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Naming Rights Could be Financing Gap Filler for New Bucks Arena

Since 1926, when Chicago Cubs’ owner William Wrigley named the Cub’s stadium “Wrigley Field,” professional sports teams across the country have created significant revenues by selling sponsorships to companies who wish to be affiliated with the team and the team’s sports facility. Naming rights are the name of the game. The majority of teams in all major professional sports leagues sell the naming rights to their sports facility as an important revenue stream. In the National Basketball Association, twenty-eight of thirty teams in the league have naming rights deals for their arenas. Currently, only the New York Knicks (who play home games at Madison Square Garden) and the Detroit Pistons[1] (who play home games at the Palace of Auburn Hills) do not have naming rights arrangements for their respective arenas.

Most recently, the New Orleans Pelicans sold the naming rights to their arena to Smoothie King (a smoothie food retailer), a company headquartered in Metairie, Louisiana who has 650 locations throughout the United States. The deal, signed in February 2014, spans ten-years with an option for Smoothie King to opt-in for another ten years and is worth roughly $40 million for the Pelicans.[2] Similarly, the Portland Trail Blazers sold the naming rights to their arena, formerly known as the Rose Garden, to Moda Health in August 2013. The arena in Portland is now called the Moda Center. Moda is a dental and health insurance company who operates in the Pacific Northwest. That deal was also for ten-years and valued at an estimated $40 million and was the first time that the arena in Portland had been named after a title sponsor.[3] In December 2013, the Chicago Blackhawks and Chicago Bulls announced a further extension of their naming rights agreement with United Airlines for an additional twenty years.[4] The financial terms were not announced. Other notable deals in the NBA include the Atlanta Hawks (playing at Philips Arena) who sold naming rights for $185 million over twenty years.[5] Philips Arena used to host the Atlanta Thrashers of the NHL, but after that franchise relocated to Winnipeg, Canada in 2011[6], the arena is home to the NBA’s Atlanta Hawks and the WNBA’s Atlanta Dream.[7] The Brooklyn Nets sold the naming rights to Barclays for their new arena, which opened in 2012, for an estimated $400 million over a twenty year period.[8]

Of the seven US arenas that signed naming rights deals since 2011, four have terms of at least ten years. Of arenas that disclosed naming rights terms and have at least one major league tenant, the average naming rights revenue is $3.8 million.[9]

In Milwaukee, the Bucks are facing the prospect of building a new arena downtown. The proposed location is just north of the existing BMO Harris Bradley Center, which opened in 1988. The Bradley Center is currently one of the NBA’s oldest and economically outdated arenas. The NBA has required the new Bucks’ owners, Wesley Edens and Marc Lasry, to start construction of a new arena or face relocating the team to a different city. The Bucks, formerly owned by Senator Herb Kohl, were purchased by a group of investors led by Edens and Lasry in May of 2014. As part of the sale, Kohl donated $100 million toward the funding of a new arena for the Bucks. However, that $100 million does not attach naming rights to the arena. Kohl said “I am making a pure gift. There’s no return from it financially.” Kohl views his donation as a way of supporting the local community while also helping to keep the team in Milwaukee long-term. He has also stated that he would like the team to be able to sell the naming rights for the arena and the money could go toward the cost of building or operating the new arena. [10]

BMO Harris bought the naming rights for the Bradley Center in May 2012 as part of a six-year deal. The move comes just four years after the Bradley Center officials dropped an effort to sell the naming rights for the building because the children of Jane Bradley Pettit, the philanthropist who donated $90 million to build the facility, opposed the effort. The Bradley Center and the Metropolitan Milwaukee Association officials were able to convince David and Lynde Uihlein, Pettit’s children, that securing the funds for naming rights was critical in getting enough financial support to provide maintenance and upgrades to the building.[11] BMO Harris pays more than $1 million per year as its portion of the naming rights deal, while other companies, such as Harley Davidson, Kohl’s, Northwestern Mutual, and Rockwell Automation, contribute sponsorship dollars which (coupled with BMO Harris) total greater than $18 million over six years for the Bucks. Until 2012, the Bradley Center had never sold its naming rights.[12]

In the Bucks’ case, the importance of selling naming rights for a new arena is that it could fill the gap in financing that is needed to break ground on the project. Possible naming rights candidates for a new arena in Milwaukee might include PNC Bank, BMO Harris Bank, MillerCoors, Harley Davidson, Northwestern Mutual, Associated Bank, Potawatomi, Southwest Airlines, and Kohl’s. What follows are some comments on each of the possible candidates:

