Staples Center Nails Down Some Big League Sponsors

Staples Center, the new downtown arena that will house the Lakers, Clippers and Kings, today will unveil complex and potentially lucrative sponsorship agreements that could define how arenas of the future craft sponsorship deals.

The pacts, which allow sponsors to parade their brands before local sports fans as never before, will also serve as a test of whether an arena financed largely with private money can operate profitably in an era when most venues seek public funding to survive.

The eight marketing partners to be announced today are United Airlines, Pacific Bell, McDonald’s Corp., PepsiCo, Toyota Motor Sales, Anheuser-Busch, BankAmerica Corp. and the Los Angeles Times. Two more sponsors, including an energy company, are to be announced later when negotiations close.

The deals allow sponsors to plug their frequent-flier programs, cellular phones and soft drinks directly into the game experience--in effect turning Show Time into show-and-tell. For example:

* In an exclusive Chairman’s Room hosted by sponsor BankAmerica, elite clients of the bank will be invited to schmooze with Laker owner Jerry Buss, Staples Center co-owner Philip Anschutz and other bigwigs.

* The best seats in the house will be called Premier Seats--a play on the Premiere class in United’s frequent-flier program--and fans sitting there will qualify for complimentary upgrades on United flights.

* PacBell is readying a technology center called “TeleZone” that will showcase the company’s newest products.

These deals are being watched by other stadium and arena operators.

The Staples deals “will really raise the bar around the country,” said marketing consultant E.J. Narcise, who is working on arena and stadium projects in San Francisco and Denver. “I’d be surprised, knowing the people involved in the [L.A.] deal, if they don’t come out with some tremendous partnerships, because they’ve got such a terrific product in that building . . . and the number of events scheduled.”

Sports marketing industry observers describe the Staples Center’s corporate sponsorship ventures as part of a trend that began in 1984 when businessman Peter Ueberroth developed a plan to finance the cost of the 1984 Los Angeles Summer Olympic Games.

Purists continue to criticize Ueberroth for letting marketing become the game. But the increasingly sophisticated sports marketing world still takes its cues from the 1984 Games.

“We’re using corporate partnerships as an avenue to develop the kind of funds we need to build the most expensive arena ever built,” said Staples Center President Timothy J. Leiweke. “And because of the size of the Los Angeles market, we’re able to generate the kind of exposure our partners need to do these kinds of deals.”

The kind of exposure that Staples’ corporate sponsors want doesn’t come cheap.

Staples Ponied Up $100 Million for Name

Staples Inc., the big office supply chain, paid a reported $100 million for the right to tack its name onto the arena for 20 years. Marketing industry observers believe that sponsors like PacBell, Pepsi and United are paying $2.5 million a year or more for exclusive signage rights at Staples Center.

Sponsorships are growing in importance at arenas and stadiums around the country. And observers say that competition for top-notch sponsors is cutthroat.

“The sports marketing business keeps getting bigger,” said Peter McLoughlin, vice president of corporate media for St. Louis-based brewing giant Anheuser-Busch. “There are more teams in the four major leagues, there are more cities involved and there are more new stadiums and arenas being built.”

As the opportunities expand, corporate sponsors are demanding more for their money than they did just a few years ago.

“Sports marketing used to be a real passive type of thing,” said Jeanne Lewis, senior vice president of marketing for Westborough, Mass.-based Staples. “But we view this arena as an active investment--one with real marketing opportunities outside the four walls of Staples Center.”

Twin Towers Will Spread the Word

Fans won’t even have to step inside the new arena to know who the sponsors are. Motorists on the Harbor and Santa Monica freeways will be able to read the sponsors’ names on 135-foot tall towers that will flank the center. Once inside, the imprint of Staples Center’s corporate sponsors will be easily apparent. But, in keeping with a growing trend in the sports marketing business, the roster of corporate sponsors will be noticeably shorter than those at older arenas.

And, rather than simply tacking signs up on the walls, sponsors were invited to sit in as architects pieced together the state-of-the-art arena’s interior design.

“Now the name of the game is exclusivity,” said consultant Narcise. “Sponsors no longer want to be one of 35 sponsors in the building. That’s why our clients refer to their premier sponsors as the ‘Starting Five’ or the ‘Fab Five.’ ”

Sports marketers say their research suggests that fans will like the new marketing approach because fewer sponsors should mean less advertising clutter. Sponsors say they are willing to pay more to be in Staples Center for the very same reason.

The sponsorship team at Staples Center will include 12 corporate partners. In addition to Staples and the eight others to be announced today, the roster is rounded out by Fox/Liberty Networks, a co-owner of the facility, and two founding partners to be named later.

While construction of the arena is financed with private funds, the city of Los Angeles paid about $60 million to make land available for the project. That money is to be recovered through taxes paid by the arena.

For their money, each of the sponsors will get exclusive signage rights inside the building. Pepsi will be the only soft drink company represented, for example, but state law prohibits Anheuser-Busch, which will have exclusive signage rights, from being the only beer on tap.

It’s possible that some “exclusive” signage deals won’t turn out that way because each team has the right to select sponsors for rotating signs to be installed at court side. While the Kings have allied themselves with the founding sponsors--and the Lakers are close to a similar arrangement--it’s possible that the Clippers will break ranks.

Marketing industry observers expect other clashes to surface during coming years because each team controls its own television and radio broadcasts--setting up the possibility of dueling advertisers.

In the old days of sports marketing, sponsors expected little more than exclusive signage rights and a handful of free tickets. But the increasingly sophisticated sports marketing industry is constantly cooking up new and innovative ways for sponsors to pitch their wares.

In addition to the technology center, PacBell plans to staff a telephone switchboard where anxious baby-sitters will be able to contact parents watching the Lakers, Clippers or Kings. When calls come in, employees will rush cellular phones to parents sitting in the arena so they can return calls without missing any of the action.

Staples will staff an office center with computer ports, secretarial staff and photocopying and fax machines for the inevitable business deals that will go on during the games. And the Los Angeles Times will operate newsstands inside the arena.

But other parts of the complicated sponsorship deal won’t be as evident to the average fan.

PacBell, for example, will provide telephone service for the center, the Lakers and Kings. And Staples is striking deals to sell its products to other center sponsors--and toying with the idea of inviting sponsors like Pepsi to pitch their products from its office-supply stores.

And, Staples Center is negotiating with an energy company whose sponsorship fee will be paid in part by building an electrical generating plant for the arena.

The glue that holds the whole sports marketing package together, observers say, is the massive Southern California market and the sports and entertainment package that Staples Center executives piece together.

Marketing industry observers say the center’s three sports teams will give the arena a firm grasp on sports-hungry males. But the arena’s plans to host popular events like the MTV and Grammy awards ceremonies will broaden its appeal to sponsors that also want to reach women and families.

Television Could Boost Revenue

In another twist, experts expect the arena to enter the television market by using its close ties to Fox--a move that could boost revenue as well as give sponsors even more promotional avenues to explore.

That diversity of options in a huge media market like Los Angeles “is the key to their deals,” said Sean Brenner, editor of Chicago-based Team Marketing Report.

“There’s the sheer number of visitors who are going to be passing through this building. And there’s the varying demographics attracted by everything from basketball to ice shows and concerts. In theory, that’s how they give their sponsorships the visibility they promise.”