What's In a Name?
By Kenny Berkowit - Assistant Editor at MomentumMedia Sports Publishing.
How to carefully approach the game of selling naming rights.
Jim Schaus knew that his men's basketball team needed a new arena. As Athletic Director at Wichita State University, he had watched his squad finish last in its conference and its home court, the 45-year-old Henry Levitt Arena, was showing its age.
"We were reaching a precipice, not only for basketball but for our entire sports program," says Schaus. "Our weight rooms, locker rooms, academic centers, and indoor practice facilities were all at a critical point. We needed to do something."
Architects had twice drawn plans for a new building, and both times the department's capital campaigns hadnt come close to raising the needed money. Setting his sights instead on renovating the existing arena, Schaus was still looking at raising $25 million. "We had to run a successful campaign, or there would be serious consequences," he says.
The solution: selling naming opportunities. Three years later, naming rights have changed the face of Wichita State's athletics facilities. One family gave $2.75 million to name the basketball court, another gave the same amount to name the complex's student services building, and a third gave $1 million to name the learning center. But most important, in the largest single gift in WSU history, Koch Industries contributed $6 million and the entire arena was renamed for its Chairman and CEO, Wichita businessman Charles Koch.
"Naming the building wasn't just the lead gift for a successful campaign," says Schaus. "It was the gift that precipitated all the other gifts. It was the Pied Piper of gifts. When Charles Koch affixed his name to our project, it gave us great credibility in the community, both as an institution and as an athletic department. That lead gift was the key to everything else."
Opened in October 2003, the Charles Koch Arena takes its place next to the department's Bledsoe Plaza, C. Howard Wilkins Softball Facility, Cessna Stadium, Coleman Outfield Hill, Eck Stadium, Joe Carter Locker Room, Michaud Pavilion, Sheldon Coleman Tennis Complex, Southwestern Bell Press Box, and Virginia H. Farah All-American Club. They were all financed through naming opportunities, and like facilities across the country, they represent an enormous influx of new money to athletic departments.
At the top of the list, Fresno State University recently secured a $40 million, 23-year contract with Pepsi to help build a new arena. The University of Maryland's new Comcast Center included a $20 million, 25-year deal with the media company. And the University of South Carolina named its new arena the Colonial Center after signing a 12-year, $5.5 million contract with the Colonial Life & Accident Insurance Company of Columbia. The trend has also reached high schools in a handful of communities.
Though the value of naming rights varies widely from one contract to another, many of the questions that athletic directors should ask themselves are the same everywhere: What do I need to think about before I can start looking for a potential business partner? How do I find potential sponsors, and how do I approach them? What can I do to guard against over-commercialization?
The first step in thinking about naming rights is deciding what your needs are and determining the amount of money you'll have to raise to fund your project. Do you expect to build a new facility? Renovate an existing one? Or just sell the naming rights to your current field?
At George Mason High School, a 600-student public school in Falls Church, Va., Athletic Director Tom Horn had a clear purpose for using naming rights: to add lighting to the school's outdoor field. Without stadium lighting, the school was able to host only four of its 11 varsity football games.
"We weren't just out selling something," says Horn. "We had identified a need and come up with a plan to fund the project without taking anything away from the educational budget. In addition to seeking donations, one of the mechanisms we had for raising money was to offer the opportunity to name the stadium."
After estimating the lighting improvements would require about $120,000, Horn used naming rights to close the gap between costs and available funds. Working with his booster association, Horn set the stadium's naming rights at $50,000, which was about 40 percent of total expenses, and struck a five-year deal with the local Cadillac and Hummer dealership. The booster club contributed an additional $40,000 to the project, and a capital campaign in the local community raised enough money to finance the rest. The newly named Moore Cadillac Stadium will be unveiled later this year.
"If you're thinking about a way to fund a specific project, you have to consider all your available resources," advises Horn, "and we had a big one in an unnamed stadium."
At Vernon Hills (Ill.) High School, a 1,200-student public school located in suburban Chicago, Athletic Director Al Janulis found himself with a unique naming opportunity. His school, which opened in 2000, is located in a corporate park that houses headquarters for the paint manufacturer Rust-Oleum, the computer retailer CDW, and American Hotel Register, which provides supplies to the hospitality industry. So when he needed funds to complete the construction of a $1.8 million football stadium, Janulis went to his nearest neighbors.
