After the Love is Gone: Why Naming Rights Agreements End...

By Bill Miller

It is no secret that there have been several high-profile naming rights agreements that have failed over the past several years. The landscape is littered with several high-profile naming rights failures as names like Enron Field, Adelphia Coliseum and the Trans World Dome become distant memories.

However, it is also clear that the alleged failure of stadium & arena naming rights can be dramatically overblown by some. Since the Rich Stadium agreement in 1972, there have been 200 deals announced for major league and minor league stadiums and arenas. Of those 200 agreements, only 31 of those agreements are not currently in force.

Those 31 "defunct" agreements break down into the following categories:

Finished: Three agreements (3Com/San Francisco, Rich/Buffalo & Skyreach/Edmonton) ran for the length of their contract terms and were not renewed.

Demolished: Four agreements (Cinergy/Cincinnati, Compaq/Houston, Great Western/Los Angeles & Houlihan's/Tampa Bay) concluded early because the named building was destroyed and replaced by a new structure. In every instance, the team secured a different naming rights sponsor for the new facility.

Never Built: In three instances (Labatt/Montreal, Walson/Allentown & Pacific Coast Net/Victoria), the facilities that were to be named were never constructed for reasons unrelated to naming rights.

Never Finalized: There have been four instances of a deal being announced but never finalized. The first was in 1997 when UMAX tried to acquire the naming rights to the Oakland-Alameda County Coliseum, the home of the NFL's Oakland Raiders and MLB's Oakland Athletics. The deal bogged down after opposition arose and was never implemented.

In St. Charles, MO, a deal was announced between SSM Health Care and the new arena that now houses the UHL's Missouri River Otters. Despite the public announcement of the agreement, the terms were never finalized and the facility is now called the Family Arena.

In Ottawa, there was disagreement between JetForm and the City of Ottawa over whether a contract was ever fully completed even though the parties appear to have thought one one completed.

A similar situation recently occurred in suburban Cincinnati where a previously announced deal between Tom Gill Chevrolet and the Frontier League's Florence Freedom was announced but never completed.

As you can see for the first ten agreements, it can certainly be argued that the arrangement was relatively productive one that either concluded successfully or ended when the facility went away. In the remaining four agreements of our first group, it can be argued that the arrangement never really got off of the ground despite the public pronouncements stating otherwise.

The remaining seventeen agreements fall into two different camps. The first group consists of, for lack of a better term, hand-off agreements. In these situations, the original naming sponsor has decided to try and exit the relationship for a variety of reasons, most likely, a change in corporate finances or a change in marketing philosophy.

While this is certainly not an ideal situation for a team or facility, the ability to keep generating revenue by quickly transitioning from one naming rights sponsor has to be considered a relative positive in light of the alternatives.

Hand-offs: There have been seven naming rights hand-offs. These include:  CMGI/New England, Canadian Airlines/Calgary, Ericsson/Carolina, Molson/Montreal, North Americare/Buffalo Bisons, Seafirst (Bank of America)/Spokane & Skyreach/Kelowna.

Another item to note is that in the major league situations, it has been reported that the outgoing naming sponsor has usually stayed on as a team sponsor in a lesser capacity. Thus, this could mitigate some, but certainly not all, of the financial loss and aggravation caused by switching naming sponsors.

Finally, the remaining ten defunct agreements consist of situations where the agreement was terminated and the team/facility lost the naming sponsor entirely.

Obviously, the loss of a naming rights sponsor is a worst-case scenario for any team of facility. The loss of revenue from the shattered naming rights arrangement is exacerbated by the fact that additional expenses are incurred in trying to find a new naming rights sponsor the expenses associated with purging the facility of the logo and name of the outgoing sponsor.

With that being said, it is interesting to look at these ten failed agreements to see what happened to these teams/facilities after they lost the outgoing sponsor.

Terminated & New Sponsor: In four instances (Minute Maid/Houston, North Americare/Buffalo Bisons, Dodge Arena/Hidalgo & Edward Jones/St. Louis)  it can be argued that the team/facility was able to strike a new naming rights agreement that was equal to or better than the previous arrangement.

Of course, this is still not a win/win for the team/facility as there were periods where no revenue was being generated and expenses were being incurred. But again, the team was able to get another strong deal in place.

In two additional situations (M & T Bank/Baltimore & Office Depot/Florida), the team/facility sustained some financial loss in the new deal but was able to secure another significant naming rights sponsor.

Terminated & Not Looking: In one situation (Anaheim Angels), it does not appear that the team/facility is seeking a new naming rights sponsor.

Terminated & Still Looking: Finally, there are three situations (Tennessee Titans, Miami Dolphins & Syracuse) where the team lost a naming rights sponsor and has not been able to secure a deal satisfactory to its interests.

In conclusion, it is always an unfortunate circumstance for a team/facility that loses its naming rights sponsor. However, the reality is that approximately 5% of the 200 major league and minor league deals completed since 1972 have ended with the need to secure a new naming rights sponsor before the completion of the original contract. Other "agreements" simply ran their course or never were really enacted.

As such, while teams and facilities should always do full diligence on a potential sponsor, the reality is that most naming rights contracts are typically satisfactory arrangements for the team/facility.

Posted 4/5/2004. Updated 10/05/2004.

Bill Miller is Executive Vice President at The Leib Group, LLC in Mequon, Wisconsin. He is a regular contributor to Naming Rights Online and can be reached at bmiller@namingrightsonline.com