May 31st, 2009
Naming Rights a Big Business
By Shaun Sutner
Worcester Telegram & Gazette
Communities look to bolster coffers
When a pair of major regional banks put up big money to slap their logos on two landmark chunks of city-owned property, city officials and community boosters took notice.
Naming rights deals were no longer just for big-market pro football teams and glitzy basketball arenas.
Here and across the country, cities and towns and school districts are marketing corporate sponsorships for everything from high school athletic fields to airports.
While these arrangements have succeeded in capturing much-needed private revenues to support public services, some of the deals have also raised questions about the commercialization of youth sports and municipal dependence on potentially risky business propositions.
In Worcester, the consensus is that the two high-profile naming rights deals have been winners for the cash-strapped city, which has had to resort to layoffs and budget cuts to deal with a fiscal crisis stemming from deep cuts in state aid.
So the push is on to look again at naming rights, along with other potential new revenue streams such as convincing colleges and other nonprofits to make payments in lieu of taxes, as another way to get the city through perilous fiscal times.
Recently, City Councilor At-Large Gary Rosen proposed that the city consider corporate sponsorships for the Great Hall at Union Station, Worcester Regional Airport and city-owned ball fields.
“Maybe it’s not easy in this economy, but I think the experience with naming rights so far has been great advertising for the companies and sponsors and good revenues for those facilities,” Mr. Rosen said in an interview. “We’ve got work to do, but more of this is around the corner.”
In 2004, Digital Federal Credit Union of Marlboro pumped $4.8 million into the city’s coffers by buying the naming rights for 10 years to the rechristened DCU Center, formerly the Worcester Centrum.
In addition to having its name emblazoned on the heavily used arena, DCU secured exclusive rights to have its ATMs installed in the building and to market its credit union to the center’s employees, among other benefits.
Worcester-based Commerce Bank & Trust followed DCU two years ago with another 10-year deal — this one totaling $1 million, including $800,000 in cash and $200,000 worth of signage, for renaming the old Foley Stadium high school field Commerce Bank Field at Foley Stadium.
That transaction remains one of the most lucrative naming rights deal yet inked for a high school field in the country. A similar contract in high school sports-crazed Texas went for $1.9 million, but a good portion of that went toward paying a broker to sell advertising space. Most high school pacts have been in the $50,000 to $100,000 range, and some school districts have sold seats in gymnasiums and rooms in high schools.
Termed a “gift” by city officials and Commerce executives, the contract provides some obvious benefits to the region’s biggest independent bank — from a stipulation requiring reporters to use the bank’s name in news stories to painting the sports complex with the bank’s recognizable blue and gold brand colors.
The 15-page agreement spells out a series of prerogatives for the bank that include placement of Commerce-approved artwork on top and in front of the stadium aa well as on the playing field, press box and scoreboard; and zoning exemptions for the location, size and style of the Commerce signage.
Before Commerce Bank came along the stadium, built in 1926 and named after the late Gen. Thomas F. Foley, was badly deteriorated, with heavily corroded metal bleachers. The old natural grass field, rutted and easily torn up, was considered unsafe and unplayable after only a few games each season.
For David M. Brunelle, the lead fundraiser for the renovation and who first pitched the idea of a large sponsorship deal to bank chairman David G. “Duddie” Massad, reviving the complex hinged on getting a single large donor to jump-start other fundraising.
That approach worked, he noted, as local nonprofit groups followed Commerce’s lead and made sizable donations that have left the Worcester Educational Development Foundation that oversees the field with a $300,000-plus endowment that has allowed it to repay the city more than half of the $2 million it originally borrowed. The foundation also has raised money by selling more than $30,000 a year worth of advertising space on a scrolling electronic ticker.
“We tried for a long time to figure out a way to get this project done, but the city didn’t have the money and the schools obviously didn’t have the money,” Mr. Brunelle, a 38-year-old financial planner, said. “We needed the lead gift.”
But, while most in the city welcomed the bank’s participation, some critics of high school naming rights deals warn of problems.
Reginald F. Overton, director of the graduate sports management program at Virginia State University, has studied corporate involvement with high school athletics.
He advises school districts and city governments to examine the fine print on contracts to make sure companies are committed to maintaining facilities, and to confirm that corporate partners are trustworthy and of good character because their names become synonymous with amateur athletics.
“It’s kind of sad to see this going on at the high school level, but I know why. It’s because school districts are desperate for money,” Mr. Overton said. “The days of a handshake and the name of coach on a plaque have gone by the wayside. High school sports have become big business.”
Now the big question is how viable are naming rights possibilities during a recession.
While the former Providence Civic Center is still under a 10-year, $4.5 million contract with Dunkin’ Donuts that renamed the arena the Dunkin’ Center in 2001, similar big-ticket regional naming rights agreements might be harder to come by these days.
They also are likely to be riskier than ever, noted Mr. Overton. Turmoil in the banking industry has kicked off a corresponding churn in stadium names, as evidenced by the former Boston Garden’s naming odyssey.
The new version of that arena became known as the FleetCenter, then turned into the Shawmut Center and the TD Banknorth Garden. In July, it is scheduled to be renamed again, as the TD Garden.
One deal eyed by Worcester officials two years ago to subsidize a proposed downtown sky bridge evaporated when the project fell apart. And a private naming rights deal (Hanover Insurance Park at Fitton Field) between the Hanover Insurance Group and the independent minor league Tornadoes baseball team, which amounts to about $100,000 a year, could be in jeopardy because of the team’s financial problems. The ballpark is located at the College of the Holy Cross.
City officials say they are looking into Mr. Rosen’s naming rights proposal but other avenues, such as securing recurring payments from colleges, are higher priorities.
Local business people say that even with the faltering economy, naming rights could work. The problem is finding the right, high-traffic place such as the DCU Center or Commerce Bank Field.
Sleepy Worcester Regional Airport and underused Union Station likely wouldn’t have the same appeal, said Cliff Wilson, owner of Framed in Tatnuck, a framing store, and co-chairman of Worcester Local First, a city business association.
“Whether it’s a local, regional or national business, the key is visibility,” Mr. Wilson said. “Companies aren’t going to do this out of good will. It’s a marketing tool. It’s exposure.”