Warriors to get $295m for naming rights to arena plaza, or maybe $31m, math is still hard

The healthcare group Kaiser Permanente has agreed to pay Golden State Warriors owners Joe Lacob and Peter Guber to give the plaza and park outside their new San Francisco arena the name “Thrive City.” That much we know. What we don’t know, after yesterday’s Phil Matier column in the San Francisco Chronicle, could fill volumes:

  • How much is Kaiser paying for the naming rights? Matier writes that “the total for the naming rights and other costs could hit $295 million,” but also that Kaiser indicated that “expenses ‘associated with Thrive City would be about $2.5 million a year,’” which would come to a present value of about $31 million. Clearly that’s a big difference! The larger figure is apparently from a December 2016 meeting of the Kaiser board’s finance committee, which included a single line recommended “the expenditure in an amount not-to-exceed $295.58 million for the Golden State Warriors sponsorship strategy over a twenty-year period.” The smaller figure is what Kaiser’s PR officer is claiming. The truth is either somewhere in the middle, or off to either side, because neither of these are exactly watertight financial figures.
  • What will Kaiser get for its money? The name of the park and plaza, certainly, but “sponsorship strategy” implies that Kaiser is also buying arena ad signage or the right to be the official health insurer of the Warriors or uniform ad patches or god knows what. So it’s tough to put a number on the actual naming rights.
  • Why “Thrive City” of all things? “Thrive” is a Kaiser wellness program/branding strategy that involves cutting healthcare costs by promoting healthier living and, for some reason, running marathons dressed as a lobster. One hopes that the company was smart enough to include in its deals with the Warriors the right to change the name of the plaza to something else if Thrive is abandoned or rebranded in the next 20 years, which seems extremely likely given the shelf life of corporate subbrands.

Whatever the actual amount of money changing hands in exchange for what, this does hint at how on earth the Warriors owners are planning to make back their new arena’s $1.4 billion construction cost. They’re already getting about $15 million a year in naming rights from Chase Bank, so if you add in plaza naming rights and new ad signage and corporate logos on anything not nailed down, then … even in a white-hot real estate and consumer market like San Francisco, it still seems like a lot of money to spend, but it’s Lacob and Guber’s money, so more power to them if it’s what they want. Though do remember that Warriors president Rick Welts wants you to know that the fact his team is building its own new arena is no reason for other cities not to give public money to their teams’ new arenas, a thing that should keep happening because arenas “enhance the quality of life for residents.”

Of course, one could also wonder if these naming rights deals, especially to a big empty plaza that is unlikely to get a lot of free TV mentions or whatever naming rights deals are supposed to do for companies, are really worth the expense. That’s what the National Union of Healthcare Workers is complaining, saying that Kaiser would be better off spending money on patient care (money that would flow to union members in the form of paychecks, naturally) at a time when “some patients wait weeks, even months for mental health appointments.” Good thing there’s no such thing as bad publicity, or one might be tempted to conclude that Kaiser had just bought itself $295 million of exactly that.

Friday roundup: Long Island residents yell at cloud over Isles arena, Calgary forgets to include arena in arena district plan, plus a reader puzzle!

It’s Friday (again, already) and you know what that means:

