With New Stadium, Name of Game Is Money
Tuesday, November 28, 2006
With the Washington Nationals on the verge of putting the naming rights to their new stadium up for bid, industry sources say the team likely will receive at least $4 million and possibly as much as $10 million per year on the deal, which would make it one of the most lucrative in Major League Baseball.
The Nationals are close to hiring Los Angeles-based Wasserman Media Group to auction the naming rights for the $611 million stadium that the city is building for the club along the Anacostia River, according to industry sources. The sale could take months to complete.
A rich naming rights deal would help the Nationals, who now play in RFK Stadium, by guaranteeing a significant revenue stream each year. "Naming rights money gives you a foundation for your revenues that you can depend on and utilize to field a competitive team year in and year out," said Dan Duquette, a former general manager of the Boston Red Sox.
The New York Mets recently signed a record $20 million-per-year naming rights deal with financial services giant CitiGroup for their new stadium that is scheduled to open in 2009. The Mets deal set a new benchmark for stadium naming rights and, according to industry sources, will help elevate the price the Nationals receive.
The District government is building the Nationals a new stadium in Southeast Washington, and the facility is scheduled to open in April 2008. Under the agreement that Major League Baseball reached with the District, the ballclub is entitled to all of the revenue from the naming rights to the stadium.
The provision was opposed by some local politicians, who said the city should receive any naming rights revenue. Mayor Anthony A. Williams (D), the stadium's main backer, said the naming rights were an important incentive for persuading baseball to locate a franchise in Washington and attract a buyer.
One industry source, who asked not to be identified because of the sensitivity of the sale, said the family of Theodore Lerner, which owns the Nationals, is hoping the naming rights will earn $10 million to $15 million per year. The source estimated the rights probably will sell for $5 million to $10 million. Others said these numbers were too high.
"My guess is this Nationals deal will fetch between $4 and $6 million a year, based on other recent deals," said Jeffrey Grill, a Washington lawyer who has negotiated several sports naming rights deals. "No one should expect a deal anywhere near what the Mets got. But Washington is interesting because the stadium is going to be the cornerstone of a new revitalization area, it's an affluent area and there's clearly a demand for baseball here that was underestimated by most people, including Major League Baseball."
If the contract for conducting the auction goes to Wasserman Media, as expected, the sale likely will be engineered by WMG Marketing President Jeff Knapple, one of the top sports naming rights marketers in the country. Knapple will lead the naming rights process for the new stadium being built for the New York Jets and New York Giants. A spokesman for Wasserman declined to comment.
Stadium naming rights have become a major revenue source for teams in the last decade. The Washington Redskins struck one of the biggest naming rights deals ever when FedEx Corp. agreed in 1999 to pay the team $7.6 million per year for 27 years.
Most recent baseball naming rights deals have been near $4 million per year. Cisco Field, to be built near Oakland, Calif., sold for $120 million over 30 years and Citizens Bank Park in Philadelphia sold for $95 million over 25 years. Minute Maid Park in Houston sold for $168 million over 28 years, or a little more than $6 million per year.
The University of Maryland this year sold the naming rights to the field at Byrd Stadium to Chevy Chase Bank for $20 million over 25 years, which averages $800,000 per year.
Grill and others said Washington has several factors that raise the value of naming rights for a stadium in the city, the most important being that the city is the nation's capital and a focus of world attention. Other issues favoring the city are the region's rising wealth and baseball's return to Washington after a 33-year absence. The new stadium also is tied to a high-profile economic revitalization plan in Southeast, which could increase the value of the naming rights.
On the other hand, the city's ownership of the stadium and the lack of deep-pocketed local companies that tend to invest in naming rights, including financial, airline and telecommunications firms, could dampen the bidding.
The leading candidates for the naming rights would likely include such local companies as Capital One Financial, Sprint Nextel, Chevy Chase Bank, Geico, XM Satellite Radio and America Online.
"The ones that tend to go better are the ones that have a local flavor, where the company has a strong presence in the area and can use the naming rights deal to solidify or maintain your dominance," Grill said.