stadium vibe make for a game worth attending."
Simers, likewise, had a positive view from his game-day experience at the home opener last Sunday. Read his column here or just keep reading for his perspective:
When you ask Chargers employees why the team needs a new stadium, they talk about the disgusting bowels of Qualcomm Stadium, as if that's the reason they have to have a new stadium, as if the bowels anywhere are all that appealing.
Everywhere else in Qualcomm Stadium seems just fine for eight or nine days a year, and that's without the owner or city sinking any significant money into the place.
There's plenty of room in the concourses, no long lines for concessions, club areas for those who want more comfort, decent bathrooms and plenty of parking with trolley cars also available to drop off thousands here.
It's true the fans don't seem in a rush to buy tickets, 1,800 still available early in the week for the season opener, but that's not because they don't like the stadium.
How many tickets would go unsold if San Diego had a new stadium and the higher prices that would come with it?
The reluctance to buy tickets here has more to do with the cost of the Chargers experience as well as the disappointing team that doesn't always give everyone their money's worth.
The stadium's problem, as if it is one, is the fact it's not new and lacks the suites and premium seats that would allow Chargers management to wring more money out of fans.
The city skybox, in any event, is still drawing crowds. See who sat in luxury for the home opener here.
And it seems the stadium has worked out well for its corporate namesake. Among 13 publicly-traded companies with stadium deals, Qualcomm's stock has enjoyed the greatest growth since putting its name in lights, according to this Wall Street Journal analysis.
As I wrote in my story, though, the Chargers view a remodel as putting lipstick on a pigskin so who knows where the debate goes from here? Well, the team and the Mayor's Office does.
Nothing new to report about those negotiations since the mayor returned from his U.S. tour of sports venues, but as his staff and the team brainstorm ways to finance construction of a new stadium in East Village this is something to monitor: It's the discussion on how to finance a convention center expansion downtown.
By now you know that the Chargers want to figure out a way to build a stadium that does double duty as convention space. While the Mayor's Office and the movers and shakers behind a convention center expansion don't want to jeopardize their overhaul by tying it to another project, any changes to or uncertainty about the hoteliers' plan may be an opening for the team.
At the San Diego Reader, columnist Don Bauder cast doubt here on the usefulness of a downtown San Diego football stadium doubling as convention center space. He wrote:
A company displaying tractors or construction equipment, for example, does not want to be surrounded by a bunch of empty seats.
The stadium touted by the Chargers would be several blocks away from the convention center; thus, it would have two strikes against it immediately.
The largest question, of course, remains how to pay for a new (or for that matter, remodeled) stadium.
Los Angeles
Majestic Realty, the developers who want to build a football stadium in City of Industry and the tortoise in our tale, continued its slow roll last week, announcing this week it had won support from the Orange County Board of Supervisors. It previously corralled support from the Riverside County supervisors in May and the San Bernardino County supervisors in June.
Majestic's latest announcement prompted me to wonder on Twitter: #transitortailgate? If you don't get the joke, I'm surprised you made it this far today.
Speaking of the other L.A. football stadium proposal, the hare of our football fable, its biggest news this week was that a major supporter of AEG's project ... is still a major supporter.
Actually, its most interesting news was buried near the bottom of this Sam Farmer column in The Los Angeles Times on a smattering of National Football League news: I'll save you clicking through. Farmer reported that AEG's Tim Leiweke was going to be meeting with NFL Commissioner Roger Goodell Friday. No word on what was discussed at the meeting.
A prominent former San Diegan wasn't so secretive about his views on the L.A. football stadium. Bruce Reznik was quoted in this Michael Hiltzik column criticizing the Calfornia Environmental Quality Act exemptions being dispensed like candy by the state Legislature via Senate Bill 292 and Assembly Bill 900.
"In a country and state governed by the rule of law, a multibillion-dollar influential corporation shouldn't be able to go to the Legislature and get a special law," Reznik said.
The line prompted U-T colleague Chris Cadelago to quip on Twitter: "Wonder if Bruce Reznik was a Chargers fan when he and his family lived here."
The Los Angeles Daily News also talked to Reznik for its story on what the CEQA changes portend for California. The Daily News reporter didn't stop with reaching out to one Reznik, though.
She found another in Hollywood who represents developers and who called the CEQA changes "long overdue." Maybe the two Rezniks should save us all some time and arm wrestle to settle this issue.
Meanwhile, there was more skepticism about AEG's proposed carbon neutrality for Farmers Field, this time from LA Weekly.
