|Monday, March 26
Updated: March 27, 4:35 PM ET
Heisley taps last mother lode of revenue streams
By Darren Rovell
The Brewers earned their nickname because they played in the country's beer capital. The Steelers, because they played in the steel capital.
Traditionally, team names in sports have been decided by owners and team executives. The monikers also have come by way of popular "name the team" contests. But never in the history of the four major professional sports leagues has a team owner sold a nickname to the highest bidder.
Vancouver Grizzlies owner Michael Heisley might be the first to do so if his team moves to Memphis and Federal Express agrees to buy both facility and team naming rights.
With more and more teams threatening to move because of an inability to compete financially, it is possible Heisley might have tapped into the last mother lode of revenue streams. Not bigger than luxury suites and seats, but perhaps more valuable than arena naming rights.
It didn't happen by accident.
The issue of selling team naming rights was first brought to the negotiating table by Tricon Global Restaurants Inc., the parent company of Kentucky Fried Chicken. KFC was trying to lure the Grizzlies to Louisville and offered $100 million to call the arena The KFC Bucket and the team the Kentucky Colonels.
But, in the end, KFC might have helped land the team in Memphis. Heisley, according to a source, shopped KFC's offer and found what was likely a higher bidder in Memphis-based Federal Express. The name of a new arena has not been specified, but a FedEx spokesperson confirmed Tuesday that the company registered the domain names fedexarena.com and fedexforum.com recently. The team might be called Memphis Express. Michael Glenn, a vice president of FedEx Corp., told the Associated Press on Monday that talks of a specific name is premature.
No word yet whether the Charlotte Hornets ownership group has a similar deal in the works. Like the Grizzlies, the Hornets applied to the NBA for approval to relocate to Memphis for the 2001-02 season.
Such a premise was attempted two years ago on a league-wide basis. The upstart College Professional Basketball League had corporate team nicknames purchased by Internet companies such as Yahoo! and Broadcast.com. The league, however, died before tipoff.
"Today's blasphemy is tomorrow's sacred tradition," said Mark Cuban, owner of the Dallas Mavericks and founder of Broadcast.com. "There are more important things to care about than the name of your favorite team. Cowboys, Steelers, Pirates. Just because we grow accustomed to them doesn't make them special."
Buying a team nickname, instead of facility naming rights, could have its advantages.
"These naming rights travel with the team wherever it goes, whereas Federal Express only gets FedEx Field a few times a year," said Dick Irwin, a sports marketing and management instructor at the University of Memphis. "In this way, team naming rights are like a FedEx truck that travels from venue to venue."
Eric Wright, spokesperson for Joyce Julius, a sponsorship evaluation company, said an NBA team name such as the Vancouver Grizzlies generates between $110 million and $120 million in equivalent media advertising time. Wright said a corporate name on a sports facility generates as much as $10 million for the corporation in equivalent advertising dollars. Therefore, Wright said, the value on team naming rights would fall somewhere between the two values.
"This natural tie-in does not work for all companies," said Bill Miller, author of "Facility Naming Rights," a guide for negotiating corporate naming rights deals. "Express and Colonels work here. But there's a lot of companies that don't have a natural tie-in which makes a team naming rights package deal tougher than a facility package."
How about the Memphis Kleenex, Memphis Xerox or Memphis Nikes? It's not as easy as Federal Express and Kentucky Fried Chicken have made the idea sound.
"What would you call an Atlanta team named after Coke?" Irvin asked. "The Atlanta Cokes or the Soft Drinks?"
The value of such a deal will be based on whether the average fan who sees or hears of the Express name would automatically think of Federal Express. Having the team wear the corporate colors -- orange and purple -- which also would be the color of the arena seats, would enhance the association. If the team wore light green, Federal Express inadvertently might be paying for American Express' team naming rights.
But enhancing isn't enough, says Jed Pearsall, president of Performance Research, a Rhode Island-based sponsorship evaluation firm.
"Just naming the team alone doesn't really a do it," he said. "There's got to be a logical reason for a consumer to go to Federal Express more than an advertisement would." Pearsall suggested that if the corporate support enabled a team to become successful and attract top players, fans might associate Federal Express in a more favorable light.
Pearsall said his company, citing previous survey data, discovered "people were appalled by arena name changes on an existing facility, but that they've become desensitized to it in time." He said he believes this will be the case if teams sell their nicknames to the highest bidder.
"Change creates opportunity, and people are always going to be resistant to any change," Cuban said. "Sports don't need to be protected, they need to be enjoyed. Bullets (or) Wizards, Griz (or) Express; who the hell cares? I have never heard anyone tell me they won't go to a game because we are named the Mavericks, yet I have had people tell me we should change our name."
A name change might be more lucrative than facility naming rights. For example, over a 20-year span, a $120 million deal for team and arena naming rights would be worth $6 million a year. Given that American Airlines recently paid $2.1 million a year for facility naming rights to the Miami Heat's new arena in a larger market, naming rights to an NBA-only arena in Memphis should be of less value. Therefore, team naming rights in this deal could be worth more than $4 million a year.
There is some debate whether the NBA would allow owners to sell a team's nickname to a corporation. When individual teams have sponsors that could be considered competing brands with the league sponsor, buying a team nickname might be thought of as a conflict. A spokesman for the NBA would not comment on the team naming rights issue.
"The potential development of team naming rights as a revenue stream depends on league policies," Miller said. "Licensing is a big revenue stream for the league and its clubs. Strictly commercial team names that do not generate licensing or merchandise revenues would be robbing Peter to pay Paul. There's no incremental revenue there, and it is unlikely a league would allow it."
Darren Rovell, who covers sports business for ESPN.com, can be reached at email@example.com