Five days before the Super Bowl last February, Farmers Insurance made a blockbuster announcement that bordered on the incredible. The Los Angeles-based company committed a record $600 million in naming rights for Farmers Field, a stadium in downtown Los Angeles that has yet to be approved for an NFL team that does not yet exist. The move was far from a grandstand play. It was a stroke of genius.Farmers has since received more than 8.5 billion media impressions through mentions in newspapers, radio, television and Internet sites worth an estimated $134 million in advertising, said Mark Toohey, Farmers senior vice president of media relations.Its no wonder that 21 of the 31 stadiums in the NFL and 22 of 30 in Major League Baseball have naming-rights partners or that, here in Kansas City, the Chiefs and Royals have been exploring the possibility of attaching naming-rights sponsorship to their iconic Arrowhead and Kauffman stadiums as they turn 40 years old in the next two years.But finding the right partner is no easy task. And changing the names of Arrowhead or Kauffman, or adding a corporate sponsors name to one of them, could cause fan backlash. Speculation has persisted in recent days that each franchise is close to unveiling a naming-rights partner, but officials from both clubs say nothing is imminent.To compete in the National Football League, its important for us to have broad-based corporate support, Chiefs chairman Clark Hunt said. One of the biggest avenues for that is through the sale of naming rights.Kevin Uhlich, Royals senior vice-president/business operations, said: If the right deal with the right partner and someone who cared for the Kansas City community, as we do wed have to look at it.Farmers wont pay a penny on its 30-year sponsorship in L.A. until the stadium is built and a team is in place, turning the investment into essentially a 35-year deal. Imagine the value to the company once an NFL team actually plays in the stadium and when a Super Bowl, Final Four, World Cup soccer matches and major concerts are staged there.When you look at sports as an area of sponsorship, you cannot ignore the NFL, said Paul Patsis, Farmers president of enterprise marketing.• • • The Chiefs, in the nations 31st-ranked television market, could not command a deal as lucrative as teams in the largest markets, such as the Farmers arrangement, or the $425 million-$625 million over 25 years that Metropolitan Life Insurance is paying for the new MetLife Stadium at the Meadowlands. But Indianapolis, in the 27th-ranked market, has a 20-year, $121.5 million naming-rights agreement at Lucas Oil Stadium, and Denver, in the 17th-ranked market, has a $60 million deal for 10 years at Sports Authority Field at Mile High.Baseball stadium naming rights arent quite as lucrative. Citigroup has committed $400 million over 20 years to Citi Field, home of the New York Mets in the nations largest market. But the next-highest rights fees are found at Philadelphias Citizens Bank Park, home of the Phillies, which went for $95 million for 25 years, or $3.8 million a year. Closer to Kansas Citys price range, Great American Insurance in Cincinnati has committed $75 million over 30 years or $2.5 million a year for the naming rights to the Reds Great American Ball Park.As a small-market team, teams have to look to every available means to try and be as competitive as they can, Uhlich said. Baseball doesnt share the amount of revenue that football shares. Teams have to make their own bed, and all pieces of local revenue contribute to ways we can use it for major-league payroll, minor-league payroll, scouting, development its something were open to. We would have to be.The Chiefs and Royals would keep all revenues from naming-rights deals, according to Article XIV of the 2006 stadium lease with Jackson County.• • • The Chiefs already have granted naming rights to what they call quads in the corners of Arrowhead Stadium to companies like HyVee and Sprint, which provide services before and during games, and to Time Warner, which sponsors the Hall of Honor. HyVees quad, known as the Hot Zone, includes a live band and provides a gathering area for fans who can take advantage of heaters to warm themselves during cold weather.It ties to the tailgating side of our brand, Chiefs president Mark Donovan said. It fits well with their brand. Sprint, in their quad, provides Sprint technology, giving people updates on whats the latest in the ever-changing world in cellular communications. The Ford Fan Experience in the plaza area has car displays, dealers with giveaways. They brought it into the stadium by taking our Horizon level and making that the Ford Fan Zone and branding that whole zone with Ford.We talk a lot about competing with the at-home experience. A naming-rights partner could help us do that.The Royals have similar amenities, such as the Diamond Club, sponsored by BATS; the Pepsi Party Porch in right center; the HyVee Level seats in the upper deck; and the Sonic Slam seats in left-center. Next year would seem to be the time for a naming-rights