The 10-year relationship between Staples Inc. and AEG, which brought us Staples Center of sports and entertainment fame, is moving to the next level: forever and ever.
Staples' original naming rights agreement with AEG has been "extended in perpetuity," the two companies said. AEG contends that the arrangement is "the first lifetime naming rights extension for a major market arena."
The office supply store chain promised to pay almost $120 million in 1999 to put its name on top of Staples Center for 20 years. Neither party revealed how much more Staples will pay to lock up the rights for good, saying only that it was a fee previously agreed upon in their contract.
"The lifetime piece to this sets a new precedent," said industry watcher Dave Brooks, a senior writer at Venues Today magazine. "AEG accomplished something unique in pro sports."
Brooks speculated that Staples' annual payments to AEG could change depending on how well its namesake arena continues to perform as an entertainment venue.
If, for example, the Clippers basketball team is someday sold and moved to another city, Staples would get less exposure so its payments might go down.
So far, however, Staples Center remains "a very prestigious building," he said. It houses about 250 events annually including games played by the NBA champion Los Angeles Lakers. The Grammy Awards and the Pac 10 college basketball championships also are held there.
By Venues Today's estimates, Staples Center is the No. 3 concert venue of its size in the world, grossing $43 million on 70 shows last year. Only Madison Square Garden and the O2 arena in London, which is also owned by AEG, took in more.
"A long list of sports champions, community leaders and entertainers have had some of their greatest moments at Staples Center, and we look forward to many more in the years to come," said Mike Miles, president of Staples.
The Framingham, Mass., company is one of 10 that pay AEG substantial annual fees for naming rights, said Todd Goldstein, president of AEG's sponsorship division. Other large sponsors include American Express, Nokia and British mobile phone provider O2.
AEG expects to gross more than $250 million from selling naming rights this year, Goldstein said.