By Barry Janoff
January 15, 2016: Would the Disney Company, Farmers Insurance or Live Nation Entertainment pay $1 billion for naming rights to a 298-acre sports stadium and entertainment complex in Los Angeles?
When the NFL this week gave its approval for the St. Louis Rams to return to Los Angeles and begin a second life as the Los Angeles Rams, it impacted a series of maneuvers that includes a new stadium being built in Inglewood and the potential of a second team, most likely the San Diego Chargers, also moving in.
The approval by NFL owners also put into motion a play for naming rights to the 80,000-seat stadium, scheduled to open for the 2019 season, that could become the biggest such deal in naming rights history.
Industry analysts put a construction price tag in excess of $2.6 billion on the 298-acre stadium and entertainment complex, being built under the auspices of Rams majority team owner Stan Kroenke,
That could almost be matched by what might become the largest naming-rights deal in sports history.
"The NFL’s return to Los Angeles will redefine our view of the American sports entertainment experience in the future," said Peter Stern, president of The Strategic Agency, New York, a leading sports and lifestyle marketing agency with expertise in sponsorship, experiential and promotional marketing.
"Given the vision of this development, we may be looking at the first billion-dollar naming rights deal or a new model that others would likely follow," said Stern.
Stadium naming rights alone should fall in the range of $17- $21 million for a stadium with one NFL team, and even top $25 million for two teams, according to Eric Smallwood, managing partner for Apex Marketing Group, St. Clair, Mich., a leading naming rights and sponsorship marketing firm.
Doing the math, over the course of 30 years, at $25 million annually, a two-team stadium naming rights deal would reach $750 million, over the course of 35 years it would hit $875 million.
The venue currently goes by the working title of Los Angeles Entertainment Center, and naming rights to the entire complex would increase exponentially, according to industry analysts.
The venue is located on the site of the former Hollywood Park race track. To acquire the land, Kroenke partnered with Stockbridge Capital, owners of the Hollywood Park Land Company. The venue is being designed by HKS Sports and Entertainment Group.
As NFL commissioner Roger Goodell said when he revealed the relocation approval, "This is more than a stadium, it's a complex . . . (It would have a lasting impact) not just on NFL stadiums and complexes but sports complexes around the world."
Regarding the stadium approval by the league, Goodell said, "We needed to have a kind of stadium, a project, that had a vision that had the facilities to bring a new fan experience to the NFL and Los Angeles."
According to Mark Williams, AIA, LEED AP BD+C, principal, HKS Sports and Entertainment Group, “From our initial conversations with Mr. Kroenke and his staff, we knew this project was going to be a very special place that will change the face of sports and entertainment venues as we know them."
Los Angeles last was home to the NFL in 1994, after which the Raiders returned to Oakland and the Rams moved to St. Louis.
The lure of getting national — and likely global — attention for a naming rights deal should attract a short-list of companies that want to aligns with the new stadium and the NFL. That list would be headed by companies already based in Los Angeles or southern California, but not limited to those firms.
The proposed 80,000-seat stadium would be part of an entertainment complex that includes space for the NFL to move NFL Network from its current location in Culver City.
Though it would not host a Super Bowl in its first season of operation, which would be Super Bowl LIV in February 2020, it certainly would be fast-tracked to host Super Bowl LV in 2021 or Super Bowl LVI in 2022.
The NFL already has narrowed the list of potential host venues for the Big Games in those years to Mercedes-Benz Stadium in Atlanta (currently under construction and scheduled to open for the 2017 season), Sun Life Stadium in Miami, Mercedes-Benz SuperDome in New Orleans and Raymond James Stadium in Tampa.
Super Bowl LII, scheduled for February 2018, to be played in U.S. Bank Stadium, home for the Minnesota VIkings, is under construction and is scheduled to open this summer.
Among other global events, the Los Angeles Stadium could also be used for the 2024 Summer Olympics if Los Angeles wins the bid (to be determined in late 2017 by the International Olympic Committee.
Although standard operating procedure for a venue whose naming rights holder is not an official partner of the IOC would be to have stadium signage covered for the duration of the Games, the venue would still be referred to by its name in the media and would get a plenty of national airtime in the month's leading up to the Games themselves.
That would change, of course, if the naming rights holder is also an IOC partner, which includes Coca-Cola, Dow, General Electric, McDonald's, Omega, Panasonic, Procter & Gamble, Samsung, Toyota and Visa.
Among the potential contenders for Los Angeles stadium naming rights:
• DirecTV, a division of AT&T, headquartered in El Segundo.
• Farmers Insurance, based in Woodland Hills.
• Live Nation Entertainment, with headquarters in Beverly Hills.
• Hyundai Motor America, with U.S. headquarters in Fountain Valley, Calif. — about 35 miles south of the Inglewood stadium site — is the official automotive partner with the NFL.
"Given the vision of this development, we may be looking at the first billion-dollar naming rights deal or a new model that others would likely follow."
The potential spend on naming rights in Los Angeles is not without precedent.
In 2011, Farmers Insurance aligned itself with a deal for 30-year naming rights valued at $700 million for a proposed NFL stadium to be built in Los Angeles.
In March 2015, the firm driving that stadium, Anschutz Entertainment Group (AEG), pulled the plug on the project when political, environmental, financial and other logistics became too overwhelming to resolve.
Farmers was not scheduled to begin paying for the naming rights until the proposed 65,000-seat venue was completed. Despite the fact that the company paid no money, it received nearly $6 million in media exposure over the four years, according to Smallwood.
In addition to a naming rights deal, stadium and team owners would look to sign several high-profile founding partners.
Sponsorship deals sans a naming rights deal could hit $40,425,000 if one team plays there, $74,294,278 for a two-team stadium, according to Smallwood.
The only two-team stadium in the NFL is MetLife, home to the New York Giants and Jets.
MetLife in 2011 paid $400 million ($16 million annually) for a 25-year naming rights deal. Cornerstone partners also include Anheuser-Busch (Bud Light), SAP, EMC2, Verizon and Pepsi.
The venue hosted Super Bowl XLVIII in 2014.
That equals a deal between the New York Mets and CitiGroup for a 20-year naming rights deal, signed in 2006, valued at $400 million ($20 million annually).
NRG Energy is in the midst of a $310 million ($10 million annually) 32-year deal for NRG Stadium, home for the NFL's Houston Texans (signed in 2002 by Reliant Energy, now a division of NRG). It will host Super Bowl LI in 2017.
The stadium is located in an area known as NRG Park, which also includes the NRG Astrodome, NRG Arena and NRG Center.
Levi Strauss & Co. signed in 2014 a $220 million deal ($10 million annually) for 20-year naming rights to the new home for the NFL's San Francisco 49ers, which opened prior to the NFL season that year and will host Super Bowl 50 in February.
AT&T is paying some $18-$19 million a year for naming rights to the home venue for the Dallas Cowboys via an estimated 20-year deal signed in 2013 (two years after the then Cowboys Stadium hosted Super Bowl XLV). It also hosts the annual Cotton Bowl Classic, which is part of the college football post-season.
ARTIST RENDITIONS COURTESY HKS
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