partner to cash in at Kauffman Stadium, as the venue hosts the 2012 Major League All-Star Game. The Chiefs two prime-time home appearances on national television this season similarly enhance a naming-rights partners visibility.The Monday night game (against San Diego) was a perfect example, Donovan said. The Kansas City Chiefs our brand was on a national stage for four-plus hours, and a naming-rights partner benefits from that nationally.Even in a down economy, the overall finding is that naming-rights deals are beneficial to companies, said Stephen W. Pruitt, a professor of finance at the University of Missouri-Kansas City who has published studies on corporate stadium sponsorships.Its always a good thing for the sports team, theres no doubt about that, Pruitt said.Pruitt said his research showed the average stock prices for companies that invested in naming rights for major league sports stadiums rose 2 percent, which is a strong rate of return.• • • The American landscape is littered with former names of stadiums because those companies either no longer exist or could not afford to continue funding the naming rights. Enron Field (Houston), Adelphia Communications (Nashville), 3Com (San Francisco), Ericsson (Charlotte), Network Associates (Oakland), PSINet (Baltimore), Alltel Communications (Jacksonville), Pro Player (Miami) and the TWA Dome (St. Louis) are among those in the naming-rights graveyard. Some of the stadium signings, done in the late 1990s, early 2000s with a lot of the high-tech companies, did not work out as far as the companies didnt survive, Pruitt said. But our research makes it clear that high-technology companies get a lot more benefit from these stadium sponsorships than do brick-and-mortar firms.In fact, all things being equal, Pruitt said, high-tech firms realized a stock price gain of 4.5 percent relative to low-technology companies. These were unknown firms, Pruitt said of the high-tech companies. It doesnt mean the company is going to prosper, but when a company does a super-visible thing like these sponsorships, suddenly everybody knows about them.So what kind of company makes the best naming-rights partner?From the sports franchises point of view, a local company thats willing to strike a long-term deal. Anschutz Entertainment Group, which is building the stadium in Los Angeles, found that in Farmers Insurance, and with Sprint, the namesake behind the Sprint Center that opened in 2007 in downtown Kansas City.In the case of the Sprint Center, this was as much a statement about Sprints commitment to Kansas City as anything else, said Steve Gaffney, vice president of corporate marketing for Sprint. Farmers, founded in Los Angeles in 1928, also sponsors the PGA golf tournament at Torrey Pines in La Jolla, Calif., and will sponsor Kasey Kahnes NASCAR ride in 2012 in hopes of expanding its business coast-to-coast.Youre after increasing awareness in your brand, Farmers Patsis said. From the companys point of view, it makes sense to align with a winner.Pruitts 2002 study, published in the Journal of Advertising Research, reported: Sponsors of the home venues of teams with a 65 percent winning record experienced mean share-price increases almost twice as large as those sponsoring stadiums with a winning record of only 35 percent.• • • No matter how much revenue a naming-rights deal might bring the Chiefs or Royals, it will come with an emotional price.Arrowhead is a sacred name in Kansas City, one forever linked to the late Lamar Hunt, founder of the Chiefs. The former Royals Stadium was named for the late Ewing Kauffman, a revered man in Kansas City who resisted attempts to name the park in his honor while he was alive.Ewing and Muriel Kauffmans daughter, Julia Irene Kauffman, sits on the Royals board of directors. Uhlich said, before we would ever go down the road of doing something, Julia would be part of it were very sensitive to that. But the fact still remains, if Mr. K were alive today, he would want the Royals to be in the best position they could be Its hard to believe that Arrowhead or Kauffman wouldnt remain part of the stadiums new or revised name. But even if it were to be called Sprint Field at Arrowhead Stadium, or Hallmark Field at Kauffman Stadium, fans acceptance probably wouldnt follow unanimously. Just ask the Broncos faithful who wildly rejected Invesco Field at Mile High when a new football stadium was built in Denver. (The stadium is now known as Sports Authority Field at Mile High.)The name Arrowhead is very important to me and our family, Clark Hunt said. We would want to think carefully about the name of the stadium and how Arrowhead could potentially be incorporated.Companies understand that sentiment. Said Donovan, Ninety percent of the people Ive talked to have said, We want to keep Arrowhead in the name, because they understand the value of that iconic image to this community, to the region, to the NFL, to the sports world.Initial backlash aside, UMKCs Pruitt said he expects naming-rights arrangements at Arrowhead and Kauffman will be too tempting to pass up.