The alt-weekly's latest stadium story prompted reader JohnLittle to write, "This is just anti-Farmers Field propaganda. Why are you so anti-jobs? Do you understand what unemployment is in L.A.? Haters."
(Ah, the Disqus commenting system. Memories....)
Reader ddbear, on the other hand, opined, "Governor Brown should veto SB 292 and allow the normal environmental review process without special shortcuts for AEG. They should not get their own laws just because they have a lot of lobbyists in Sacramento. That is corrupt."
Brown has until Oct. 9 to sign SB 292 and AB 900, as we told you in last week's stadium review.
St. Louis
In the Twenty-Seventh City, the potential return of the Rams to Los Angeles is almost an afterthought in a Bernie Miklasz St. Louis Post-Dispatch column. But it's reason to rant for St. Louis Magazine co-owner Ray Hartmann, who considers it a more pressing topic.
Miklasz noted in his column that:
The Rams almost certainly will be free to opt out of their stadium lease after the 2014 season. With Los Angeles clearly on the prowl for a team, St. Louis fans are nervous.
Kroenke politely declined to discuss the stadium situation Saturday. For now, Kroenke's attention is locked in on the immediate future.
"I'm really looking forward to the season," he said. "We've tried to put together a good organization. Our people have been working hard. Let's see what we have."
Here is Hartmann's take:
One source tells me there’s a good chance that St. Louis will be forced to throw itself into technical default of the lease next year when it’s unable to meet a 2012 deadline for asserting that it can have the Edward Jones Dome in the “top tier” of NFL stadiums.
And even it that’s not true, St. Louis would have little choice but to accept a buyout of the lease from Kroenke next year if he decided to move to L.A. to play in the new Farmer’s Field in 2015.
Would we really want to cling to a lame-duck team for three miserable seasons, knowing that it was leaving at the end of the lease? That’s like having your wife says she’s leaving you for another man, but she’s going to live at home with you for a few years until he gets on his feet.
If the Rams were to decide, however reluctantly, that the team is leaving St. Louis, it would be a decision made and announced next year, not in 2014 or after.
"When's the rematch?" — K.C. Alfred
This, of course, could be construed as good news to football fans in San Diego and these guys.
Parting shots
In Minnesota, there was a report last week that the team's total contribution to a new stadium, pegged for some time at $407 million, could approach $500 million and this report that the state's $300 million contribution "wasn't going to happen." None other than the speaker of the Minnesota House made that last statement.
The news out of Buffalo Sunday was that owner Ralph Wilson would like a lease extension, perhaps for 10 years to coincide with the length of the NFL's new labor agreement, in exchange for some improvements to the Bills' 38-year-old stadium (which bears his name). The team's lease expires in July 2013, but Wilson said he doesn't need "some billion-dollar palace." According to this report, Wilson wasn't healthy enough to attend the Bills' home opener, and dramatic win, against the Oakland Raiders. He hadn't missed an opening day since he founded the team in 1959.
Some Bay Area stadium news? Well, there wasn't any. But tweet of the week revolves around those Raiders. It goes to @LATimesfarmer (Sam Farmer of the LA Times, for the uninitiated) and came after the Los Angeles CBS affiliate did its contractual thing and cut away from that close-fought Raiders-Bills game.
This is going to sound like a setup to a joke, but it's not. Have you heard the one about the fan who sneaked a taser into a stadium? Moreover, into MetLife Stadium? For the Jets' home opener, on Sept. 11? Deadspin has the video and (earmuffs!) the audio here.
Related to such high-profile violence at NFL stadiums this season (and pre-season): Be warned. This year the league is conducting patdowns of stadium entrants from the ankles up, as opposed to patdowns from the waist up a season ago. Read about the practice here and ponder the catchphrase opportunities with some help from this related (and local!) classic.
Finally, here is the rundown of the weekly home attendance figures for the seven teams that have appeared on the NFL in L.A. short list. Teams whose names don't appear were on the road this week.
San Francisco | Attendance: 69,732 Stadium capacity: 99.3 percent (same numbers as in Week 1)
Buffalo | Attendance: 68,191 Stadium capacity: 93.3 percent
Minnesota | Attendance 62,461 Stadium capacity: 97.4 percent
For context, here is the entire list.
As always, let me know what you thought and what I missed.
San Diego Chargers: Does L.A. even want them? Local fan’s take
Freddy Sherman, Yahoo! Contributor Network
Sep 20, 2011
http://sports.yahoo.com/nfl/news?slug=ycn-9147135
Of all the NFL teams that might move to Los Angeles, I think the San Diego Chargers are the most likely to move here. The team plays in an older stadium and has not been able to make a deal to build a new local stadium, despite numerous attempts in many local areas. Even the newest proposal for a stadium right in downtown San Diego is meeting resistance and is just too far away (2018) to compete with lucrative offers by aggressive developers trying to secure a team to build their stadiums.