  • New York State’s Empire State Development agency held a series of three public hearings on the plan to build an Islanders arena on public land near Belmont Park racetrack (which the team would be getting at as much as a $300 million discount), and the response was decidedly unenthused: Speakers at the first hearing Tuesday “opposed to the project outnumbered those in favor of the plan by about 40 to one,” reports Long Island Business News, with State Sen. Todd Kaminsky joining residents in worrying that the arena will bring waves of new auto traffic to the town of Elmont, that there’s no real plan for train service to the arena, and that there’s no provision for community benefits to neighbors. Also a member of the Floral Park Police Department worried that the need for police staffing and more crowded roads would strain emergency services. Empire State Development, which is not a public agency but a quasi-public corporation run by the state, is expected to take all of this feedback and use it to draft an environmental impact statement for the project, which if history is any guide will just include some clauses saying “yeah, it’ll be bad for traffic” without suggesting any ways to fix it. I still want to see this plan from the Long Island Rail Road for how to extend full-time train service there, since it should involve exciting new ideas about the nature of physical reality.
  • Meanwhile in Phoenix, the final of five public hearings was held on that city’s $168 million Suns renovation plan, and “out of nine public comments, three involved questions, five voiced support and one was against the deal,” according to KJZZ, so clearly public ferment isn’t quite at such a high boil there. One thing I’d missed previously: The city claims that if it doesn’t do the renovations now with some contribution ($70 million) from Suns owner Robert Sarver, an arbitrator could interpret an “obsolescence clause” in the Suns’ lease to force the city to make the renovations on its own dime. I can’t find the Suns’ actual lease, but I think this just means that Sarver can get out of his lease early if an arbitrator determines the arena is obsolete [UPDATE: a helpful reader directed me to the appropriate lease document, and that is indeed exactly what it means], and he can already opt out of his lease in 2022, it’s pretty meaningless, albeit probably more of the “information” that helps convince people this is a good deal when they hear it. (Also important breaking news: A renovated Suns arena will save puppies! Quick, somebody take a new poll.)
  • Speaking of leases, the Los Angeles Angels are expected to sign a one-year extension on theirs with Anaheim, through 2020, while they negotiate a longer-term deal. It’s sort of tempting to wish that new Anaheim mayor Harry Sidhu would have played hardball here — sign a long-term deal now or you can go play in the street when your lease runs out, like the Oakland Raiders — but I’m willing to give the guy the benefit of the doubt in his negotiating plans. Though if this gives Angels owner Arte Moreno time to drum up some alternate city plans (or even vague threats a la Tustin) just in time to threaten Anaheim with them before the lease extension runs out, I reserve the right to say “I told you so.”
  • The Calgary Planning Commission issued a comprehensive plan for a new entertainment district around the site of the Flames‘ Saddledome, but forgot to include either the Saddledome or a new arena in it. No, really, they forgot, according to city councillor Evan Woolley: “It should’ve been identified in this document. It absolutely should have. Hopefully those amendments and edits will be made as they bring this forward to council.” The 244-page document (it’s not as impressive as it sounds, most of them are just full-page photos of people riding bicycles and the like) also neglects to include any financial details, beyond saying the district would be “substantially” funded by siphoning off new property taxes, “substantially” being one of those favored weasel words that can mean anything from “everything” to “some.” Hopefully that’ll be clarified as this is brought forward to council, too, but I’m not exactly holding my breath.
  • Here is a Raleigh News & Observer article reporting that the Carolina Hurricanes arena has had a $4 billion “economic impact” on the region over 20 years, citing entirely the arena authority that is seeking $200 million to $300 million in public money for upgrades to the place. No attempt to contact any other economists on whether “economic impact” is a bullshit term (it is) or even what they thought of the author of the report, UNC-Charlotte economics professor John Connaughton, who once said he “questions the sincerity” of any economist who doesn’t find a positive impact from sports venues. Actually, even that quote would have been good to include in the N&O article, so readers could have a sense of the bona fides of the guy who came up with this $4 billion figure. But why take time for journalism when you can get just as many clicks for stenography?
  • The San Francisco Giants‘ stadium has another new name, which just happens to be the same as the old new name of the basketball arena the Warriors are leaving across the bay, and I’m officially giving up on trying to keep track of any of this. Hey, Paul Lukas, when are you issuing “I’m Still Calling It Pac Bell” t-shirts?
  • Indy Eleven, the USL team that really really wants somebody to build it a new stadium so it can (maybe) join MLS, still really really wants somebody to build it a new stadium, and hotels, office and retail space, an underground parking structure, and apartments, all paid for via “[Capital Improvement Board president Melina] Kennedy wasn’t available to discuss the proposed financial structure of the project.” It would definitely involve kicking back future property taxes from the development (i.e., tax increment financing), though, so maybe Indy Eleven owner Ersal Ozdemir is hoping that by generating more property taxes that his development team then wouldn’t pay but instead use to pay off his own stadium costs, that would look better, somehow? I mean, he did promise to keep asking, so at least he’s a man of his word.
  • “At some point in time, there’s going to have to be a stadium solution,” declared the president of a pro sports team that plays in a stadium that just turned 23 years old. “If we don’t start thinking about it, we’ll wake up one day and have a stadium that’s not meeting the needs of the fans or the community.” Want to try to guess which team? “All of them” is not an acceptable answer! (Click here for this week’s puzzle solution.)

