Did the "deal just set the sponsorship industry back 100 years? I'm
leaning toward yes," quipped sponsorship expert Jim Andrews on
"It doesn't speak highly of the medium when a major property
like an NBA team and an NBA arena enters a deal with a company that
is not a blue chip established company -- a company that has a lot
of questions hanging over it," Mr. Andrews, a senior VP at WPP's
IEG, which tracks sponsorships, added in a later interview. "Were
there not more established companies, more bigger brands that were
interested ... if that's the case, why not?"
The short answer, and one that might relieve those hoping for a
sponsorship rebound, could be that the Kings simply don't have a
lot going for them right now. The team is stuck near the bottom of
the Western Conference standings, draws a paltry attendance of
13,287 a night -- second-worst in the league -- and, despite trying
for years, has been unable to finance a new arena to replace the
23-year-old Arco Arena, which will be renamed Power Balance
Pavilion beginning March 1. The Kings also play in one of the
smallest media markets in the NBA and have recently been the
subject of relocation rumors.
"For the smallest of the markets, getting a meaningful naming
rights deal for a sports facility has always been challenging, but
it's more so today than it's historically been," said Marc Ganis,
president of SportsCorp, a sports-business consulting firm.
That's mostly because the universe of potential sponsors has
shrunk: Fewer companies are willing to invest big sums in a single
advertising vehicle, and marketers are reluctant to ink long-term
deals with the economy still on shaky ground, Mr. Ganis said.
But there are signs of a rebound. Sports sponsorship spending,
including more than just naming rights, grew by 3.4% in 2010 to
$11.66 billion, up from the 1% decline in 2009, according to the
IEG Sponsorship Report published earlier this month. And spending
this year will jump by 6.1%, the report forecasts. Even so, two of
the biggest sports properties remain unnamed as owners seek deals
worth several million dollars a year: the stadium shared by the New
York Giants and Jets, and the Dallas Cowboys stadium, which hasn't
secured a deal despite hosting the Super Bowl this year.
Kings owners Joe and Gavin Maloof had been searching for a
naming rights partner since September to replace its
$750,000-a-year deal with Arco, the BP-owned company that operates
gas stations in five Western states. By turning to Orange County,
Calif.-based Power Balance, the Maloofs -- who own the Palms Casino
Resort in Las Vegas -- are making a big gamble, some experts
"I think it's an incredible risk," said David Carter, director
of the Sports Business Institute at University of Southern
California, noting that if Power Balance were to go out of
business, "the value of the next naming rights deal really goes
The Kings have not disclosed terms of the Power Balance deal,
which experts estimate could be worth about $1 million a year,
potentially including tie-ins with the Palms. Some of the richest
naming rights deals in the NBA include American Airlines'
sponsorship of the Dallas Mavericks arena, valued at $6.5 million a
year, and the Houston Rockets deal with a regional Toyota
distributor, worth $5 million, according to Marquette University
Law School's National Sports Law Institute.
Power Balance bracelets feature holograms that are marketed to
"resonate with and respond to the natural energy field of the
body." Boosted by endorsers including NBA star Shaquille O' Neal,
the bracelets were named 2010 sports product of the year by CNBC.
But late last year, Power Balance was slapped by the Australian
Competition and Consumer Commission, which said the company
admitted "there is no credible scientific basis for the claims"
about the bracelets, adding that "consumers should be wary of other
similar products on the market that make unsubstantiated claims,
when they may be no more beneficial than a rubber band."
In the U.S., the Federal Trade Commission has not taken any
action, but the company faces lawsuits from consumers alleging
false advertising. Power Balance declined an interview with Ad Age,
but in a statement on its website denies the Australian charge that
it admitted that the product does not perform.
The naming-rights deal could bring more attention to the ad
controversy, but it could also bring needed exposure for a brand
seeking mainstream status, experts said.
"They've got to have an implementation strategy that simply goes
beyond putting their name on the building," Mr. Ganis said. "They
have to go out and define themselves ... almost like a politician
As for the Kings, spokesman Mitch Germann called Power Balance a
"young, hungry, up-and-coming brand that we're excited to align
And for a team in need of revenue, "it's probably worth it form
their perspective to go and take the risk," said Dany Berghoff,
VP-business development of 21 Sports & Entertainment Marketing
Group. "For the market they play in, for how the team's been doing
... I say it's great deal for them to get that money."
After all, the Kings could be the New Orleans Hornets, which has
been searching unsuccessfully for a naming rights partner since