"The natural place to raise money is from your alumni," he explains, "but our alumni are college freshmen and sophomores, and they're a long way from being able to help us out. So instead, we decided to build long-term relationships with the corporations around us."
Signing a $100,000 deal to name the field for 20 years made it possible for Vernon Hills to complete construction on Rust-Oleum Field, build a new concession stand, and develop its baseball fields. With other contributions from Rust-Oleum, CDW, and American Hotel, it was also able to install new scoreboards, outfit locker rooms, purchase computers, refinish floors, and stabilize some cracking concrete in its athletic wing. But most important, says Janulis, the department's corporate partnerships have been beneficial for everyone involved and go beyond simple business deals: Vernon Hills sends its choir to perform at Rust-Oleum functions, lends its auditorium to American Hotel for meetings, and shares its ball fields with CDW teams.
"Selling naming rights has been very positive for us," says Janulis. "We've received a tremendous amount of financial support to get the stadium up to this level. But it's not about the money as much as it about building a sense of community with our neighbors."
Making the Approach
In approaching potential corporate partners about naming rights, Janulis emphasizes the importance of creating mutually beneficial relationships. So, as co-chairs of Vernon Hills' fundraising committee, Tom Foster and Rick Friedenberg didn't want to look like they were asking for favorsthey approached donors as potential partners.
"We didn't go with our hands out," says Friedenberg. "We went to them and said, 'What can our high school do for you? What resources do we have that could be beneficial to you as a corporation?' As big and powerful as they are, we knew there were things the corporations needed that we could provide.
"To succeed at this kind of deal, you have to treat it like any other business venture," he continues. "You've got to be well organized, and you've got to determine who your targets are going to be."
Foster and Friedenberg chose to approach corporations with a history of charitable giving, a strong presence in the community, and good reasons for wanting a shared stake in their project. After they identified Rust-Oleum as fitting the bill, they researched who to approach at the company. Poring over the school directory, they looked for names of parents who worked at Rust-Oleum, and came up with the company's worldwide manager of buildings and grounds, who has two children at Vernon Hills. That's where they began their asking, and eventually reached the head of the corporation.
"Find someone inside the company who cares about your school," advises Friedenberg. "We found the perfect place to start: a key person inside the business who had a stellar interest in Vernon Hills."
At Wichita State, Schaus approached Koch Industries for many of the same reasons that Vernon Hills contacted Rust-Oleum. Koch is one of the largest employers in the Wichita area, and has a highly visible public profile, a strong identification with the community, and a history of giving to the university. Although Schaus says he could have outsourced the naming rights to a consulting firm, the existing relationship between the university and the corporation was central to closing the deal.
"The advantage of negotiating the deal ourselves is that we understand our community," says Schaus. "Better than anyone else, we understand the people who are involved, and they understand us. We understand what we're selling, and we understand the attributes of our program."
Outsourcing Your Rights
Other universities, however, have chosen to outsource their naming rights. At Fresno State and the University of Texas, for example, the scope of the projects and the amount of money involved led administrators to seek outside help. In addition, these schools' arenas are legally owned by auxiliary corporations that partner with the school on building projects.
At Fresno State, which wanted to fund a new $100 million arena, using an outside agency to sell naming rights gave administrators the ability to sign the largest university sponsorship agreement ever negotiated. In a three-way partnership between Fresno State, the regional Pepsi-Cola Bottling Group (which leased the naming rights from the school), and Save Mart Supermarkets (which sub-leased the naming rights from Pepsi), the university gained $40 million, to be paid over the next 23 years.
Pepsi gained long-term, exclusive pouring rights on campus, plus a benefits package that includes arena signage, tickets, suites, and branding. Along with placing its name on the largest arena in its region, Save Mart gained exclusive rights for off-campus ticket sales to Save Mart Center events, generating additional long-term traffic into its 120 stores in northern and central California. And the athletic department gained use of a first-class, state of the art arena, which is legally owned by one of Fresno State's auxiliary corporations and operated by SMG, an outside management company that also books the arena's entertainment events.
Because of the complexity of the deal, Fresno State officials felt an outside firm was a necessary part of the process. "Outsourcing your naming rights allows you to hire a firm to focus on negotiating the deal, without the distractions of your day-to-day work on campus," says Peter Smits, Vice President for University Advancement at Fresno. "Firms that specialize in this field have a list of clients that they work with. They know how to get the attention of somebody in the corporate world.
