The Washington Redskins have reached a tentative agreement on a 27-year, $200 million-plus deal with Federal Express for the naming rights to the team's Landover stadium, a deal that could make one of the wealthiest franchises in the National Football League even wealthier, according to sources.
Under the agreement, the stadium will be renamed FedEx Field, sources said.
Those sources said negotiations between representatives of Redskins owner Daniel M. Snyder and Federal Express, the Memphis-based overnight package delivery service, are expected to produce an agreement within a week.
Snyder's ownership group paid $800 million for the franchise and the stadium in July, the largest amount paid for a U.S. professional sports team. The $200 million FedEx would pay for the naming rights deal would be the largest overall amount ever paid in such an agreement, although the average amount per year--$7.5 million--is not the largest. The naming rights for Atlanta's Philips Arena, which will host professional basketball and hockey games, sold for $181.9 million, a little more than $9 million annually.
Because of the longer seasons in those sports, Philips Arena will host 82 games a year, compared with no more than 10--including possible playoff games--for a pro football team. But the NFL's large television audience make such deals attractive for companies looking for widespread exposure.
Snyder, president of Bethesda-based Snyder Communications Inc., and Federal Express spokeswoman Shirley Clark declined to comment.
One Redskins source, who spoke on the condition that his name not be used, said "there is no deal, [but] we have had discussions with a number of potential partners. There is a form of a proposed contract that has been shared with all interested parties."
Former Redskins president John Kent Cooke, who failed in his bid to buy the team this year, chose to name the stadium after his late father, Jack Kent Cooke, rather than sell the naming rights. Jack Kent Cooke, who died in April 1997, was the majority owner of the franchise for 25 years and paid $180 million to build the stadium, which opened in September 1997. John Kent Cooke made $25 million in improvements last year.
When Snyder bought the team this past July, he said he intended to sell the naming rights in order to recoup some of the $800 million price tag. In the interim, he decided to remove Cooke's name from the facility, which has been referred to as Redskins Stadium this season.
To finance his record purchase, Snyder took on $495 million in debt: $340 million in loans and $155 million in stadium debt that he assumed when he bought it from the Cooke estate.
The stadium is one of the biggest cash generators in all of sports. The Redskins have sold all of their 80,166 seats, including 208 luxury suites, 2,000 loge seats and 15,000 club seats, more club seats than any other team in the NFL. In addition to the NFL's lucrative TV contract, NFL licensing, concession sales and parking, the team earns roughly $50 million a year before taxes and interest--one of the highest returns in professional sports.
The Redskins' record this season is 4-2, and the team is showing great improvement over the past several seasons.
Snyder has beefed up his marketing staff since taking over the team, appointing former Snyder Communications senior vice president Stephen T. Baldacci as president of Washington Redskins Entertainment Inc. Snyder also hired David Cope away from the Baltimore Ravens to be a top marketing executive. Snyder, Baldacci and Cope are believed to have negotiated the deal with Federal Express.
Federal Express, which also sponsors college football's Orange Bowl, is the only company now negotiating for the naming rights, although Snyder did talk earlier with several other major companies, according to sources.
There are 53 naming rights deals totaling nearly $2.2 billion, according to a recent report in the Rocky Mountain News in Denver. According to the News, the two biggest deals are the $195 million, 30-year deal at the new American Airlines Center in Dallas and the Philips Arena deal. The Dallas agreement comes to $6.5 million per year.
MCI Communications, now known as MCI Worldcom, paid Washington Sports and Entertainment, which owns MCI Center and the Washington Wizards National Basketball Association team, $44 million over 13 years for the naming rights to the arena, which opened in downtown Washington in December 1997.
Federal Express, known officially as FDX Corporation, ranks 94th among Fortune 500 companies and had a 1999 fiscal year net income of $631 million on sales of $16.7 billion, according to Hoover's Online. It has 141,000 employees.
The company was founded in 1973 by Frederick W. Smith, who is chairman, president and chief executive officer.
Staff writer Mark Maske contributed to this report.
CAPTION: The Redskins have reached a tentative agreement on a 27-year, $200 million-plus deal with Federal Express.