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Government Could Sell Name Rights Of Puerto Rico Arena To Raise Revenue
Companies have been willing to pay between $1 million to $3 million annually for 15 to 35 years for the name rights
BY EVELYN GUADALUPE-FAJARDO
May 16, 2002
While a cash-strapped local administration looks to increased excise taxes on consumers to balance the budget, it appears to have no clue that there is an increasing trend among stadium owners to sell facilities names to corporations willing to pay big bucks for the privilege.
No longer are cities or states opting to name a major sporting arena after prominent local figures.
In some instances, money for name rights helps pay to build a new facility. For example, Compaq Computer Corp. pledged $3.13 million a year until 2015 with an option until 2018 for the name rights of the former San Jose Arena in California. And American Airlines pays approximately $42 million over 20 years or $2.1 million a year for their name on the American Airlines Arena in Miami.
"It is a great brand-awareness [marketing] opportunity and an opportunity to support the local market," said Minnette Velez, manager of corporate communications for American Airlines in Puerto Rico and the Caribbean. "Naming a stadium in a market where your company has many employees is an element of pride for them, especially when its a company that offers service."
Other times, the money goes directly into a local sports teams pocket.
The Houston Oilers swung a deal to get the name rights while the teams new stadium was being built in Nashville with tax dollars and seat licenses.
In Puerto Rico, legislators have been proposing several local names for the Puerto Rico Arena (scheduled for completion July 2003), including Ricky Martin, Felix "Tito" Trinidad, German Rieckehoff Sampayo, Manuel Rivera Morales, and Antonio "Toñin" Nigaglioni Caparros.
Theres even a partisan proposal to name the arena after former Gov. Pedro Rossello, during whose administration the facility was conceived and started.
"Right now, Im in favor of the facility to be simply called the Puerto Rico Arena," said Milton Segarra, executive director of the Puerto Rico Tourism Co. "Its a branding issue. It will put Puerto Ricos name out in the entertainment marketplace."
The Puerto Rico Arenas site location is in Hato Rey, and it has a seating capacity of 20,000. The internal space of the arena is expected to be 400,000 square feet. The arena has the capacity of hosting high caliber sporting events and live entertainment events.
Bidding out the name rights of the Puerto Rico Arena could possibly be a revenue-raising measure to solve some of the governments budget squeeze.
"We have made an effort to look at the local market interest for the name rights of the facility," said Jochi Davila of SMG, the company hired to operate the Puerto Rico Arena. "There is interest out there and several companies willing to do it."
Another U.S. corporation who had paid for name rights is CoreStates. It paid $40 million for 29-year name rights for CoreStates Spectrum and CoreStates Center in Philadelphia. Approximately $1.5 million was paid upfront with $2 million to be paid annually in years one through 20. Payments in years 21 through 29 have yet to be determined. First Union acquired name rights through a merger with CoreStates in November 1997.
"We dont want to commercialize to such an extreme the name of the arena," said Jose Pagan, executive vice president of financing at the Government Development Bank (GDB). "If there was a local company interested in the name rights, the possibility would not be discarded."
Houston-based Continental Airlines paid $29 million ($18 million in cash and $11 million in tickets over 12 years) to have the former Brendan Byrne Arena in New Jersey now called Continental Airlines Arena.
Also, Enron Corp. agreed to pay more than $100 million over 30 years to convert Astros Field in Houston to Enron Field but due to the recent bankruptcy declaration by the corporation the Astros made an agreement with Enron to buy back the name rights. The Astros are actively pursuing another name right deal with several other local corporations.
Either way, companies have been willing to pay between $1 million to $3 million annually for 15 to 35 years of name rights.
"The issue of name rights has not been discussed and we dont even know what the facilitys name will be," said Olga Velez, director of communications of AFI (an affiliate of the GDB).
This Caribbean Business article appears courtesy of Casiano Communications.