KansasCity.com

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Chiefs, Royals could cash in with new stadium names

But finding the right partner for Arrowhead and Kauffman could be tricky and cause fan backlash.

By RANDY COVITZ

The Kansas City Star

Livestrong Sporting Park’s stadium deal benefits others

Poll | Are you for or against naming-rights deal at Arrowhead and/or The K?

More News

Five days before the Super Bowl last February, Farmers Insurance made a blockbuster announcement that bordered on the incredible.

The Los Angeles-based company committed a record $600 million in naming rights for Farmers Field, a stadium in downtown Los Angeles that has yet to be approved for an NFL team that does not yet exist.

The move was far from a grandstand play. It was a stroke of genius.

Farmers has since received more than 8.5 billion “media impressions” — through mentions in newspapers, radio, television and Internet sites — worth an estimated $134 million in advertising, said Mark Toohey, Farmers’ senior vice president of media relations.

It’s no wonder that 21 of the 31 stadiums in the NFL and 22 of 30 in Major League Baseball have naming-rights partners … or that, here in Kansas City, the Chiefs and Royals have been exploring the possibility of attaching naming-rights sponsorship to their iconic Arrowhead and Kauffman stadiums as they turn 40 years old in the next two years.

But finding the right partner is no easy task. And changing the names of Arrowhead or Kauffman, or adding a corporate sponsor’s name to one of them, could cause fan backlash. Speculation has persisted in recent days that each franchise is close to unveiling a naming-rights partner, but officials from both clubs say nothing is imminent.

“To compete in the National Football League, it’s important for us to have broad-based corporate support,” Chiefs chairman Clark Hunt said. “One of the biggest avenues for that is through the sale of naming rights.”

Kevin Uhlich, Royals senior vice-president/business operations, said: “If the right deal with the right partner and someone who cared for the Kansas City community, as we do … we’d have to look at it.”

Farmers won’t pay a penny on its 30-year sponsorship in L.A. until the stadium is built and a team is in place, turning the investment into essentially a 35-year deal. Imagine the value to the company once an NFL team actually plays in the stadium … and when a Super Bowl, Final Four, World Cup soccer matches and major concerts are staged there.

“When you look at sports as an area of sponsorship, you cannot ignore the NFL,” said Paul Patsis, Farmers’ president of enterprise marketing.

• • •

The Chiefs, in the nation’s 31st-ranked television market, could not command a deal as lucrative as teams in the largest markets, such as the Farmers arrangement, or the $425 million-$625 million over 25 years that Metropolitan Life Insurance is paying for the new MetLife Stadium at the Meadowlands.

But Indianapolis, in the 27th-ranked market, has a 20-year, $121.5 million naming-rights agreement at Lucas Oil Stadium, and Denver, in the 17th-ranked market, has a $60 million deal for 10 years at Sports Authority Field at Mile High.

Baseball stadium naming rights aren’t quite as lucrative. Citigroup has committed $400 million over 20 years to Citi Field, home of the New York Mets in the nation’s largest market. But the next-highest rights fees are found at Philadelphia’s Citizens Bank Park, home of the Phillies, which went for $95 million for 25 years, or $3.8 million a year. Closer to Kansas City’s price range, Great American Insurance in Cincinnati has committed $75 million over 30 years — or $2.5 million a year — for the naming rights to the Reds’ Great American Ball Park.

“As a small-market team, teams have to look to every available means to try and be as competitive as they can,” Uhlich said. “Baseball doesn’t share the amount of revenue that football shares. … Teams have to make their own bed, and all pieces of local revenue contribute to ways we can use it for major-league payroll, minor-league payroll, scouting, development … it’s something we’re open to. We would have to be.”

The Chiefs and Royals would keep all revenues from naming-rights deals, according to Article XIV of the 2006 stadium lease with Jackson County.

• • •

The Chiefs already have granted naming rights to what they call “quads” in the corners of Arrowhead Stadium to companies like HyVee and Sprint, which provide services before and during games, and to Time Warner, which sponsors the Hall of Honor. HyVee’s quad, known as the Hot Zone, includes a live band and provides a gathering area for fans who can take advantage of heaters to warm themselves during cold weather.

“It ties to the tailgating side of our brand,” Chiefs president Mark Donovan said. “It fits well with their brand. … Sprint, in their quad, provides Sprint technology, giving people updates on what’s the latest in the ever-changing world in cellular communications. The Ford Fan Experience in the plaza area has car displays, dealers with giveaways. … They brought it into the stadium by taking our Horizon level and making that the Ford Fan Zone and branding that whole zone with Ford.

“We talk a lot about competing with the at-home experience. A naming-rights partner could help us do that.”

The Royals have similar amenities, such as the Diamond Club, sponsored by BATS; the Pepsi Party Porch in right center; the HyVee Level seats in the upper deck; and the Sonic Slam seats in left-center.

Next year would seem to be the time for a naming-rights partner to cash in at Kauffman Stadium, as the venue hosts the 2012 Major League All-Star Game. The Chiefs’ two prime-time home appearances on national television this season similarly enhance a naming-rights partner’s visibility.