While the stadium issues can cause a team to move, the Chargers have also experienced issues with ticket sales and the games do not always sell out. The team's owners have also gone back and forth on selling a minority interest, which is one of the requirements of developers of both proposed Los Angeles NFL stadium projects, Farmers Field and the Los Angeles Stadium at Grand Crossing. The latest news from the team is they don't want to sell, and it was all just to save on estate taxes, which is no longer an issue with the extension of Bush tax cuts after the budget agreement. I don't believe it and think they will end up selling.
All these factors may point to the Chargers playing in Los Angeles as early as next season, but there certainly is no love for the team right now. My girlfriend is a Chargers fan and makes sure to watch every game. We ventured to the cool Down N Out bar in downtown Los Angeles to watch the Chargers-Patriots game on September 18, with her in her full Philip Rivers(notes) Chargers jersey. As beautiful as she looked, the reception was less than warm.
Not only were there no other Chargers fans in the bar, we were well outnumbered by Pats fans who loudly cheered each Chargers failure. Even the security guard at the door talked smack about the Chargers the moment we walked in, telling my girl despite how good she looked, the Chargers were still not liked there.
The Chargers are just one of the teams mentioned as a possible candidate to move to Los Angeles. The Oakland Raiders, Jacksonville Jaguars, St. Louis Rams and the Minnesota Vikings have all been named as having formal discussions with Farmers Field developer AEG.
Naming-rights roundtable: Seeking the next big deal
Sports Business Journal
September 19, 2011
http://www.sportsbusinessdaily.com/Journal/Issues/2011/09/19/In-Depth/Roundtable.aspx
The proposed Farmers Field in Los Angeles and the deal that created MetLife Stadium in the Meadowlands invigorated the naming-rights marketplace and demonstrated that such deals still work for brands. To discuss the state of the naming-rights market, SportsBusiness Journal held a teleconference this month with some of the executives on both sides of the negotiating table. They discussed the areas they see as ripe for growth and what it takes to get brands to sign on the dotted line.
■ Where are we in the state of naming rights today, in terms of the opportunities that are out there and the inventory that is out there?
Shervin Mirhashemi, COO, AEG Global Partnerships: The last few years, for us at least, it’s been hit or miss. We’ve had some obviously good hits on the naming-rights front; we’re still out in the market on some others, both domestically and internationally. But I think overall, if you start looking at the deals that have been done over the last few years, while some may say that naming rights are sort of a dying breed, or it’s far more difficult to get deals done, I personally would beg to differ. We’ve done, I think now, 13 naming-rights deals in the last 2 1/2 years alone. And while some are smaller than others, at the end of the day, it still means that partners and brands out there are respecting and valuing the concept of a naming right. I would also add that naming rights may have changed a little bit over that time period, so they’re looking for more than just the signage. … It’s a little bit more difficult or a little bit more challenging to get those deals done. But I certainly think that they’re alive and well and kicking, as evidenced by several deals that have happened over the last few months.
John Alper, senior vice president, sales and marketing, CSL Marketing Group: I tend to agree. I think if you look at the last five years, probably from 2006 to 2009, you saw these deals somewhat dry up. In fact, if you look at the deals that were done in 2009, there were only a couple for both major venues and minor league venues. And then if you take a look at the last 24 months, [you can] clearly see that naming rights are coming back in vogue, so to speak, and companies are getting much more comfortable with the opportunity, and in fact, a variety of different sectors are jumping back in.
John Brody, Principal, Wasserman Media Group: The way that people buy, generally, has evolved, and there’s no greater representation of the way people buy evolving than the naming-rights space. What we’ve found is it’s changed the way that you sell. And rather than naming rights being “found money” after a stadium is built, it’s really a part of the way the stadium is customized from the very beginning. The work we just did with the Jets and Giants on MetLife Stadium, we made a conscious decision at the beginning of the process that we were going to have five key partners in that building: the four cornerstones and the naming rights. If you look at maybe 10, 20 years ago, I don’t think buildings were built that way. So I think first, the way people buy and the way people sell has been impacted. I think that’s a good thing, probably, because it’s given a better marketing vehicle for the buyer, and ultimately the most important thing is a better experience for the fan, whether it’s with signage or customized space. … And the second thing I’d say is there is more saturation in U.S. markets, but the market outside of the U.S. we see tremendous opportunity and tremendous room for growth, and a greater appreciation, understanding and validation of the naming-rights platform every day. It doesn’t mean the U.S. market is bad, it’s just more saturated.
