Naming-Rights Deals Only Getting Hotter

Biggies of 2006 are just a taste of what's to come in 2007 for Superdome, Nats, Jets/Giants

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Naming-rights deals for pro teams' new stadiums represent the high end of the sports-sponsorship spectrum, and 2006 shaped up to be the hottest year ever for such agreements. The pace should continue into 2007.

The rarefied atmosphere of major naming rights includes deals that involve tens of millions of dollars and last for decades. Behind the surge in these deals is the same force that's driv-ing the marketing world: marketer dissatisfaction with the 30-second TV commercial.

"We show that 16 North American 'Big Five' naming-rights deals were completed in 2006 for new or existing facilities, an all-time record," says Dean Bonham, chairman-CEO of Bonham Group, which brokered several naming-rights deals in 2006. (Those five top pro sports, as identified by Bonham Group in its tracking of naming-rights deals, are the National Football League, Major League Baseball, National Basketball Association, National Hockey League and Major League Soccer.)

"There were seven major facility naming-rights transactions completed during 2006," says Dennis Howard, a naming-rights expert and professor at the James H. Warsaw Sports Marketing Center at the University of Oregon. "Companies committed $956 million in these naming-rights arrangements over the next 20 years. The number and economic magnitude put these very close to the best years ever."

The blockbuster of 2006 was Citigroup's deal with the New York Mets for the new Citi Field. It's been reported at $400 million over 20 years, unprecedented for a baseball deal. The park is scheduled to be ready by Opening Day 2009.

The pace is likely to be at least as frantic in the immediate future. Earlier this month, the NHL's New Jersey Devils and Prudential Financial finalized a $105.3 million deal for naming the Prudential Center. Several other major naming deals are expected to be announced this year. Taking center stage in financial terms will be a deal for a new stadium serving the NFL's New York Giants and Jets.

"If one sport facility with not a lot of national television coverage is worth $20 million a year, what is a facility with two teams worth? Could it and should it be north of $20 million? Sure," says Frank Vuono, a partner at 16W Marketing, a sports marketing company, in comparing the Mets and Giants/Jets deals. 16W is currently handling naming rights for the New Orleans Superdome.

Wasserman Media Group is responsible for the naming rights of the Giants/Jets stadium.

"I'm not going to comment on a dollar value [of the Giants/Jets deal]," says Jeff Knapple, president of Wasserman's marketing division. "However, if you look at the numbers and run them outside New York and you look at the comparables, the NFL is almost double Major League Baseball." Wasserman is also expected to handle naming rights for Washington Nationals Stadium. The $611 million MLB park is expected to fetch between $4 million and $6 million a year from the sponsor.

"There's been an education in the market from the early iteration of naming rights," says Brian Schecter, a sports business analyst at Kagan Research. "Teams have been very clever in how they've used naming rights. They're also doing more due diligence, avoiding the Enrons of the world [the Houston Astros in 2002 bought back naming rights from the disgraced Enron, and Minute Maid took its place] and suffering the consequences when these companies take a hike."
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