The Question of An Arena Soon To Be Known As The Arena Formerly Known As Ford Center
A year ago I wrote the following story about the challenge facing the Thunder as they pursue a new naming rights deal. I suspect the environment hasn’t changed much despite a much improved team and national image:
When the Thunder arrived at Ford Center, the team’s owners were free to start the clock on taking bids for naming rights for the arena.
A year later, however, that clock has yet to tick and the only naming rights dollars are those being paid to Oklahoma City by the Oklahoma Ford Dealers under an agreement struck in 2001.
Officials with the Thunder declined to comment and repeated calls to representatives of the Oklahoma Ford Dealers went unanswered.
Gary Desjardins, general manager at Ford Center, and Tom Anderson, special projects manager for Oklahoma City, both confirm the Thunder has yet to trigger terms for renegotiating the naming rights deal with the Oklahoma Ford Dealers.
The team’s owners also could have opened negotiations with new bidders for a deal that would guarantee the current pay-out ($409,000 a year) to the city with anything above that amount going back to the Thunder. To date, city officials say the team has not taken any action.
Miami, Fla., sports consultant Rick Horrow, who played a critical role as a promoter with the original MAPS program, isn’t surprised by the lack of news regarding a naming rights deal for Ford Center.
The market, he says, has stalled.
“I can’t really put my hands on any large deals,” Horrow said. “It’s not fair to say the market has dried up. But some of the bigger searches are being postponed.”
The problem, Horrow said, is obvious: the 2008 economic crash.
“We have the same issue at the new Orlando (Fla.) arena, same for the Cowboys, Yankees, Giants and Jets. But once the economy shows strong signs of stability, I think these deals will become more beneficial and prudent than ever.”
Horrow can only name one deal in recent months: the Miami Dolphins’ decision to christen its new home “Landshark Stadium” for one year.
The beer label’s founder, Jimmy Buffett, agreed to perform two concerts at the stadium in exchange for the naming rights, with all performance proceeds going back to the team.
High hopes
Just a couple of years ago, Oklahoma City leaders had plenty of cause to believe a big money deal could be cinched for an NBA team making Ford Center its permanent home.
A study presented by ICON Venue Group LLC for the Thunder owners before the team’s move from Seattle projected naming rights for the Oklahoma City arena would be worth $2 million to the owners the first year, $3 million the second year, $3.5 million the third year and increase 3 percent a year for the remainder of the deal.
The estimates were based on assumed attendance of 14,569 for the 2008-2009 season and 14,269 the following year. The Thunder’s average attendance its first year (2008-2009) was 18,594.
In other cities similar NBA relocations have translated into naming rights deals worth millions of dollars.
When the NBA Grizzlies moved to Memphis in 2001, FedEx entered into a 20-year, $90 million naming rights deal for the city’s downtown arena — FedEx Forum.
And even without an NBA team, Oklahoma City successfully sealed an $8.1 million deal for its arena with the Oklahoma Ford Dealers. And Tulsa, also lacking a major league tenant, still managed to secure an $11 million deal with Bank of Oklahoma for its new arena in 2005.
That same year, with the Hornets beginning a two-year stint at Ford Center, speculation began to build about the potential of a permanent NBA tenant. One of the country’s top naming rights brokers saw good things ahead for Oklahoma City and Ford, if the NBA were to stay for good.
“The NBA is as good a brand as it gets,” said David Ehrlich, executive vice president at The Bonham Group in Denver.
He said that, during the 2005 interview, if the Oklahoma Ford Dealers’ agreement were to stay in place, the deal could be a free bonus to Ford Motor Co. during nationally televised games.
With a broker like The Bonham Group at their side, cities and teams across the country sealed deals that dwarfed the Ford Center agreement. Just last year the company was involved in 137 discussions around the world for naming rights deals, the Denver Business Journal reported. But the economic crash quickly wiped out the 20-year-old company in January and it closed its doors for good.
Some of the country’s newest and biggest venues, meanwhile, have hit a snag in wrapping up deals started before the crash or even getting a deal started.