Friday roundup: Naming-rights woes, Austin update, and the World’s Largest Chest of Drawers

It’s Friday already? Seems like we were just doing this, but the pile of stories in my Instapaper queue says otherwise, so away we go:

  • The Florida state house has again passed a bill that would ban building or renovating private sports facilities on public land, which would potentially affect the Tampa Bay Rays, among others. This is kind of a dumb idea, as we discussed back in October, since there’s nothing wrong per se with putting stadiums on public land so long as the public gets a good deal for it; a far better plan would be a Seattle-style bill to require that local governments get a return on their investment in any sports lease project. But then, this bill already passed the Florida house last year and died in the senate, so probably not worth getting worked up over too much just yet.
  • Sports Authority agreed in 2011 to pay $6 million a year for 25 years for the naming rights to the Denver Broncos stadium, and now Sports Authority is bankrupt, and Metropolitan State University of Denver marketing professor Darrin Duber-Smith is saying I told you so: “My big warning was, ‘I’m not sure Sports Authority is a big enough or healthy enough company to commit that much money from their marketing budget each year.’ And I was right.” The Broncos are now looking for another company to pay $10 million a year for naming rights, and haven’t found any takers yet, hmm, I wonder why?
  • Chelsea F.C. will get to move ahead with its new-stadium plans after the town council used a compulsory purchase order — like eminent domain, surely you’ll remember it from that Kinks song — to clear an injunction that a nearby family had gotten on the grounds that the new stadium would block their sunlight. The purchase order isn’t actually seizing their home, but the land next to it, which is enough to invalidate the injunction; not that this doesn’t raise all kinds of interesting questions about the use of state power for private interests, I’m sure, but man, don’t you wish this were the only kind of stadium controversy we had to put up with in North America? League monopoly power over who gets a franchise is a bad, bad thing.
  • High Point, North Carolina is spending $35 million on a stadium to bring an indie minor-league Atlantic League baseball team to town, and City Manager Greg Demko says this will help the city’s commercial tax base recover, because “the construction of a stadium is like an anchor for the revitalization and development of a downtown.” Demko is going to be so disappointed, but at least he got mention of his city in a Bloomberg article as “home to the World’s Largest Chest of Drawers,” and you can’t buy publicity like that.
  • New Seattle mayor Jenny Durkan says that while it’s “a longshot,” it wouldn’t be impossible for Chris Hansen to build his Sodo arena while OVG renovates KeyArena at the same time. I’m going to interpret the tea leaves here as “Hey, if you want to spend your money to try to compete with another arena across town, be my guest,” but stranger things have happened, maybe?
  • The city of Austin has issued a report on eight possible sites for a stadium for a relocated Columbus Crew, and are now waiting on Crew owner Anthony Precourt to tell them which, if any, he likes. A consultant for Precourt has since ruled out a site or two, but it looks like nothing might be ready for the city council to vote on February 15 as planned; Austin MLS lobbyist Richard Suttle says the problem is “between the holidays, flu season and winter storms, it’s been slow going.” It’s not quite helping to spark women’s suffrage, but the flu still reminds us who’s boss from time to time.
  • Now that Amazon has announced its short list of cities that will get to bid on its new second headquarters, it’s time for another look at how to stop corporations from launching interstate bidding wars to be their homes, which once again leads us to David Minge’s 1999 bill for a federal excise tax on public subsidies. “Of all those offers [made to Amazon] there’s one obvious one that should have been made and it should have come from Congress,” University of Minnesota economist and former Minneapolis Federal Reserve research director Arthur Rolnick, who helped Minge concoct that bill, tells CityLab. “Now if that offer were on the table it would end it, it would end the bidding war. Then Amazon would simply base its decision on where location is best for business.” It’d work for sports leagues, too!

Friday roundup: Raiders talk lease extension, Rams attendance woes may set record, and more!

