Op-Ed: Selling naming rights would make sense for Burbank
On Feb. 9, the Burbank City Council gave IKEA the street naming rights to First Street between Santa Anita and Angeleno Avenue. The street will be renamed IKEA Way. Streets are a taxpayer-funded city asset and ordinarily, naming rights are sold and not given away. The exception is to rename a street in honorarium after a beloved community member.
We taxpayers should have been fairly compensated for it per regular practice in municipalities throughout the nation. For the City Council and other city officials to dismiss this concept is not a healthy representation of reasonable and well-informed leadership.
Renaming to IKEA Way would allow Burbank to seek state Department of Transportation signs along the freeway. The desired result would be to direct freeway traffic to exit at Olive, Verdugo and IKEA Way instead of Alameda, and keep traffic off the South San Fernando corridor.
The benefit to IKEA is valuable exposure along several miles of one of the busiest freeways in the world along with brand advertising and communications along hundreds of feet of commercial frontage, not to mention ancillary brand advertising on maps, GPS apps, and other platforms and channels.
Selling naming rights for taxpayer-funded assets is not a new practice and provides significant compensation to the municipality selling that right. It would make a lot of sense for Burbank, a slow growth city facing a deficit.
Naming rights can be extremely valuable. We should consider responsibly and reasonably leveraging such rights to generate revenue/benefits for our residents. We certainly shouldn’t give them away just because we can’t be bothered to responsibly explore the possible pros and cons to such a plan. Other entities use sponsorship specific guidelines that provide a way for these types of transactions to take place.
For example, there is a pending deal in Ohio that is very similar to the IKEA Way scenario: A corporation is purchasing the naming rights for an access route to their business, located at a freeway offramp. The results are a freeway exit sign named for the corporation, and a 30-year, $3.8 million revenue stream for the state of Ohio.
Another example of selling naming rights involves UC San Diego Health paying $37 million over 30 years to the San Diego Metropolitan Transit System (MTS) to rename the San Diego MTS Blue Line to the UC San Diego Blue Line. It’s a partnership that enhances the UC San Diego Health brand throughout the city and results in a reliable revenue stream to MTS and the funding of much needed transit.
This month the city of Milwaukee closed a small cell technology deal with Verizon that equates to about $3.5 million over 35 years.
Sharon Robinson, administration director for Milwaukee, indicated that other businesses want to work with them as well. In an email, Robinson told me the following: “The city of Milwaukee has inventoried city assets with the goal of leveraging these assets to create marketing partnerships between the city and private sector businesses and nonprofit organizations in areas including advertising, naming rights, sponsorships and in-kind contributions. Forming these partnerships holds the promise of generating millions of dollars in new revenue to support city of Milwaukee programs and services. Milwaukee is limited in its revenue generating options. Over the years, there have been fluctuations in state revenues and there are no local sales or income tax. Alternative revenue sources, like this, are needed to generate revenues, maintain high quality services and minimize tax and fee increases.”
City Council’s reasons for giving the IKEA naming rights away were as follows: It was apparently Burbank’s idea to rename First Street, not IKEA’s; it will benefit Burbank in that it will better direct traffic to the IKEA store and hopefully, keep traffic off Alameda and South San Fernando; selling the rights will set a precedent and we might get stuck with an entity that wants an offensive street name.
No precedent is set that cannot be fairly contextualized. The enormous yellow sign on the IKEA building, signaling the store’s location, does a great job of directing customer traffic to the store. Should the city pay for that as well? All these issues are taken care of through negotiation so the result is beneficial to both the taxpayers and the corporate partner. Agreements are written to exclude names that are improper.
Burbank can use the significant amounts of money that naming rights partnerships can generate and could at least partially replace funds that previously came from redevelopment agencies. Even if the IKEA Way street renaming successfully diverts the largest part of the freeway traffic to First Street and away from the San Fernando corridor, IKEA traffic from Glendale and Burbank may find the South San Fernando corridor the most convenient access.
Also, the corridor will continue to redevelop with the draw of IKEA as an anchor. Revenue from the IKEA Way street renaming could fund a plan and maybe all the necessary improvements to transform South San Fernando Boulevard between Alameda and Verdugo into an attractive area of our city, safe for residents and shoppers alike, and possibly generating even more revenue for our city.
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SHARON SPRINGER is a Burbank resident.