"I'm not sure very many schools have the capacity to do that on their own," continues Smits, "and when you approach the level of these naming rights, it's well worth it. It's essentially payment for a service rendered, like paying an advertising company a 15 percent commission to place your ads."
At the University of Texas, which is looking for a corporate donor to name its basketball arena following years of pursuing only personal naming opportunities, administrators hired two firms to head the project. The company that owns Texas' multi-media rights is partnering with Team Services, a firm that specializes in naming opportunities, in a search for the right donor.
For Chris Plonsky, Texas' Director of Men's and Women's Athletics for External Services, there are many advantages to working with naming rights specialists. "They do the research, they set up the meetings, and they find the clients who would most logically have an interest in your property," she says. "They have access to information that most universities don't have access to. They know how to compute the value of your opportunity. And they have a dedicated, full-time staff working on your behalf, completely focused on representing you.
"That doesn't mean that you divorce yourself from the project," she continues. "You still go to pitches with prospective clients, guide company representatives through your facilities, and introduce people to your coaches. You're still involved every step of the way, but with an outsourcing firm representing you, you've got a dual effort."
Setting the Price
How much is a naming opportunity worth? For Plonsky, it depends on the size of your market, the number of events you plan to schedule, and the amount of exposure you can provide to your corporate partner. Some of that worth, such as exposure in the media, use of your school's name and seal, and signage at your venues, may already have an established monetary value at your school But the final amount is essentially worth whatever someone is willing to pay.
"Value varies from market to market and property to property," Plonsky says. "There's no minimum and no maximumit's what that exposure is going to be worth in your marketplace."
"Each environment is unique," agrees Wichita State's Schaus. "There are many, many factors that determine what the market will bear. You can get a general idea by benchmarking naming rights at other facilities in your class and your region. But you have to adjust to your environment, marketplace, and situation."
At Texas Tech University, where the 15,000-seat basketball arena is named for United Supermarkets and 60,000-seat football stadium is named for SBC Communications, seeing the naming opportunities as part of a larger agreement was the key to estimating the value of the deal. "When we offer corporations a naming opportunity, we also offer other marketing and advertising avenues," says Craig Wells, Associate Athletic Director for External Operations. "We want to put them in a position to fully reap the benefits of being the naming rights sponsor, and that includes any coverage we get in the media. It's a complete package, and it needs to fulfil what they're hoping to get from the naming opportunity."
Those larger deals include giving SBC the chance to promote its new DSL service and allowing United to host a series of promotions for its Market Street grocery stores. In addition, Texas Tech has sweetened the package with game sponsorships, half-time promotions, in-game contests on the video boards, and signage at other venues. And for Wells, the proof that the partnerships are working is that both corporations have continued to sign additional contracts with the university.
Especially at the high school level, one potential problem of selling your naming rights is a negative response from the community. Some administrators have suggested that the process over-commercializes scholastic sports.
To head off such concerns at George Mason High School, Horn was careful to anticipate questions and get public approval at the very beginning of his effort. "Before we ever spoke to Moore Cadillac, we held public hearings," says Horn. "Both our school board and our city council were apprised of our plans, and through school board votes and the public hearings, people in the community had an opportunity to comment on the naming process. If our school administrators or elected officials had seen these naming rights as anything negative, we would have stopped the process."
It also helped that the George Mason Booster Association did its homework. It consulted lawyers and local officials to learn about zoning regulations, signage standards, and building permits. At the same time, Horn gauged community response by attending community meetings, carefully reading the local newspaper, and quickly responding to any concerns that a naming opportunity might over-commercialize the field or take advantage of his student-athletes.
"You need to avoid the perception that this is more about money than it is about having the opportunity to fund a specific project," says Horn. "This wasn't a football decisionit was a community decision."
Ultimately, the concessions to commercialism were minor. Moore Cadillac had input on the size and placement of stadium signage, and was given the opportunity to host a series of promotions at the field, including give-aways with the name of the stadium on cups or seat cushions.
At Vernon Hills, where community members did raise some questions, Janulis made sure to keep his student-athletes separate from any suggestion of commercialization. "We faced criticism early on by people who were concerned that kids would be running around the stadium with Rust-Oleum paint cans," he says. "The concern was that one thing could lead to another, because other schools are supported by athletic apparel groups and their students are wearing company logos.
"We made sure not to do anything overtly commercial," continues Janulis. "None of our equipment or uniforms has anything to do with Rust-Oleum. All we have is a sign on our press box, and two small, unobtrusive plaques at the entrance to the stadium."