Here’s what you missed this week, or rather what I missed, or rather what I saw at the time but left till Friday because there are only so many hours in the week, man:

Rams to charge record PSL price, Cavs arena subsidy moves ahead, and other news of the week

It’s Friday again, so let’s go spanning the world:

  • The Los Angeles Rams are considering charging a top personal seat license price of as much as $225,000, just for the right to then buy season tickets for $350-400 per game. This seems like a bit of a reach when the payoff is just that you get to watch Rams games, but I guess Stan Kroenke needs to try to recoup his $2 billion in stadium costs somehow — and at least if it all goes south, he’ll be the one on the hook, not taxpayers.
  • Some Canadian bank bought the naming rights to the Toronto Maple Leafs arena away from some Canadian airline. Is this going to buy it valuable market exposure and name recognition that will justify the $40 million a year expense? Not on this blog!
  • The LED lights at the Atlanta Falcons‘ new stadium make football look all weird.
  • Shreveport Mayor Ollie Tyler says spending $30 million on an arena for a minor-league basketball team is a great idea that only “naysayers” don’t appreciate. “I think sometimes we don’t believe in ourselves and some of our urban areas we don’t believe that we are able to make things happen,” she says. If Mayor Tyler needs a reelection campaign theme song, I have a suggestion.
  • “The Federal Aviation Administration has determined that the Oakland Raiders‘ proposed stadium in Las Vegas would not be a hazard to aircraft.” Huzzah!
  • Would-be St. Louis MLS owner Paul Edgerley says he’s still ready to pay $150 million for a franchise, and $100 million toward a stadium, as soon as someone comes up with the other $60 million in construction costs. Noted.
  • Cleveland Cavaliers owner Dan Gilbert has officially reinstated his plan to do $140 million of renovation work to the team’s arena, with Cuyahoga County paying for half the cost. ”This is corporate welfare at its worst,” said Steve Holecko of the Cuyahoga County Progressive Caucus, after his erstwhile coalition partners the Greater Cleveland Congregations withdrew petitions against the arena subsidy after getting a promise of two mental health crisis centers from the county. Holecko’s group doesn’t plan to mount another ballot challenge on their own, though, so construction work is set to begin later this month.
  • Mikhail Prokhorov is ready to sell the Brooklyn Nets, but will hold onto the Barclays Center, after renegotiating the team’s lease so that it will pay less rent to the arena. This … does not seem like the smartest way of going about things, but maybe Prokhorov is figuring he’ll give up future rent revenue in exchange for a higher sale price now on the team? Or maybe he’s just not very smart.

White Sox stadium actually getting even worse name than “U.S. Cellular Field”

Aw, jeez:

U.S. Cellular Field will change its name to Guaranteed Rate Field, the White Sox announced Wednesday afternoon.

The White Sox and Guaranteed Rate, a national mortgage lender, have signed 13-year naming rights deal, according to the Sox. But the name could last even longer — the Sox have an option of extending the deal past 2030.

There is nothing to say about this other than to make jokes. And the Chicago Tribune’s Phil Rosenthal has already won that contest:

More seriously: You know, there’s nothing requiring any of us normal people (or even us abnormal people who are journalists) from using the corporate-assigned name for a stadium — we can still call it U.S. Cellular Field, or New Comiskey Park, or my preference, “the White Sox’ stadium” all we want. Which is no doubt why resold naming rights go for discount rates: Business owners know that there are plenty of other options for what to call the place, so they’re willing to pay less to slap their name on it. Which is also why you see so many smaller companies putting their name on used stadiums — American Airlines doesn’t need that kind of attention, but Monster Cables, sure.

Speaking of which, the White Sox and Guaranteed Rate didn’t reveal how much the new naming rights deal was for. I’m going with “not nearly enough to be worth the ridicule.”

Three sports venues get new corporate names that you’re going to forget immediately

Lots of old sports venues getting new names this week!

The price tags on the Buffalo deal was $40 million for seven years; no money changed hands in Charlotte, obviously, while the Dolphins declined to say how much they got for 18 years of their stadium name. I’m guessing not much, since nobody is going to remember this corporate name any better than the last five or six, but maybe since they just did a renovation, people will think of it as a new building with a new name?

Anyway, the fact that naming rights are worth more for a brand-new, nameless venue continues to be an incentive for teams to demand them. It’s probably not the best thing from an environmental sustainability standpoint that teams and cities are building stadiums partly just to act as giant billboards, but I can’t complain too much so long as it does allow them to fob off some costs on another sucker.

