August 15th, 2008
Seeking Post-Game Sponsors
By Geoffrey A. Fowler
The Wall Street Journal
Naming Rights Are Up for Sale At Olympic Venues
BEIJING—For sale: the right to name one giant bird’s nest. Serious inquiries only.
For a price tag in the hundreds of millions of dollars, the manager of the “Bird’s Nest” National Stadium is selling the 30-year rights to put a corporate name on the front of the Beijing Olympics’ most prominent venue, as well as the rights to about 10 specific partnerships, such as soft drinks and technology, inside. Next door, Beijing’s “Water Cube” Aquatic Center is also selling partnership rights, though so far only inside.
Ben Sturner, chief executive of New York-based Leverage Agency, which is helping broker both deals, says six multinational companies are competing for title rights to the stadium, which cost $500 million to build and whose steel superstructure resembles a bird’s nest. He won’t name them but says he has been taking top executives through a whirlwind sales pitch in recent days, including visits to high-profile Olympic events.
“I would call it the most valuable piece of real estate in the world right now,” Mr. Sturner says.
The Beijing Games have been a boon for marketers in China seeking to tap the growing middle class’s national pride and interest in sports. But when the Olympic flame goes out at the end of the month, many will be looking to extend the glow. “What will be left behind are the good memories,” says Priscilla Ho, managing director of Chinese sports-marketing agency Prescient Group, which is also helping broker the deals.
For the eventual buyers, it is a bet both on the continuing iconic status of the Beijing Olympic venues, and on the still-nascent development of a sports industry in China. “Chinese consumers are getting more money now, and in their leisure time they will spend a lot on culture and sports,” says Henry Zhang, deputy general manager of National Stadium Co., which manages the Bird’s Nest.
Potential buyers could include any of the current Olympic sponsors, several of which—including Lenovo Group Ltd., Adidas AG and Coca-Cola Co.—currently feature the Bird’s Nest in their marketing. Because their expensive Olympic rights run out at the end of the Beijing Games, a competitor could swoop in and take over the Nest.
Games sponsor Adidas said it doesn’t put its name on venues anywhere in the world. Coke said it wouldn’t comment on its future marketing activities. Lenovo didn’t respond to a request for comment.
“It would be a really significant thing that a brand could say about their commitment to China,” says Scott Kronick, the president of WPP Group PLC’s Ogilvy Public Relations in China, which advises several Olympic sponsors. “What price you put on it is the question,” he adds.
Putting a corporate name on such a high-profile public space in China comes with some risk. Starbucks Corp. closed a small shop in Beijing’s Forbidden City after complaints from Chinese bloggers, who thought it was unsuitable to have one inside a national treasure. National Stadium’s Mr. Zhang says selling the name after the Olympics has been in the plan for the stadium all along, and a survey conducted for the company by Nielsen Co. found that 70% of people in five big Chinese cities accepted the idea in principle.
Any sign going up on the front of the stadium “has to be very classy and sophisticated,” Mr. Sturner says. “We will choose a company that has a very good reputation in China.”
An announcement is expected within the next few months. The choice of sponsor is subject to review by Beijing government officials.
Naming stadiums after companies is old hat in America, but it is a new idea in China. The Communist government has long owned most venues, but market-oriented practices are starting to take over even cultural and sports businesses.
The Bird’s Nest established a new public-private ownership model for China. A consortium led by Chinese conglomerate Citic Group owns a 42% share of the Bird’s Nest and the rights to operate it for 30 years, and the rest is owned by the government. The Water Cube is owned by the Beijing State-Owned Assets Management Co., which is wholly backed by government money, and which also owns the remaining 58% of the Bird’s Nest.
The deal-making also reveals a more detailed picture of how the venues will be used after the Games are over. The Bird’s Nest will accommodate 80,000 people after being refit. It has been already booked as the permanent home for the Beijing Guoan Football Club, a Chinese soccer “super league” team, and stadium managers are in talks for other exhibition games, aiming for a total of at least 60 matches and concerts a year. They are also adding a museum, mall and hotel to the area around it, in addition to selling VIP skyboxes. The Water Cube will have some of its seating taken out, and be turned into a water park and bubble-themed bar.
NBA China, which plans to develop a league here, is working with Anschutz Co.’s sports-marketing company AEG Worldwide on selling naming rights to Beijing’s less-high-profile Wukesong arena, which is hosting basketball games during the Olympics. Tim Chen, chief executive of NBA China, says he doesn’t have a timeline for closing the naming deal.
Past efforts to find a long-term legacy for Olympic venues have had mixed success. The Olympic Stadium built for the Montreal Games in 1976 became home to the city’s professional baseball and Canadian football teams. But since the Montreal Expos relocated to Washington, D.C., in 2004, the stadium has had no main tenant. In Athens, host of the 2004 Games, the main Olympic complex is well used, but the city can’t find permanent tenants for some other venues.
Bird’s Nest managers say the Nielsen research found that some 84% of people in five Chinese cities say they plan to visit the venue at some point after the Olympics. Even before it opened, the Bird’s Nest became a Beijing tourist attraction, with tour buses stopping along the side of the road for people to snap photos.