Mike Reisman, principal, Team Epic: My perspective throughout this call is going to be from the buyer’s side, and while we’re not out there selling naming rights, we’re clearly working with brands who are looking at them. … I’ve seen that sales cycle really slow down because I think the brands have become more circumspect in what we’re looking at. That’s good news and bad news from the seller’s perspective because the seller always wants a quickened sales cycle, but at least now, when you have a company buy into a naming-rights deal, it’s more considered, it’s more strategic and it’s going to make for a better partnership. … Buyers are more circumspect in what they’re looking for with new construction versus old construction and that’s why you see a relatively depressed pricing model on old construction — second, third, fourth names coming into a stadium versus new construction, where I think you can still get a premium based on the fact that there’s more in it for the brand.
Kip Koslow, senior vice president, Van Wagner Sports Group: I come at this much more from a buyer’s side, having done this now with MetLife, whereas I’ve been consulting on the corner back a couple years ago, and then with Sun Life at the end of 2009. I think you’re exactly right. I think each stadium presents its own unique opportunities and value proposition for the person buying. And I think the deals are probably out there. Again, a lot depends on just what you said. How old is the stadium? In Sun Life [Stadium], we were going into a stadium that was old by today’s standards and also had seven names on it beforehand, so we came at it with a much different approach.
Rob Yowell, president, Gemini Sports Group: I think it was John [Brody] that mentioned kind of seeing the shift and taking it more international. That’s definitely the perspective we’re starting to see, and it’s definitely related to where the new construction is. We’ve got a lot of these new venues that are starting to pop up now with the Olympics and the World Cup dates being awarded out. The opportunities that we’re starting to see really follows this construction trend because where there’s still some opportunities remaining here in the U.S., I think the big opportunities are starting to shorten, and those bigger opportunities are being found internationally. … Partly because I think we’ve done such a good job here in the U.S. of setting the table that … there’s a pretty good standard in place. I think the international and the newer markets are the ones that are seeking outside counsel and expertise in today’s market.
■ Talk about the differences between the European market and the U.S. market. Clearly one’s more developed than the other, but are people looking for anything different?
Mirhashemi: We jumped in the naming-rights world in Europe with our O2 deal in London and that sort of catapulted us … into sort of building out our facility business within Europe. We now have roughly, I think, 12 different facilities that we either own, manage or operate in that region. And I will tell you that’s probably one of the biggest growth areas that we see, just from a facility standpoint. In conjunction with that facility growth, you’re obviously going to have revenue streams that are going to need to be attached to that, naming rights being the largest one. For us, as everyone has conceded, the biggest growth area for naming rights really is going to come internationally. Now, we’ll obviously do our big projects here in the States, which will have naming rights attached to them. But the biggest areas are in Europe, South America, the Far East and China. So as far as the kind of deals, I can tell you with China, it’s a little bit more like the traditional deals where you have a naming component, you have branding. There’s obviously different types of activation that go along with it. But our experience in Europe has been that it’s really no different than here in the United States.
Brody: We’re working hand in hand with our client at Wembley Stadium, which we see as one of the iconic venues around the world, and the hallowed grounds there. But what we’ve seen generally, to compare and contrast outside of the U.S. to the U.S., if you look outside of the U.S., they’re used to logos on jerseys and sponsored kits. But they’re really not that familiar with something that is very familiar here in the U.S., which is naming rights. It’s really just educating and making changes to the fabric of what they’re used to as fans. And it’s always about enhancing the fan experience if you’re a naming-rights partner, or any partner. And that’s what I think part of the education is, whether it be Wembley, or you know, we did the Emirates Stadium for our friends at Arsenal, it was educating how naming rights can be a real enabler and a fan enhancement vehicle, and a tremendous asset that people are really starting to embrace in Europe.
Yowell: I think the main difference is that, where here in the U.S. naming rights is the pinnacle opportunity with a sports franchise … the pinnacle opportunity anywhere else in the world has always been the kit. And so typically, from a mind-set, “Well, we’re going to sell naming rights,” you know, it is hallowed ground, especially with a lot of these soccer venues. I mean, to change the name of some of these facilities overnight is hard, and breaking tradition. But as they start to develop new stadiums … they’re becoming a little bit more Americanized and opening up those doors because they’ve seen the success that the WMGs have had in the U.K. and AEGs have had with their venues. So again, it’s a perception and just a philosophy that I think is starting to become more prevalent and I think China is very much out in front of that. And certainly the two venues that Shervin’s group did in Shanghai and Beijing really set the mark.