  • PNC Bank does business in the City of Milwaukee and is currently the naming rights sponsor for the Pittsburgh Pirates of MLB (PNC Park).
  • BMO Harris Bank purchased M&I Marshall & Ilsley Bank, does business in Milwaukee and currently has the naming rights for the BMO Harris Bradley Center – home of the Milwaukee Bucks.
  • MillerCoors has local ties and has the naming rights for Miller Park – home of the Milwaukee Brewers, is headquartered in the Midwest, and has administrative offices and brewing operations in Milwaukee.
  • Harley Davidson, founded and headquartered in Milwaukee, is arguably the most famous motorcycle brand in the world. Early rumors have stated that Harley is a leading candidate for a naming rights deal.
  • Northwestern Mutual is an insurance and financial services firm based in Milwaukee, and already has plans to build a sky-scraper in downtown Milwaukee. (The Northwestern Mutual tower is set to be completed by the end of 2017 and will be the tallest building in Milwaukee.) Northwestern Mutual is also a leading candidate for a naming rights deal.
  • Associated Bank is headquartered in Green Bay, Wisconsin. It serves primarily Midwestern states and may be a good local fit for naming rights. It also is one of the four corner sponsors for Lambeau Field. While the Green Bay Packers do not have a naming rights sponsor at historic Lambeau Field, it does have entry sponsors.
  • Potawatomi is a local Native American tribe in Wisconsin. The tribe has a large casino and hotel located right outside of downtown Milwaukee that attracts visitors from all over the state.
  • Southwest Airlines, based out of Dallas Texas, is a major airline that serves Milwaukee. Given the trend of airlines signing naming rights sponsorships in the NBA (American Airlines Arena in Miami, American Airlines Center in Dallas, Air Canada Centre in Toronto, etc.), this may be a good fit.
  • Finally, Kohl’s is a national, publicly held corporation based in Milwaukee that has 1,160 retail stores covering 49 states. Herb Kohl’s family used to own the company, but sold the corporation long ago. So Kohl’s may be a perfect fit given that Kohl’s is a national corporation with many local ties.

The lingering question regarding a naming rights deal for the new Bucks’ arena is how much revenue the deal would bring to the team. It is unclear how much money the new arena would command, but some project that the number may be from $40-50 million over a ten year period. Given that the new facility would also serve as home to the Marquette University basketball team, the Milwaukee Admirals (minor league hockey), and numerous concerts and events, a potential sponsor may have to pay a higher fee than it would at an arena that only hosts one team. Given the heated debates regarding how the new arena will be financed, the income from a naming sponsor for the arena could be a great boost for funding. The Bucks, however, will insist that naming rights revenue go to the team’s bottom line. Although Kohl has promised $100 million to finance the arena, he has refused to have his name on the arena, opening up another revenue source for the Bucks. With Kohl’s $100 million contribution, another $150 million from Edens and Lasry, and a potential $40-50 million naming rights deal, the Bucks would be getting much closer to finally building a new arena in Milwaukee.

Thank you to Brycen Breazeale for his assistance in researching this article.

 


[1] It has been reported that the Pistons and the Palace are searching for a naming rights sponsor. http://www.detroitbadboys.com/2015/1/5/7494033/palace-no-more-pistons-looking-for-new-naming-rights-deal

[2] Reid, John, “New Orleans Pelicans Agree to Arena Naming Rights Deal with Smoothie King,” February 5, 2014, http://www.nola.com/pelicans/index.ssf/2014/02/new_orleans_pelicans_agree_to.html

[3] Tokito, Mike, “Trail Blazers rename the Rose Garden the Moda Cent in a Sign of Changing Times,” The Oregonian, August 13, 2013, http://www.oregonlive.com/blazers/index.ssf/2013/08/trail_blazers_naming_rights_moda.html

[4] “New 20-Year Naming Rights Agreement Announced for United Center,” NBA.com, December 11, 2013, http://www.nba.com/bulls/news/new-20-year-naming-rights-agreement-announced-united-center.html

[5] Marquette University Law School, “National Basketball Association,” Sports Facility Reports, Appendix 2, June 1, 2013, https://law.marquette.edu/assets/sports-law/pdf/nba-2013.pdf

[6] Buteau, Michael, “Thrashers Moving to Winnipeg After Sale to Canadian Group,” May 31, 2011, http://www.bloomberg.com/news/articles/2011-05-31/thrashers-moving-to-winnipeg-from-atlanta-after-sale-to-canadian-group

[7] Philips Arena Website, http://www.philipsarena.com/arena-info

[8] Sandomir, Richard, “What’s in a Name? $400 Million,” The New York Times, January 19, 2007, http://www.nytimes.com/2007/01/19/sports/basketball/19sandomir.html

[9] Erickson, Clark, “A Brief Analysis of New Orleans’ Smoothie King Center Naming Rights Deal,” Erickson Partners, LLC, February 18, 2014, http://ericksonpartnersllc.com/brief-analysis-new-orleans-smoothie-king-center-naming-rights-deal/

[10] Kirchen, Rich, “Herb Kohl: Don’t Name New Arena After Him,” Milwaukee Business Journal, April 16, 2014, http://www.bizjournals.com/milwaukee/news/2014/04/16/herb-kohl-dont-name-new-arena-after-him.html

[11] Kass, Mark, “BMO Harris Secures Bradley Center Naming Rights,” Milwaukee Business Journal, May 21, 2012, http://www.bizjournals.com/milwaukee/news/2012/05/21/bmo-harris-secures-bradley-center.html?page=all&r=full

[12] BMO Financial Group Press Release, “Milwaukee’s Bradley Center Becomes the BMO Harris Bradley Center as Local ‘Champions of the Community’ Come Forward to Support Jane Bradley Pettit’s Gift,” Marketwire, May 21, 2012, https://newsroom.bmo.com/press-releases/milwaukee-s-bradley-center-becomes-the-bmo-harris–tsx-bmo-201205210792110001