March 21st, 2008
Twins See Naming-Rights Deal Done by End of '08
By John Vomhof Jr.
Minneapolis/St. Paul Business Journal
Minnesota Twins officials hope to finalize a naming-rights deal for the team’s new ballpark by year’s end as they market a limited number of high-profile sponsorships loaded with a range of marketing opportunities.
Team executives are in talks with some of the state’s largest and most-recognizable companies about the naming rights and other sponsorships. When the ballpark opens, lead sponsors will play a more prominent role than they do at the Metrodome because the team is shrinking its roster of sponsors to between 75 and 100 companies, about half the total now.
The Twins will retain all of the revenue from naming rights and other ballpark sponsorships. In addition to one naming-rights partner, the team will have at least four “founding partners,” each of which will have broad-reaching sponsorships that include naming rights for various signature areas of the stadium, such as the club rooms or the home-run porch in left field.
All of the top partnerships will be long-term, multimillion-dollar deals. The lead naming-rights deal could exceed $5 million a year.
“We’re out conducting high-level discussions with a multitude of Minnesota legacy companies, and the response has been outstanding,” said Laura Day, Twins senior vice president of business development, who is leading the naming-rights search.
In fact, Day, who helped negotiate the naming-rights deal for Xcel Energy Center when she worked for the Wild, believes she is already in talks with the company that will be the team’s naming-rights partner, though she won’t disclose any company names.
“Our goal will be to secure our naming-rights partner and our four founding partners for the new ballpark certainly by the end of the year, and I’m confident we’ll do that based on the discussions that we’ve had and the level of interest,” she said.
The team’s top sponsors will be highlighted more extensively in the new ballpark than they have been at the Metrodome as some inventory, such as signage on the outfield walls, will be scaled back to make those advertisements more exclusive and valuable. The Twins are reducing the number of available sponsorships so companies that have them get increased visibility.
The right price
The value of naming-rights deals has increased in recent years. Citigroup Inc. agreed to pay the New York Mets $20 million a year for 20 years for the naming rights to the team’s new ballpark, scheduled to open in 2010. The Progressive Corp. will pay the Cleveland Indians an estimated $3.5 million a year to rename Jacobs Field.
A small-market team like the Twins won’t generate as much from naming rights as one in New York, but should expect more than Cleveland, said Marc Ganis, president of Sportscorp, a Chicago-based sports-marketing firm. “The Twins should get somewhere in the range of $4 million to $5 million a year, and maybe a little more than that. Even though the market isn’t robustly sized, there are quite a number of excellent, high-profile corporations that could use this type of platform to promote their company and brand that are headquartered in the Minneapolis-St. Paul area.”
It’s not critical to find a naming-rights partner until the stadium is completed, but sponsors can benefit from signing on early, said Fred Fried, a principal with Team Services, a Rockville, Md.-based sports-marketing firm that has negotiated naming-rights deals for several professional and college sports venues.
“If you’re in early, you have a seat at the table,” he said. “If there are some marketing or design features that can enhance the value for either side, that’s certainly something the designers and architects would be willing to look at.”
The company that lands the Twins’ naming-rights deal will get more than just a name on the building, though. Such agreements typically include a wide range of incentives that benefit the buyer in other areas beyond marketing.
Wayzata-based TCF Financial Corp., which agreed to pay $35 million over 25 years for the naming rights to TCF Bank Stadium at the University of Minnesota, received increased access to university students, faculty and alumni. The benefits included an extended sponsorship of the university’s student-identification cards, an option to lengthen its ATM lease on campus, the right to take over U.S. Bank’s branch in the student union when that lease expires in 2010 and the rights to a new U of M debit affinity card.
“There are certainly business-to-business opportunities,” Fried said. “The stadium itself is going to utilize a lot of products and services for that matter, so if it’s a company that falls in line with some of the items and elements that are necessary, there is a direct business opportunity.”
The right fit
There’s more to a naming-rights deal than meets the eye. The sponsor will want a large package of benefits that stretches far beyond just stadium signage, and the Twins will want a partner that represents the team’s values.
“It’s not necessarily about who’s going to write the biggest check,” Day said. “For us, it’s going to be the ultimate marriage. There’s a tremendous amount of shared marketing equity.”
That’s why the team hopes to find a well-known local partner that will resonate well with fans in Minnesota and beyond, Day said. “All of the companies we’re talking to not only have a very strong regional presence, but also an international presence. Even though they’re headquartered here, their businesses far surpass just Twins Territory.”
Finding a good partner isn’t always as easy as it might seem, though. The Houston Astros were happy with their 30-year, $100 million deal with Houston-based Enron Corp. until the company went bankrupt amid a public scandal.
It’s always best to find a local partner, though, Ganis said. “If you have a local firm that can benefit from the civic activities and the entertainment value right there in their backyard and get the national and international recognition that they’re looking for out of a naming-rights deal, that’s the best of both worlds.”