■ How big is that cultural barrier, in terms of either fan acceptance, media acceptance and verbal mentions? Or are you saying that it’s basically just a slow-build and that it’s going to be more commonly accepted shortly?
Yowell: For example, FC Barcelona just obviously changed their kit over to Qatar Foundation, off of UNICEF. But I could never see anyone within that group ever accepting the change of Camp Nou [to] anything else than Camp Nou. ... I don’t think that’s a name that would ever change, you know. One of the largest stadiums in the world, and I’m sure there are brands that would line up to put their name in association, not only with that football club, but also that venue. The only way that you’re probably going to be able to change that is that Camp Nou goes into disrepair, and they’re going to build a new one. There’s your opportunity to kind of transition over to the new era. It’s easy to change the name on a kit, but for a lot of these fans, and certainly the U.K. is with that as well, to change the name of Old Trafford and Man United would throw an uproar. They’re already pissed that an American owns the team. I can only imagine if we come in and change the name of their hallowed grounds. I think a little bit there, culturally, is that we, as the U.S., are not used to seeing, would think it blasphemous, to put a logo on the front of the Giants jersey. But they’re like “Well, that’s old hat,” but it’s certainly OK to put the name on the New Meadowlands. Vice versa, I think that’s just where the cultural shift is there; they started so much more with the expectation and certainly the understanding [that] the name on the jersey is the bigger deal than the name on the stadium from a business standpoint, and then the fans, [it’s] kind of like that’s the one thing they still hold on to is that name of the stadium that’s been there for ages.
Reisman: Clearly, there is the tradition of a lot of these old, venerable stadiums, and clearly, there is the push and pull
between the kit sponsor and the naming-rights sponsor. There have been a lot of markets in Europe where fans have resented or rejected the naming rights in the stadium either because of the tradition or because of the kit sponsor. … I remember very well the old days of naming rights in this country and I think there are lessons to be learned from what is going on culturally in the development and introduction of naming rights into foreign markets. Because there was plenty of backlash from the media, resistance from, back in the day, from the wire services, from the major news publications, from the networks and not ever mentioning the names of the stadiums. And over time, as it became more mainstream and it became more culturally accepted, the names were accepted in the media, they were accepted by consumers, they were accepted by the key stakeholders in the sport. So part of this is just a natural evolution, which even with this natural tension between a kit sponsor and the stadium sponsor, and/or consumer acceptance, seems to be evolving faster than it did even in this country back 20 years ago.
Mirhashemi: The ones we’ve gone after are mostly arenas, obviously internationally, and usually they’re built from scratch. So in some ways it’s a little bit easier, in some ways it’s a little bit harder, depending on who you talk to, because there isn’t that legacy naming issue or legacy reference issue that you have to deal with. What we’ve experienced is, [we] certainly started it a few years ago when we did the O2, is you have to have a relationship, or at least try to forge a relationship, with the government entities that you’re dealing with, because they can make or break the media aspect of things and just the general reference to that facility by its naming-rights partner. So, for example, in London, being able to have the stop in Greenwich Village be called “The O2” was a massive undertaking, and ultimately probably one of the more important things that we were able to pull off as far as general acceptance of that facility and its name. ... Same thing with China and working with the Mercedes-Benz Arena. Having a partnership and a relationship with the government entities there comes in very handy when they’re trying to make sure that the media’s picking up on the name and they’re using it.
■ Do the retrofits/rebrandings of venues ever work? When do they work for sponsors and what are the guidelines on those?
Koslow: Again, the one closest to home for me with the retrofit is what happened with Sun Life [Stadium]. That’s Rebranding, as has happened multiple times at Sun Life Stadium, brings added challenges. probably the worst of any stadium we have here in the U.S., only in that you had Pro Player Stadium, you had Dolphins Stadium, you had Land Shark in some crazy deal, and then here comes Sun Life into the whole picture. Walking into that building, we were trying to figure out how we were going to change it over in such a short period of time. Every time I turned a corner, I’d see a different name of the stadium in a certain place. That’s probably the extreme. Now, as we’re going around working with clients and looking at some of the stadiums that have been around for 10 years that are talking about renovations and kind of creating these new branded areas, it’s going to be interesting to see what happens. When we first entered the picture at the Meadowlands, the whole concept of “less is more” was interesting to me. I wasn’t sure how well it was going to go over, but quickly we saw, you know what, this is a pretty cool concept, there isn’t a lot of clutter here, you really do own the area and the sponsor really does control what they want to put out there.
