Keeping naming rights could pay Portland’s share of Timbers stadium cost

Writing in The Nation, Dave Zirin and Jules Boykoff call attention to yet another problem with the problematic Portland Timbers soccer-only renovation plan for PGE Park:

PGE secured a decade’s worth of naming rights at a bargain-basement price of $8.5 million, but the deal expires after 2010.

If the naming-rights agreements signed recently by other MLS teams are any indication, Portland could get a lot more bang for its corporate buck.

In Toronto, the Bank of Montreal paid $24 million for a ten-year naming-rights deal. The Los Angeles Galaxy scored $70 million over ten years from Home Depot for soccer-stadium naming rights. Real Salt Lake signed a ten-year deal with Rio Tinto for approximately $20 million, while Dick’s Sporting Goods agreed to pay the Colorado Rapids $30 million over fifteen years for stadium naming rights.

If PGE were asked to fork over $19.7 million for the next decade of sponsorship–a figure in line with other MLS agreements–there would be no need to finagle the city for money.

Of course, that would mean Timbers owner Merritt Paulson giving up the naming-rights money — which the current stadium agreement would hand over to him, even though the city currently gets the money, and the stadium would continued to be owned by the city. See what I was saying about hidden costs?


6 comments on “Keeping naming rights could pay Portland’s share of Timbers stadium cost

  1. You are absolutely correct, however, naming rights are not very lucrative for existing facilities as compared to brand new facilities.

    The Columbus Crew of MLS have a purpose-built stadium in Ohio which has been called Columbus Crew Stadium since it’s inception in the late 90’s. Despite serious attempts to sell naming rights to the building in recent years, the owner has been unable to find a taker.

    PGE Park will not be a brand new glitzy stadium – anything but. Also, Portland has a smaller population than some of the other locales with bigger naming rights deals, such as the Home Depot Center in greater LA. I understand that Portland also doesn’t have as many Fortune 500 companies as comparable cities in other parts of the US. I suspect that naming rights for PGE Park would be significant (in the millions again), but probably well below those of the other new stadiums you mentioned in your post.

    If PGE Park is not renovated, it seems likely that the existing tenants might struggle or move, and the city might not be able to sell naming rights to an aging facility at all, so all of these issues (and opportunities) are directly linked to each other. Hopefully they will come up with a mix that satisfies all of the parties as best as can be expected.

  2. Matt, the city was getting the naming rights money this past decade from PGE, but they won’t be getting any of the naming rights money after the renovations.

    The Paulson family says that they will contribute $8 million to the renovations. Yet, PGE paid the city of Portland $8.5 million for a 10-year deal. Do you think the Paulson family will do worse than this? The city is basically giving the Paulson this money, and then letting them tell Portland taxpayers “we are contributing this money ourselves.”

    The Paulson family says that they will pay $11.1 million rent up front in exchange for an 18-year rent holiday. The city will lose $38.4 million during that period.

    The spin coming from the Paulson camp and the city council boosters is that the city is only paying $11.2 million in the form of bonds. But let us add up the real costs:

    1. $11.2 million in zero-coupon bonds turns into over $40 million after interest payments in 20 years.

    2. The pre-paid rent agreement costs the city $38.4 million.

    3. The future naming rights money is unknown, but whatever it is, it is money the city is losing since it is basically giving it away to the Paulson family. Let us assume a minimum of $8 million since that is the deal they got with PGE for the stadium prior to renovations, and without a major league tenant. I bet it will be more.

    Total?

    $86.4 million … minimum.

    And what is the Paulson family actually contributing?

    $0.

  3. According to this article from The Oregonian, http://www.oregonlive.com/portland/index.ssf/2009/08/renovated_pge_park_will_showca.html, the city still owes $28.5 million dollars for previous renovations done for baseball. Most of the renovations will be removed, such as a new scoreboard, suites, and dugouts. Wow.

    What will that $28.5 million turn into after interest payments?

    Henry Paulson is a clever clever man. Portland city council, not so much.

  4. While I understand that naming rights are VERY lucrative for teams and/or the facility, I do NOT understand the thought process behind the companies who pony up the millions of dollars for the naming rights.

    Have studies been done to show that “naming rights/name recognition” lead to an increase in sales for the company? In Chicago, we have US Cellular Field for the White Sox & the United Center for the Bulls & Blackhawks…frankly, being associated with the Sox & Bulls & Hawks does ZERO for me with regard to wanting to do business with US Cellular or United Airlines.

    Whoever came up with the idea of selling companies on allocating MILLIONS for “naming rights” is an absolute genius in the pantheon of Marketing.

    In addition, if the public (as is 100% of the case across the country) is paying for the construction of the new stadium, WHY does the team get to sell and keep the revenue associated with the naming rights? If Coca-Cola wants to buy naming rights to a stadium for $25 million, shouldn’t that $25 million go to the taxpayers/city/state that is on the hook for building the damn stadium in the first place???

    Further, everytime I watch a Cubs game, and they infuse “sponsor” for literally EVERY aspect of the game…it has the OPPOSITE affect on me…I HATE the fact that I have to hear “This call to the bullpen is brought to you by AFLAC…” or “This injry break is brought to you by Pepsi…” “This recap of the game thus far is brought to you by Budweiser…” I truly believe there is an oversaturation for some companies…

  5. The argument I usually use is: “If I wanted to put up a giant billboard on my roof and keep all the proceeds, my landlord would have something to say about it.”

    As for the value of naming rights, many people have wondered at this and been baffled — remember the “naming rights curse,” where companies owning stadium names kept going bankrupt or seeing their stock tank? All I can say for sure is that, as with so many other things with advertising, either marketing execs are much, much smarter than the rest of us, or much, much dumber.

  6. If you were an investor, would you want to buy stock in a company who just made a foolish investment in naming rights?

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