Key Arena Financing Tied to Sign Rights

The financial linchpin of computer entrepreneur Harry G. Cooper’s plans to build a privately funded $120-million sports “palace” in San Diego involves his ability to persuade a company to spend as much as $40 million to have the arena named after it.

If that cash-for-your-name-in-neon idea proves to be a difficult sell--and Cooper, arguing that companies will be fighting for the privilege, insists that it won’t--the plan to construct the 22,900-seat arena without public funds could disintegrate. At the very least, the financing certainly would become more problematical, Cooper admits.

“This is the key--there’s no doubt about that,” said the La Jolla resident, who hopes the new arena will lure professional basketball or hockey franchises to San Diego. “It’s the reason I was able to stand up in front of the city and say that I wasn’t going to ask for any public money. The sign deal is an integral part of the whole financing package.”

Patterned after Los Angeles Lakers’ owner Jerry Buss’ estimated $1-million-a-year contract with Great Western Bank that resulted in the Forum being renamed the Great Western Forum last December, the deal envisioned by Cooper and his partner, Richard Esquinas, is designed to raise as much as one-third of the arena’s estimated construction cost through what essentially would be a corporate advertising campaign.

Under Cooper’s plan, a company would sign a 20-year agreement that, in exchange for an annual price that he estimates at between $1.5 million and $2 million, would allow the firm’s name to be incorporated into the arena’s name--as in, for example, The Widget Palace. Besides being placed on the complex itself, the company’s name would also appear on tickets for all arena events, parking lot marquees, the basketball court or ice, and perhaps even on each seat.

Far from being merely an expensive bit of corporate ego gratification, the sign plan, Cooper and Esquinas contend, makes solid business and advertising sense.

“This is much, much more than just putting a name on a building, like some banks do for prestige,” Cooper said. “Of course, prestige is involved here, too, because every time a game is broadcast from the palace, the company’s name

would be mentioned. But the name’s also going to be on tickets and signs, so there will be a lot more exposure.”

Preliminary analyses by Cooper and Esquinas suggest that the deal could be as cost effective, if not more so, as conventional print and broadcast media advertising. If, for example, near-sellout crowds filled the arena for, say, 150 games, concerts and other events a year, more than 3 million people would be exposed to the company’s name on multiple occasions--while looking at the tickets, entering the building, on the seats.

In addition, tens or hundreds of thousands of automobiles will daily pass the arena, expected to be built either downtown or on a 38-acre site that Cooper owns in the so-called Golden Triangle of Sorrento Valley. An estimated 200,000 cars pass by the Sorrento Valley site daily, Esquinas said.

‘Real, Strong Case’

“After doing some numbers crunching, you can make a real strong case for this and see that the cost-per-exposure would be low,” Esquinas said.

Even so, why does Cooper believe that any company would be willing to pay perhaps twice as much to attach its name to a San Diego arena as was paid by Great Western in glitzier, more-populous Los Angeles?

“Because our sports palace will be newer, bigger (by about 5,000 seats) and more attractive,” Cooper said matter-of-factly.

Though other stadiums and arenas have been named after financial benefactors--among them, Busch Stadium, Pauley Pavilion and Rich Stadium--sign deals such as that contemplated by Cooper and Esquinas are a relatively new concept in corporate advertising.

Arco Agreement

In a deal similar to the one that gave the Forum its Great Western prefix, Arco agreed to pay about $600,000 a year to have the arena where professional basketball’s Sacramento Kings play known as the Arco Arena.

Such arrangements, Esquinas argues, are a logical extension of corporate sponsorship of sporting events and athletes’ promotional affiliation with companies, the latter being very familiar to television viewers thanks to the small corporate logo patches positioned on athletes’ outfits to attract maximum camera exposure.

“It’s definitely the wave of the future,” Esquinas said, echoing those who believe that the ready availability of corporate dollars will make commercial names for sports arenas increasingly common in the 1990s. “We’re not the first, but it’s all still new enough that we’ll probably be setting an example for others.”

To assess the level of interest in their proposal, Cooper and Esquinas plan to solicit bids from about 100 large U.S. companies next month and hope to have a contract signed by January, 1990. Any contract likely would be structured on a contingency basis, with different tiers of payments based on whether the arena ultimately houses a National Basketball Assn. team, a National Hockey League franchise, both--or neither.

“Certainly, there’s still a signage value even without a franchise,” Cooper assistant Larry Kallett said.

However, Cooper--a cautious businessman who has parlayed the millions that he made in the computer industry into a substantially larger personal fortune through land investments--has said that construction of the arena, which he hopes to open in 1992, might not even start until he is confident of receiving an NBA or NHL franchise.

“Obviously, getting the maximum amount for signage depends on getting a team,” Cooper acknowledged.

Few Guidelines

Cooper has established few guidelines in his search for a corporate partner, other than saying he hopes to attract a “class company” to lend its name to the arena.

“I doubt that I’d go for the Tidy Bowl Palace,” Cooper said.

“And you probably won’t see it being named the Preparation H Arena or Kaopectate Arena, either,” Esquinas chimed in, laughing.

After a well-timed pause, Cooper chuckled and added: “Of course, if they offered $5 million a year, I might have to reconsider.”