Mirhashemi: Just one quick point on the retrofits. ... It’s gotten to the point where I try to build in provisions that say, with all the consolidation in certain industries, whether it’s banking or telecom or whatever, that you almost anticipate that someone’s going to have a [mergers and acquisitions] transaction and their name is going to somehow change over the course of the naming-rights deal, that if it happens more than once, or if it happens even once, that there is some sort of additional payment that goes along with it, because it does confuse the marketplace. And I mean, that’s just the nature of the beast and you have to deal with it and sometimes it’s just a monetary thing. But at the end of the day, I think it’s a lot more challenging to try to deal with those existing facilities.
■ How much of the value in any of these naming-rights deals is the walk-up to the actual opening, and how much did Shervin’s deal with Farmers impact the industry?
Reisman: I thought the Farmers deal was one of the most outstanding deals ever done in sponsorship, in naming-rights deals. Because if there is a stadium built, and if there is an NFL team put in L.A., Farmers has locked it up. Great for them. They will be seen clearly as a company that helped to facilitate the relocation and building of the stadium. We all know that a lot of companies like to position themselves as a company that helped to build a stadium or locate a team, but it’s usually done after the fact. … I’m sure that Farmers obviously will pay some sum of money that is connected with the value they are getting in this lead-up period, but then their payments will stop at some point. So it’s a down payment for them, with which they accrue a lot of equity anyway, and it’s a down payment that will pay off the amount 10 times over. So we all joked about a naming-rights deal without a team, without a stadium, and there was a lot of jokes made about it, but it was absolutely an outstanding move by AEG and an outstanding move by Farmers, I thought.
Yowell: I’ll just touch on, certainly what Mike mentioned, that ability for that venue to come out of the ground, for any venue to come out of the ground known as “Farmers Field.” The retrofit always has that tag of “formerly known as,” “used to be called,” or “when my dad went there, it was called,” something like that. I mean the ability to actually put the shovel in the ground and have it come out of the ground. You know Staples was one of the first to kind of get out in front like that and be able to have that. Another tip of the cap to the AEG folks [for] having a building that really kind of set the standard. I think that deal, did it change the marketplace? I don’t know if it necessarily changed it, but from those of us that are on the sales side, I think it probably reinforced a lot of things that we believe naming rights is and it’s such a strong, platform-building mechanism that it can start five years before a building even exists.
Koslow: You know, a point you guys raised. Yes, we definitely were excited to move forward with the MetLife deal and MetLife Stadium. But we did wrestle with the concept of “OK, the building’s been open for a year, it’s been known as New Meadowlands. How successful were we going to be?” Forget about just the skeptic Jets and Giants fans who are always going to call it either Giants Stadium or The Meadowlands, but we wrestled with “Hey this building’s been open for a year, are we going to really get people to embrace MetLife Stadium?” To date, we’ve been very, very happy with the way it has been covered in the press, but it was a real topic of discussion as we were moving forward.
■ If we’re all saying that there’s value in the walk-up, and a large portion of value is also in the initial three to five years, why are these things still sold in 20- or 30-year increments? Is that just because that’s the way they’ve always been sold?
Mirhashemi: I think part of the reason there, quite frankly, with new facilities is when you do financing and you create the capital stacks on these deals and try to make sense of it with less and less public monies coming in, you’re putting in more and more private money. So you have to figure out mechanisms to pay for it. And in order to be able to have the contractually obligated income that would be collateralizing those financing packages, you need long-term deals.
■ Can you speak to that yet, Shervin? What a naming-rights deal does for a stadium, much less one that doesn’t have approval, blueprints or a team yet? Has that opened it up for other deals? Did other people line up more quickly once you got that deal done?
Mirhashemi: Yeah, I think that’s to the fact of something somebody said earlier, which is, you know in a lot of ways these deals are now the beginning part or instigator of getting these projects up and running. We all deal with it, especially on the facility side. Public money is really not there anymore. I mean there are some projects, there will be some municipalities that are going to throw in some bonds, etc. But the public is going to scrutinize these things more and more. We’re obviously seeing that. This is a privately financed facility, Farmers Field is, and it’s still being scrutinized on many different levels. So for us to be able to go privately finance these projects, you know you need these revenue streams. And absolutely, the Farmers deal and the naming rights there was an instrumental component of making financial sense of this project. By the way, our remaining founding partners, when we start selling those, will be instrumental in that capital stack. So will the PSLs, etc. So naming rights are the largest number and they’re very important for making these projects a reality.
