High Price of Naming Rights Sometimes Worth It
As Marci Grebstein sat at home watching President Clinton address the Democratic National Convention this week, the marketing executive for Staples Inc. was delighted by something that had nothing to do with politics: The president mentioned her company’s name.
Sure, it was just a passing reference to the company-sponsored Staples Center in downtown Los Angeles, and it’s unlikely to have spurred anyone to rush out to a Staples store for paper clips.
But having the president of the United States mention your company’s name in a nationally televised address is “something you can’t purchase,” Grebstein said. And it explains why so many U.S. companies are lining up for the rights to slap their names on sports facilities, concert halls and other entertainment venues.
Though despised by many sports fans and lamented by social critics, naming-rights deals have exploded over the last decade. About 60% of the nation’s professional sports arenas now have corporate sponsorships, and the trend, some promoters say, may soon spread abroad.
“There are more corporations that can afford to play the naming-rights game than there are venues,” said Jeffrey S. Knapple, president of Los Angeles-based Envision, a sports marketing firm that negotiated the Staples deal.
The competition is apparent in the prices companies are willing to pay. When Staples agreed in 1997 to pay $116 million over 20 years, it was the most lucrative naming-rights transaction to date. But it’s already been eclipsed by the $205-million pact for FedEx Field in Washington and the $195-million deal for American Airlines Center in Dallas, among others.
Staples, for one, thinks it’s getting its money’s worth. Thanks to several high-profile events held at Staples Center over the year--including the convention, the Grammy Awards and the Los Angeles Laker championship playoff series--the office supply giant has reaped an unexpected bonanza of publicity.
There’s been bad news too. The Democratic convention brought televised clashes between police and protesters, and the Laker victory celebration ended in the looting of nearby businesses.
Rocker Bruce Springsteen joked during a concert that L.A. should seek a sponsorship for the entire city and rename itself Los Staples. And Staples Center was involved in a highly publicized journalism ethics scandal over an undisclosed profit-sharing agreement with the Los Angeles Times. (The Times is a corporate sponsor of Staples Center.)
What’s more, not everyone in the sports industry is convinced that naming-rights deals pay off for advertisers.
“When I think of Staples Center, I don’t think of the office supplies place. I wonder if companies are getting a good bang for their buck. I thought Staples was named for a former police commissioner or someone like that,” said a spokesman for a public sports authority in the Midwest who asked not to be identified for fear of alienating potential customers.
Yet most marketing experts say all the publicity, even when it’s bad, has served only to strengthen the retailer’s brand images and boost its visibility.
“Even if there were riots in front of Staples Center and it was reported like that in every news report, Staples would still gain positive benefits for its brand name,” said Richard Feinberg, a Purdue University professor of consumer sciences and retailing. “What everyone is fighting for is a top-of-mind awareness.”
The company is definitely getting its name out there. In June, as the Lakers played their way to the National Basketball Assn. championship, Staples Center was mentioned 1,222 times in the nation’s top 50 newspapers, according to a database search. It garnered more mentions than First Lady and senatorial candidate Hillary Rodham Clinton, three times as many articles as Disneyland and 20 times as many as the No. 1 office supply chain, Office Depot.
That’s why many of Southern California’s sports and entertainment venues now bear corporate logos. Anaheim Stadium became Edison International Field. Irvine Meadows was re-dubbed Verizon Wireless Amphitheatre. Jack Murphy Stadium in San Diego was renamed Qualcomm Stadium.
The Great Western Forum was one of the nation’s first sports venues to cut a corporate sponsorship deal when it did so in 1988.
Company names have been on stadiums for decades, including places such as Wrigley Field in Chicago, named in 1926 for the chewing gum scion who then owned the Chicago Cubs baseball team. But naming deals in their current form began in the early 1970s.
Naming-rights deals tend to be unpopular with fans, particularly when they involve changing the name of an existing facility.
Great Western, for example, never convinced Southern Californians to embrace the bank’s name when referring to the former Forum in Inglewood despite its $17.8-million sponsorship deal. Great Western subsequently was acquired by Washington Mutual, and the Great Western corporate name disappeared.
In Denver, fans are now protesting the possible re-christening of the city’s Mile High Stadium. In San Francisco, sportscasters reacted to the transformation of Candlestick Park into 3Com Park by dubbing the field “Commercialstick Park.”
“In any democracy worthy of the name, there ought to be a realm of civic space that remains free of the taint of commercial propaganda,” said Mark Crispin Miller, director of the Project on Media Ownership at New York University. “Whether you’re talking about branded T-shirts or outright TV commercials or buildings that have been renamed by corporate sponsors, you’re talking about a force that treats all citizens as nothing but consumers.”
Corporations may also find that the success of their deals depends upon the success of teams that play in their sponsored arenas. And sometimes teams move away. Great Western Forum and 3Com Park both lost teams when new, rival facilities were built across town.
Washington Mutual executives haven’t decided whether they want to put their company name on the Forum, but they’re leaning against it. The Seattle-based institution inherited the naming-rights contract after buying Great Western, but so far executives are unconvinced that a sporting arena and a financial institution are a good fit.
“Sporting events are not a priority for us when it comes to marketing,” spokesman Adrian Rodriguez said.
Miller argues that even the business rationale for naming rights is, in the long run, self-defeating.
“The more advertising spreads beyond its proper domain, the more it crams the atmosphere in every conceivable way, the less effective it becomes,” he said.
Such issues don’t seem to bother Staples.
At about $5.8 million a year, the naming-rights contract amounts to only about 1% of the retailer’s annual advertising and marketing budget--a drop in the bucket, analysts said.
Though it’s impossible to measure whether the stadium deal has resulted in any increase in sales, the retailer said marketing surveys show that its brand awareness has improved, particularly in Southern California, since the opening of Staples Center.
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What Is A Name Worth?
U.S. companies are scrambling to put their names on sports arenas, concert halls and entertainment venues. Naming-rights deals have already been made on an estimated 60% of such sports sites, experts say.