At the University of South Carolina, administrators tried to avoid over-commercialization at the Colonial Center by keeping signage above eye level. "In our concourse, all of the signage is at least 12 feet off the ground, and the very large signage is 18 feet off the ground," says Director of Athletics Mike McGee. "Inside the arena, the signage is in the end zones. We made certain compromises to address the needs for signage, but we did it in a way that you don't get knocked around by the commercial aspects when you're in the building."
The key to striking a healthy balance between your sponsor and your school, says Schaus, is to maintain good communication throughout the process. "You need to continue to communicate with your donors about their intentions and the kind of recognition that's important to them," he says. "When the gift is made, make sure that everyone is on the same page. Make sure they're satisfied, and that everyone feels great about your association with each other."
"At Fresno State, we learned that in order for this to work, naming rights have to be good for both parties," adds Smits. "We learned that it takes a lot of time between the handshake and actually signing the contract. We learned that it takes a lot of patience, and a lot of work behind the scenes, even when both parties are working toward a common agreement."
Side Note One: Old Names
When thinking about renaming your stadium, it's important to remember the person it's currently named for. Because, regardless of how valuable your naming rights are, you need to be sensitive to those attached to the previous name.
At Wichita State, the original arena was named after Henry Levitt, a politician who had helped obtain the funding to build it. "Because Henry Levitt had helped that facility come to fruition, we wanted to make sure we gave him his due," says Jim Schaus, Athletic Director at Wichita State. "So the whole complex is now called the Henry Levitt Athletic Complex. It was important for us to maintain the integrity of the name, and honoring him in an even more expansive manner was very well-received."
The University of Texas used the same solution. The basketball arena was named for Frank Erwin, a former member of the board of regents and a key figure in the university's earlier expansion. So before offering up naming rights for the new arena, which is undergoing a $55 million renovation, the school renamed the entire athletic complex for Erwin.
At George Mason High School in Falls Church, Va., the outdoor complex did not have a formal name, yet school officials decided to sell the naming rights to only the football field. And before selling anything, they named the complex for a former athletic director.
"You have to think about your community standards," says Tom Horn, Athletic Director at George Mason. "And before you tell the public that you're thinking of a naming opportunity, you have to make sure you've cleared all the ethical hurdles."
Side Note Two: Grand Openings
At Fresno State, the university relations department kept the public interested in the construction of the new Save Mart Center by publishing CenterLine, a quarterly online newspaper. Then, working closely with the media for the arena's grand opening, they made sure to involve the entire community, both on and off campus.
For its fifth issue, CenterLine provided a detailed schedule of events, and made sure to prominently display information on its sponsors, including instructions for buying tickets at Save Mart Supermarkets for the center's first concerts. The Fresno Bee also published a special supplement, calling the grand opening "the event of the decade."
"We hosted two weeks of celebrations," says Peter Smits, Vice President for University Advancement. "It was the first time the public had a chance to enter the building, and the sense of anticipation in the community was incredible."
Two weeks before the building's official unveiling, the university hosted an all-day Sneak Peak and Homecoming Pep Rally for faculty, staff, retirees, and alumni to tour the new facility. The next week included a ribbon-cutting ceremony for corporate donors and university VIPs; a black-tie Top Dog Gala to honor distinguished alumni; a Community Open House to encourage the general public to tour the building, sample foods from the concession stands, and attend performances by regional high school musicians; and a Community Open House for Patrons with Disabilities.
The building officially opened on Nov. 5, 2003, with a family-friendly Bulldog Basketball Extravaganza, which included autograph sessions with members of the men's and women's teams, followed by a co-ed scrimmage; a media all-star game; a mascot basketball game; a slam dunk contest; a three-point contest; video tributes to the school's 2002-03 basketball teams; and performances by the cheer and dance teams. Then, two days later, the Center hosted its inaugural concert with operatic tenor Andrea Bocelli, produced by the Fresno Grand Opera, and followed the next night with pop star Elton John, produced by the building's management company. All the activities were completely sold out far in advance, and both set the stage for the public to see the space as a home for a wide variety of athletic and non-athletic events.
"Allow yourself months and months and months to plan ahead for your grand opening," advises Smits. "Create an organizing committeeours had over 30 people on itand make sure to involve people from the community. Take whatever money you think it's going to costthen double it."
This article originally appeared in Athletic Management magazine's June/July 2004 issue.