Reisman: Unless the financial institutions backing these stadiums change their deal structures, there’s no way the naming-rights payment streams and deal life are going to change because they absolutely need the money to underpin the financing as you’re suggesting. The only thing I would say is, from a buyer’s perspective, there’s real leverage in how you structure those payment streams, in terms of the concessions you might be able to get or the value you might be able to get from the buyer. So if you are apt to front-load some of your payments, that’s value to the seller, and it’s something that can help generate more benefits for you. But you’re still not going to shorten the amount of time that you have in the rights that you have with the stadium.
Brody: Everyone agrees on the banking side of it, but let’s not lose sight of the fact that this is a marketing expense and this is a marketing play. And the longer you can build the connection is better for both parties. Not to be too tongue in cheek, but they are the most important partner you have. They are the closest member of your family. And when you’re naming a baby, you don’t name a baby in five-year increments. You do it for a lifetime. You try to do the same thing for the lifetime of the building.
Alper: I agree with what everyone is saying. I do think there needs to be some differentiation between elite properties, iconic properties, like what they have in New York with MetLife Stadium, and perhaps maybe some of those venues that maybe aren’t quite elite in major league sports. We’re seeing that there are situations where you have to do shorter terms, even situations where you might have to have an “out” clause. It’s not ideal from the sales side, in fact it’s not preferable whatsoever. But if you’re talking about iconic venues, you’re going to be able to get that 20- or 30-year lifespan. But I think with a lot of, whether you look at colleges, whether you look at, like I said, lesser dominant pro sports teams or venues in smaller markets, right now you’re seeing short-term deals. I’m not saying that’s the way it’s necessarily going to go, but right now, especially in the economy where there’s a lot of uncertainty, I think some of these venues have to take what they can get.
■ If you are, say, five or six years into one of these deals, you’re probably on your fourth CMO, you may have a new CEO, you certainly have a new marketing agenda, a new product and a new competitive set in the markets they compete with. So how easy are any of these to support five or six years in? It just seems that with a lot of these, they just kind of become names after awhile.
Alper: Well, you know, let’s keep in mind that certainly, the majority of the value associated with a naming-rights deal is just that: the fact that your name is on there. Clearly, sponsors are a lot more attracted to activating and tying their brand and customer loyalty and so forth. But a naming-rights deal, the majority of what you’re spending is for the fact that you’re getting hundreds of millions, if not billions of impressions. … If a sponsor loses interest, I’m not going to say that’s their fault, but you can only push them so far, to try to activate and do whatever is best for their brand on-site. I don’t think that’s the norm though. … I certainly wouldn’t think that most naming-rights sponsors lose interest or stop activating midway through their term. I think that would certainly be the unusual circumstance.
Brody: I think it’s like any other investment. You get out of it what you put into it. … If you don’t take care of the asset that you have and market it, whether it’s five years, 20 years or six months, it’s not a wise investment.
Koslow: For MetLife and MetLife Stadium, I’ve got about six hours of meetings each week talking about our activation, and we take it week by week. We look at the content, and even when we were developing our space, we had to factor in, OK, what are we doing for the Jets versus the Giants versus U2 versus a soccer friendly coming in? And we had to have the ability to change out our messaging and change our activation on a daily basis. But you raised a great point in that, yes, chief marketing officers change out and they tweak the logo a little bit and stuff like that. … It’s incredibly expensive to go out and change our graphics, change out the branding that they’re doing there and that’s what’s going on now for the next 25 years with MetLife at MetLife Stadium. What we did for Pepsi at Cowboys Stadium on the upper platform, they went in there, they did a certain thing, and then we basically went in one year later, gutted it and spent, you know, well into seven figures on refitting the messaging.
Reisman: First of all, I think you’re right, I think a lot of times these naming-rights deals can be a chairman’s prerogative, new toy; a new group of executives next year feels like they’re saddled with something they don’t understand. That’s unfortunate, because maybe a good deal wasn’t struck in the first place for them. Which is why, I’m sure, both on the seller’s and the buyer’s side, a robust, flexible group of benefits and assets is in everybody’s interests going in.
■ Has the naming-rights market recovered simply because the stadium in New Jersey was sold? Are you willing to say that it’s bounced back completely?
Mirhashemi: I don’t think it necessarily went away.
