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High Price of Naming Rights Sometimes Worth It

Marketing: Staples scores a coup when Clinton mentions it during convention speech. Some question expenditure's value.


As Marci Grebstein sat at home watching President Clinton address the Democratic National Convention this week, the marketing executive for Staples Inc. was delighted by something that had nothing to do with politics: The president mentioned her company's name.

Sure, it was just a passing reference to the company-sponsored Staples Center in downtown Los Angeles, and it's unlikely to have spurred anyone to rush out to a Staples store for paper clips.

But having the president of the United States mention your company's name in a nationally televised address is "something you can't purchase," Grebstein said. And it explains why so many U.S. companies are lining up for the rights to slap their names on sports facilities, concert halls and other entertainment venues.

Though despised by many sports fans and lamented by social critics, naming-rights deals have exploded over the last decade. About 60% of the nation's professional sports arenas now have corporate sponsorships, and the trend, some promoters say, may soon spread abroad.

"There are more corporations that can afford to play the naming-rights game than there are venues," said Jeffrey S. Knapple, president of Los Angeles-based Envision, a sports marketing firm that negotiated the Staples deal.

The competition is apparent in the prices companies are willing to pay. When Staples agreed in 1997 to pay $116 million over 20 years, it was the most lucrative naming-rights transaction to date. But it's already been eclipsed by the $205-million pact for FedEx Field in Washington and the $195-million deal for American Airlines Center in Dallas, among others.

Staples, for one, thinks it's getting its money's worth. Thanks to several high-profile events held at Staples Center over the year--including the convention, the Grammy Awards and the Los Angeles Laker championship playoff series--the office supply giant has reaped an unexpected bonanza of publicity.

There's been bad news too. The Democratic convention brought televised clashes between police and protesters, and the Laker victory celebration ended in the looting of nearby businesses.

Rocker Bruce Springsteen joked during a concert that L.A. should seek a sponsorship for the entire city and rename itself Los Staples. And Staples Center was involved in a highly publicized journalism ethics scandal over an undisclosed profit-sharing agreement with the Los Angeles Times. (The Times is a corporate sponsor of Staples Center.)

What's more, not everyone in the sports industry is convinced that naming-rights deals pay off for advertisers.

"When I think of Staples Center, I don't think of the office supplies place. I wonder if companies are getting a good bang for their buck. I thought Staples was named for a former police commissioner or someone like that," said a spokesman for a public sports authority in the Midwest who asked not to be identified for fear of alienating potential customers.

Yet most marketing experts say all the publicity, even when it's bad, has served only to strengthen the retailer's brand images and boost its visibility.

"Even if there were riots in front of Staples Center and it was reported like that in every news report, Staples would still gain positive benefits for its brand name," said Richard Feinberg, a Purdue University professor of consumer sciences and retailing. "What everyone is fighting for is a top-of-mind awareness."

The company is definitely getting its name out there. In June, as the Lakers played their way to the National Basketball Assn. championship, Staples Center was mentioned 1,222 times in the nation's top 50 newspapers, according to a database search. It garnered more mentions than First Lady and senatorial candidate Hillary Rodham Clinton, three times as many articles as Disneyland and 20 times as many as the No. 1 office supply chain, Office Depot.

That's why many of Southern California's sports and entertainment venues now bear corporate logos. Anaheim Stadium became Edison International Field. Irvine Meadows was re-dubbed Verizon Wireless Amphitheatre. Jack Murphy Stadium in San Diego was renamed Qualcomm Stadium.

The Great Western Forum was one of the nation's first sports venues to cut a corporate sponsorship deal when it did so in 1988.

Company names have been on stadiums for decades, including places such as Wrigley Field in Chicago, named in 1926 for the chewing gum scion who then owned the Chicago Cubs baseball team. But naming deals in their current form began in the early 1970s.

Naming-rights deals tend to be unpopular with fans, particularly when they involve changing the name of an existing facility.

Great Western, for example, never convinced Southern Californians to embrace the bank's name when referring to the former Forum in Inglewood despite its $17.8-million sponsorship deal. Great Western subsequently was acquired by Washington Mutual, and the Great Western corporate name disappeared.

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