Bills owners sell naming rights to publicly owned stadium, pocket cash

The Buffalo Bills owners have sold the naming rights to Ralph Wilson Stadium for an undisclosed sum to New Era Cap Company, and immediately took down the lettering with the old name:

This made many Bills fans unhappy that the stadium will no longer be named for the team’s founding owner:

We’ve seen this before in other cities, of course. What’s odd here is that Ralph Wilson Stadium isn’t the building’s original name: From 1973 to 1997 it was Rich Stadium, named for a local food company in one of the first naming-rights deals in pro sports. When that deal expired and Rich Products wouldn’t agree to an increased rights fee, Erie County instead named it after the Bills’ owner.

Wilson died in 2014, and somewhere along the way, so did the county’s ownership of the naming rights, as it appears new owners Terry and Kim Pegula will be pocketing whatever cash comes from this deal, even though Erie County still owns the building. It seems like that’d be more worth getting upset over, but there’s no accounting for football fans.

 

Broncos stadium name contract goes up for auction, no one bids even one dollar

Man, I hate when I get all excited about a news story and then it turns out to be a big ball of nothing. That appears to be the case with Friday’s news that the naming rights to the Denver Broncos stadium had gone up for sale, and nobody even bothered to bid:

The stadium in Denver is called Sports Authority Field at Mile High Stadium, named after the eponymous sporting goods retailer in 2011. However, Sports Authority filed for bankruptcy in March and put the naming rights up for sale as part of a court-supervised auction.

No bidders for the rights came forward at an auction of the retailer’s assets held this week, Matt Sugar, the director of stadium affairs at the Metropolitan Football Stadium District, which is the owner of the stadium, said on Friday. Discussions are underway about launching a new auction for the naming rights.

Wow, really, nobody? I’ve argued before that naming rights for existing stadiums aren’t worth much, in part because after a couple of name changes everybody just gives up and calls it whatever it was called in the first place — and with “Mile High” stuck there in the name, that gives fans a great option to ignore whatever new corporate moniker got slapped on ahead of it. But you’d think somebody — some publicity-desperate tech startup, Peeple, anybody — would throw a token $1 at the bankruptcy auction, no?

Except then there’s this:

The contract for the naming rights up for grabs extends until 2021, and comes with a $3.6 million payment obligation due Aug. 1.

And there’s the catch: Sports Authority isn’t really auctioning off the rights to the Broncos stadium name — it’s auctioning off its contract to put a name on the Broncos stadium. And since the stadium name is almost certainly worth less than the $6 million a year the company agreed to pay back in 2011, the rights to take on those payments probably have a negative value, which is why nobody bothered to bid.

The more likely scenario now is that no one bids for the rights, Sports Authority misses that August 1 payment, and the Denver Metropolitan Football Stadium District gets to re-sell the rights to the highest bidder, of which there will no doubt be some, even if they won’t be offering $6 million a year. The Broncos and the district split the proceeds from naming rights, so Sports Authority’s bankruptcy could end up costing both the team owners and the public some money — though not as much as the naming-rights deal cost Sports Authority, since the move may have helped push the company into bankruptcy. You think maybe everyone might have thought this through better in the first place?

Vikings are suing Wells Fargo for photobombing their new stadium

The stadium news world has clearly decided this week to transition from tragedy to farce: First the mentally disturbed man who somehow claimed the lease to the San Diego Padres stadium, and now the Minnesota Vikings are suing Wells Fargo Bank for photobombing their new stadium:

“Wells Fargo has recently started installing mounted and illuminated roof top signs that do not conform to the parties agreement in an effort to permanently ‘photo bomb’ the image of the iconic U.S. Bank Stadium,” the lawsuit said. “The prohibited action must be stopped immediately.”

The Wells Fargo signs are atop a pair of new buildings the bank is building alongside the under-construction Vikings stadium — which, you’ll recall, got a naming-rights deal with a competing bank (U.S. Bank). Since they’re part of the same larger development, the Vikings got to set conditions for the types of signage that Wells Fargo would erect, and ultimately agreed to allow two non-illuminated signs that were painted on the roof, not raised. Since then, however, Wells Fargo tried to amend the agreement to allow for lit signs, saying if it was denied, it would respond by simply “lighting the entire roof of each tower, including the signs.”

There’s surely some wording deep within the agreement that will determine who prevails in court, but right now let’s just enjoy the hilarity of a football team suing a neighboring building for putting up giant roof logos that it’s afraid will distract from its own giant roof logos.