Yowell: I’ll agree with Shervin. I don’t think it ever went away. I think Mike alluded to it earlier. I think the process really became much more detailed and certainly the marketers that were looking at deals obviously knew they were [in a] much bigger spotlight, if you step into that realm. T’s were crossed, I’s were dotted, and I think they covered every other letter in the alphabet of a deal to move it forward. Look, we’ve seen sports spending come back really strong on a global scale. I don’t think it ever went away, and I think sports has always been part of the marketing budget of major brands. But also, I think the opportunities are still there …. Now our economy, if you will, is still taking a kick in the ass a little bit, but look, companies need to do business. The Farmers deal is really a shot across the bow of the insurance companies. Maybe we might see a little bit more spending in that space. Certainly you kind of saw a little bit of that when Staples did their deal. You saw the Office Depots and the OfficeMaxes step up their spending and go “Holy shit, now these guys are serious.” And I think that’s good for all that are on the phone, whether we’re representing brands or we’re representing properties. We’re seeing that market. We’re seeing the gloves come off more and more, and I think we’re going to see more of that as we start crossing our respective borders with the opportunities that we’re seeing internationally.
Koslow: I think just the state of the economy is going to continue to influence how quickly the biggest deals are getting done and the overall deal structure; I think you can’t help it. But point to the economy for how long these deals are taking.
Brody: Good ideas will get funded in economies that are challenged and economies that are prosperous. It just causes the seller and the buyer, frankly, to be sure that the ideas that they’re looking at and the concepts that they’re looking at are good ones. And if they’re good ones, people will find the financial wherewithal to fund them.
Reisman: I still see budgets being extremely tight, and I don’t think the naming-rights deal is back any more than the sponsorship business is back in terms of money being spent. Is it up over the height of the recession? Yes. Is it back anywhere near where we were pre-recession? No. I think the naming-rights industry reflects that as much as the sponsorship industry does.
■ One statement often said about naming rights is they don’t work. Do you guys have any other thoughts on that? What is the biggest misconception about naming rights?
Brody: I’d say people don’t understand the flexibility of naming rights. It allows you to market in MetLife’s case to NFL fans one day, Bon Jovi concertgoers the next, international soccer fans the next and lacrosse fans the next. And it gives you that connection that is deeper than any other brand in a way that is uninterrupted, and in a way that is DVR-proof. And I think that is the most common misconception, is people don’t understand and appreciate the flexibility of it and the natural way in which it’s a part of the landscape of enjoying and consuming sports and entertainment in America and around the world. Paul Patsis, president of enterprise marketing for Farmers Inurance, helps announce his firm’s naming-rights deal for the proposed Farmers Field NFL stadium in Los Angeles.
Mirhashemi: I would say what you just brought up initially, which is that they don’t work, that somehow they’re a waste of money. I think if you look at, speaking from our own experience, you know, how we renew these deals. They have to have some semblance of return on investment for us to be able to renew these deals over and over again. So I think they do work, and I think they work on both sides. If you look at what Farmers did, they bought into a vision about not just putting their name up, but really sort of being behind the transformation of the economy here in Southern California, specifically downtown Los Angeles. We strategically picked them because they are a Southern California/L.A.-based company, and I can tell you they have been unbelievable in their support over the last nine months as we’ve maneuvered through the city process, through the state process. If we had picked a partner that was, quite frankly, based out of New York or Texas somewhere, it would never have had the same benefits. Put aside the financial benefits, it would never have had the same strategic benefits that Farmers has brought to the table.
Reisman: One of my biggest pet peeves in this business is people who sit in judgment of whether it’s a good deal or it’s not a good deal that a company has made. You cannot look at one of these deals and say, “OK, $10 million a year for 30 years, $300 million. How could somebody do that?” It’s like there is so much in a contract built in. … I’ll give you two quick for instances: The Reliant deal. At the time, the biggest deal done, $10 million a year over 30 years. What people failed to see is it wasn’t just a stadium. It was a state-of-the-art convention center which caters to the energy business, and Reliant was going to be able to showcase its brand year-in, year-out. It was the Astro Arena, and a bunch of other benefits. … Similar thing going on with Chase and the money they paid for MSG (Madison Square Garden). Not a naming-rights deal, but as close as you can without putting your name on it. You know, I have been pretty close to that deal. The flexibility put into that deal, as John [Brody] was just saying, the amount of inventory coming through not only MSG but Radio City Music Hall, the Beacon Theatre, the theater in Chicago, the arena at Madison Square Garden, so on and so forth. The ability for Chase to segment marketing through that inventory to just about every type of population and demographic that they have to market to in the tri-state area is just unbelievable. And so the value of that deal is actually kind of extraordinary. So I guess just to kind of tie up all of my comment is, people who deign to kind of comment on a deal without knowing about it in terms of the value, just shouldn’t be doing that.