Citigroup agreed to pay $400 million over 20 years for the New York Mets’ new home to be named Citi Field. But after Citigroup ended up on a list of banks being bailed out with federal tax dollars, critics questioned whether the deal should continue. Two New York City council members even argued the stadium be christened Citi/ Taxpayer Field.
Cowboys owner Jerry Jones, meanwhile, reportedly wanted $1 billion for a 30-year naming rights deal for his team’s new home.
So far it appears as if the team will begin play at Cowboys stadium.
Horrow, however, thinks the market will return, though he acknowledges “it’s prudent for the industry to be in a more cautious mode.
“This is a very important part of the sports and entertainment industry,” Horrow said.
“Corporations appreciate the ability to be well above the normal advertising clutter. And the teams appreciate the long-term commitments from these corporations. We’ve seen naming rights deals totaling $5 billion in the last 10 years. These deals will happen; they just might not happen in the next few months.”
BACKGROUND
Big Money
→American Airlines Arena is home to the Dallas Mavericks, Stars. The deal calls for a payment of $6.5 million a year through 2031.
→FedEx Forum is home to the Memphis Grizzlies. The deal calls for a payment of $4.5 million a year through 2023.
→Pepsi Center is home to the Denver Nuggets and the Colorado Avalanche. The deal calls for a payment of $3.4 million a year through 2019.
→Phillips Arena is home to the Atlanta Hawks and Thrashers. The deal calls for $9.3 million a year through 2019.
→AT&T Center is home to the San Antonio Spurs. The deal calls for $2.1 million a year through 2022.
Source: www.espn.com
History
→The naming rights business began in 1953 when Anheuser-Busch sought to buy the naming rights for Sportsman’s Park, the home of the St. Louis Cardinals, and rename the park “Budweiser Stadium.” League officials were hesitant to name a stadium after a beer, but agreed to let Augustus Busch use his family’s name on the park. The Cardinals opened their 1954 season in Busch Stadium, and Anheuser-Busch followed up with the introduction of Busch Bavarian Beer, which later morphed into Busch and Busch Light Beer.
→Some naming rights deals end on a sour note. The Houston Astros signed a $100 million deal with Enron for the team’s new stadium. Oops. Enron ended up bankrupt and a poster child for corporate corruption soon after the company’s Chief Executive Officer, Ken Lay, threw the ballpark’s first-ever ceremonial pitch. The Tennessee Titans, meanwhile, ended up having to cancel a 15-year, $30 million naming rights deal with Adelphia Communications after the company went bankrupt, also amid accusations of corruption.
Source: Mental Floss Magazine
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Steve,
It has been my understanding from reports written at the time of the original Ford agreement and think it was an article written by you shortly after their Seattle issues were resolved, that the “clock HAD started ticking” on the renegotiation of naming rights. Can’t recall the time frame allowed but it didn’t appear to be at the Team’s discretion when the “clock started”? Even the phrase “clock started ticking” implies it was time-limited.
Interesting that the Thunder said in their press release that they apparently unilaterally had terminated the Ford agreement. Again, according to what I recall reading, the terms of renegotiation were:
1) IF the Arena secured a pro-team tenant (NBA or NHL), that the arena operator (SMG), on behalf of the City, could renegotiate.
2) There was a time limit for those negotiations (sorry, can’t recall with any certainty what the time frame was, but was relatively short and long since expired at this point).
3) After talking to others, the Ford Dealers group had an additional time-limited period to match the highest offer and could retain their naming rights (if they chose to do so). Unless and until a new naming rights agreement was reached (with others or Ford), the existing agreement is in full force and effect.
4) If all of the above criteria wasn’t met, then the Ford Dealers have the valid remainder of the 15 year lease. Don’t see how the lease can be terminated unilaterally by the Team (unless Ford didn’t fulfill terms of the agreement and there hasn’t been any indication that is the case).
As a side note, there were a few articles stressing that the Team was ensuring that the City would continue to receive the $409K/year under the Ford terms. Yet the Ford agreement was valued at $8.1M for 15 years. That works out to $540K/year. Means the City is losing $131K/year (as opposed to the “breaking even” the Mayor and City Manager both bragged about?
Any clarification is appreciated!