“The Monday night game (against San Diego) was a perfect example,” Donovan said. “The Kansas City Chiefs — our brand — was on a national stage for four-plus hours, and a naming-rights partner benefits from that nationally.”

Even in a down economy, the overall finding is that naming-rights deals are beneficial to companies, said Stephen W. Pruitt, a professor of finance at the University of Missouri-Kansas City who has published studies on corporate stadium sponsorships.

“It’s always a good thing for the sports team, there’s no doubt about that,” Pruitt said.

Pruitt said his research showed the average stock prices for companies that invested in naming rights for major league sports stadiums rose 2 percent, “which is a strong rate of return.”

• • •

The American landscape is littered with former names of stadiums because those companies either no longer exist or could not afford to continue funding the naming rights.

Enron Field (Houston), Adelphia Communications (Nashville), 3Com (San Francisco), Ericsson (Charlotte), Network Associates (Oakland), PSINet (Baltimore), Alltel Communications (Jacksonville), Pro Player (Miami) and the TWA Dome (St. Louis) are among those in the naming-rights graveyard.

“Some of the stadium signings, done in the late 1990s, early 2000s with a lot of the high-tech companies, did not work out as far as the companies didn’t survive,” Pruitt said. “But our research makes it clear that high-technology companies get a lot more benefit from these stadium sponsorships than do brick-and-mortar firms.”

In fact, all things being equal, Pruitt said, high-tech firms realized a stock price gain of 4.5 percent relative to low-technology companies.

“These were unknown firms,” Pruitt said of the high-tech companies. “It doesn’t mean the company is going to prosper, but … when a company does a super-visible thing like these sponsorships, suddenly everybody knows about them.”

So what kind of company makes the best naming-rights partner?

From the sports franchise’s point of view, a local company that’s willing to strike a long-term deal. Anschutz Entertainment Group, which is building the stadium in Los Angeles, found that in Farmers Insurance, and with Sprint, the namesake behind the Sprint Center that opened in 2007 in downtown Kansas City.

“In the case of the Sprint Center, this was as much a statement about Sprint’s commitment to Kansas City as anything else,” said Steve Gaffney, vice president of corporate marketing for Sprint.

Farmers, founded in Los Angeles in 1928, also sponsors the PGA golf tournament at Torrey Pines in La Jolla, Calif., and will sponsor Kasey Kahne’s NASCAR ride in 2012 in hopes of expanding its business coast-to-coast.

“You’re after increasing awareness in your brand,” Farmers’ Patsis said.

From the company’s point of view, it makes sense to align with a winner.

Pruitt’s 2002 study, published in the Journal of Advertising Research, reported: “Sponsors of the home venues of teams with a 65 percent winning record experienced mean share-price increases almost twice as large as those sponsoring stadiums with a winning record of only 35 percent.”

• • •

No matter how much revenue a naming-rights deal might bring the Chiefs or Royals, it will come with an emotional price.

Arrowhead is a sacred name in Kansas City, one forever linked to the late Lamar Hunt, founder of the Chiefs. The former Royals Stadium was named for the late Ewing Kauffman, a revered man in Kansas City who resisted attempts to name the park in his honor while he was alive.

Ewing and Muriel Kauffman’s daughter, Julia Irene Kauffman, sits on the Royals’ board of directors. Uhlich said, “before we would ever go down the road of doing something, Julia would be part of it … we’re very sensitive to that. But the fact still remains, if Mr. K were alive today, he would want the Royals to be in the best position they could be…”

It’s hard to believe that Arrowhead or Kauffman wouldn’t remain part of the stadium’s new or revised name. But even if it were to be called Sprint Field at Arrowhead Stadium, or Hallmark Field at Kauffman Stadium, fans’ acceptance probably wouldn’t follow unanimously. Just ask the Broncos faithful who wildly rejected Invesco Field at Mile High when a new football stadium was built in Denver. (The stadium is now known as Sports Authority Field at Mile High.)

“The name Arrowhead is very important to me and our family,” Clark Hunt said. “We would want to think carefully about the name of the stadium and how Arrowhead could potentially be incorporated.”

Companies understand that sentiment. Said Donovan, “Ninety percent of the people I’ve talked to have said, ‘We want to keep Arrowhead in the name,’ because they understand the value of that iconic image to this community, to the region, to the NFL, to the sports world.”

Initial backlash aside, UMKC’s Pruitt said he expects naming-rights arrangements at Arrowhead and Kauffman will be too tempting to pass up.