|Monday, August 5
Super Bowl winners are naming rights losers
By Darren Rovell
Teams that win a Super Bowl seem to keep losing their stadium naming rights deals.
The New England Patriots, following a trend of the past two Super Bowl champions, announced Monday that its new stadium will not be called CMGI Field, but Gillette Stadium after the Internet development company backed out of its 15-year, $114 million naming rights deal with the team.
Both the St. Louis Rams and Baltimore Ravens lost their stadium naming rights deals after the partnering companies filed for bankruptcy and after the teams won their Super Bowl titles. Trans World Airlines filed Chapter 11 in January 2001, about a year after the Rams beat the Tennessee Titans in Super Bowl XXXIV. The Ravens, who defeated the New York Giants in Super Bowl XXXV, found themselves without a naming rights partner in February 2002 after bankrupt PSInet faltered on its deal with 17 years remaining on it.
"Recently, we've said that if there was a chance to get out of this deal we would," said Tom Oberdorf, CMGI's chief financial officer, who said backing out would mean saving about $85 million. "We're a public company, we want to preserve capital and we have a lot more cash than many other internet companies out there. But now is the time to have that money."
While the correlation between ultimate success and sponsorship failure is one of pure chance, the correlation between the economic downturn and the renegging of naming rights deals is not.
Two years ago, on the day the company structured the deal, company shares closed at $43.94. Shares closed on Monday at 40 cents.
Ed Shirley, Gillette's senior vice president of global marketing, said the Patriots first approached his company a month ago. At a news conference Monday, Patriots owner Bob Kraft would not comment on how the deal was done, but did say, "Every party is very happy with this arrangement; I think it's a value proposition."
Kraft went on to name five Gillette brands in a single breath during the news conference, much like a NASCAR driver rattles off the names of his sponsors in victory lane.
"This morning, as I was using my Foamy shaving cream and my MACH3, my Oral-B toothbrush and my Braun electric toothbrush, and then knowing it was going to be a warm day -- as all of you (know) -- reached for my Right Guard …, and then I got in my car and drove to Gillette Stadium," Kraft said.
Gillette is believed to be the first company to use sports marketing, when it debuted a 1910 magazine advertisement that included Pittsburgh Pirates shortstop and then seven-time batting champion Honus Wagner pitching Gillette safety razors. The company is also the longest running sponsor of Major League Baseball, the NCAA and soccer's World Cup.
"Gillette is much more like the New England Patriots in that the company sells products to consumers," said Dean Bonham, chairman of the Bonham Group, a sports marketing firm that specializes in naming rights deals. "CMGI sold products to other businesses and therefore couldn't responsibly invest as much as Gillette will be able to."
"It's a perfect fit for the Gillette company," Shirley said. "With 65,000 fans coming to the stadium, we can increase our brand equity through sampling programs, which have been a hallmark of our marketing strategy since World War I and II when we sent our blades abroad and the soldiers liked them so much many of them came back to this country and bought them. We're not going to have to think to hard to leverage this property."
On Monday, Gillette also announced that it will spend $350 million to $400 million over the next four years on a cost reduction program in order to save $300 million to $350 million annually beginning in 2006. Shirley said the cost saving program was unrelated to the naming rights deal. Gillette stock (NYSE: G) closed down 3.25 percent, to $31.54, after trading Monday.
While the value of the new deal was not disclosed, other teams have realized better deals as their other deals folded. In June, after the Houston Astros bought out troubled energy company Enron for $2.1 million, the team sold 28 years worth of stadium naming rights to Minute Maid for a reported $6 million a year. That was much more than the $3.3 million deal annual payments that Enron agreed to.
The Rams played the 2001 season without a stadium naming rights sponsor before signing Edward Jones, the financial services company, to a reported 12-year, $31.8 million in January.
Meanwhile, the Miami Dolphins still play in Pro Player Stadium despite Pro Player's parent company, Fruit of the Loom, filing bankruptcy in December 1999. Interest in replacing bankrupt Adelphia on the Titans stadium is not known yet since the team is awaiting a bankruptcy court judge to sign off on the settlement, according to team spokesman Robby Bohren.
The San Francisco 49ers also have been looking to find a naming rights deal after its deal with 3Com, a computer networking company, expired on Jan. 31. But the team has to wait for the approval of the San Francisco Board of Supervisors, which will reportedly consider Monday if the team deserves any monetary reward should the rights ever be sold again.
Of the four other NFL stadiums that open in the next two years, three have naming rights sponsors. Ford purchased 40 years of naming rights to the Detroit Lions stadium for $40 million and Reliant Energy agreed to pay a record $10 million a year over 30 years for the naming rights on the Houston Texans stadium. In June, Lincoln Financial Group agreed to a 20-year deal with the Eagles beginning in 2003 and the Seattle Seahawks, owned by Paul Allen, are patiently looking for a naming rights partner, but will open their preseason this Saturday in Seahawks Stadium.
Darren Rovell, who covers sports business for ESPN.com, can be reached at email@example.com