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The cost of stadium naming rights
Sunday December 31, 2006
By Chris Daniels

Vector Arena
Troubled stadium tipped to open in March
Secret update for council on troubled Vector Arena Announcing Vector had "secured exclusive naming rights for Auckland's hottest entertainment venue" last year, Vector chief executive Mark Franklin described the deal as "an excellent fit".

"We are delighted to be associated with what will be another piece of essential infrastructure that contributes significantly to the country's ongoing economic success," he said.

But rather than being allied with a shining illustration of Kiwi innovation, Vector's cherished name is now being used alongside phrases such as "construction delays", "cost blowouts", "labour shortages" and "bitter litigation", as well as a fire and a string of cancelled concerts.

Veteran promoter Manolo Echave described the Vector Arena to the Herald on Sunday last week as an "international embarrassment".

Although the arena appears complete inside and out, it is understood that its curved roof has failed numerous safety inspections, requiring more work each time and compounding construction costs and penalties.


Being associated with such a shambles is the last thing Vector wants as it fights Commerce Commission regulation on one front and a governance fracas on the other, following last month's resignation of three of its independent directors.

Vector is 75.1 per cent owned by an elected trust which represents all electricity users in Auckland City, Manukau City and most of Papakura. The rest of the company is owned by people who have bought shares listed on the NZ Stock Exchange.

How much it is spending on its 10-year arena sponsorship deal is unknown, though it is unlikely to be anywhere near the top dollar demanded by New Zealand's big rugby stadiums.

A yearly fee of around $500,000 has been suggested.

Vector is refusing to make any comment on its naming rights deal with the arena, including whether it is seeking any compensation or changes to its contract as a result of the delays.

A spokeswoman said any comment on the matter would have to come from arena management.

Vector Arena chief executive Bruce Mactaggart did not return calls from the Herald on Sunday, nor did arena spokesman Shane Kelly.

Auckland brand strategist Brian Richards said a company such as Vector would have decided to put its sponsorship money into something like the arena in part because of its wide range of customers, big, small, old and young.

It would be hoping to establish a connection with most of these customers at some stage over the 10-year life of the deal.

Vector, when deciding where to put its advertising and sponsorship money, had to look at vehicles such as naming rights to make sure it reached all its available customers.

Banks and insurance companies were similar to energy companies in their need to attract a wide cross-section of customers.

The range of media outlets had also grown rapidly over the years, so a company could no longer just choose one big newspaper or a single television channel to get its message across.

But being associated with a building that cannot be properly finished, had numerous delays or had been judged defective in some way was not a good look for an energy business whose job it was to keep the lights on.

"It's a big negative to a power company," said Richards. But he said it was not all doom and gloom for Vector, since once concerts and sporting events did start happening, the bad taste caused by the delay in opening would dissipate fairly quickly.

Richards said he thought it should take "a year or so" for Vector to lose the negative connotations associated with its involvement in the arena.

Rob Cooke, head of planning at Auckland advertising agency TBWA, said he felt that the New Zealand public would be able to draw a distinction between the contractor and the sponsor, meaning that Vector the energy company shouldn't suffer too much from its association with Vector the arena.

Prestige

Securing naming rights for stadiums and sporting grounds suited a particular kind of business that wanted to demonstrate scale and gain prestige. Airlines, insurance companies and banks were the kind of businesses that liked to demonstrate they had the resources to put their names in lights on something big like a stadium.

Anyone could take out an ad, said Cooke, but not everyone could afford to put their name on a big stadium.

Sponsorship broker Murray Stott has been involved in the negotiations for naming rights for Mt Smart Stadium (formerly Ericsson).

Despite the negative press associated with the delays in opening the arena, he said, Vector had been getting some benefit from its deal, including its corporate logos displayed prominently around the arena.

Vector could be compensated for not having the arena open on time in a variety of ways, said Stott.

These could include an extension of the 10-year period of sponsorship, being offered more corporate hospitality or free seats to events.

But sponsoring a stadium was about much more than just the name being used, said Stott.

Vector would be likely to have a great deal with the arena for its corporate functions and hospitality, along with extras such as having its logo displayed on all tickets issued for events.

The sale of naming rights for a re-developed Eden Park is set to be one of the big sources of money for its $385 million revamp, due for completion in time for the Rugby World Cup in 2011.

It is understood that Eden Park's owners are seeking at least $5 million a year from a naming rights sponsor, making it the most expensive such offer in New Zealand.

Any such deal is likely to have a big corporate hospitality component, with much more than just a name being offered for sale.

American rockers Supernova are now tipped as the likely opening act in the Vector Arena, possibly in late March.

If it comes to pass, then expect to hear the loudest cheers for Tommy Lee coming not from some giddy teen fan - but from Franklin and Vector's chairman Michael Stiassny.


NAMING RIGHTS

INTERNATIONAL
Ameriquest Field
Home of the Texas Rangers baseball team, Arlington, Texas.
Sponsorship: US$2.5 million a year. Type of sponsor: Financial services.
Expires: 2034.

Bank of America Stadium
Home of the Carolina Panthers NFL team, Charlotte, North Carolina.
Sponsorship: US$7 million a year.
Type of sponsor: Financial services.
Expires: 2024.

FedEx Field
Home of the Washington Redskins NFL team, Landover, Maryland.
Sponsorship: US$7.6 million a year. Type of sponsor: Courier and logistics.
Expires: 2025.

Philips Arena
Home of the Atlanta Hawks NBA team, Atlanta, Georgia.
Sponsorship: US$9.3 million a year. Type of sponsor: Electronics.
Expires: 2019.

Reliant Stadium
Home of the Houston Texans NFL team, Houston, Texas.
Sponsorship: US$10 million a year. Type of sponsor: Energy.
Expires: 2032.

Allianz Arena
Home of Bayern Munich football team, Munich, Germany.
Sponsorship: €90 million (NZ$185 million).
Type of sponsor: Insurance.

Expires: 2035.
Emirates Stadium
Home of Arsenal football team, London, England.
Sponsorship: 100 million (NZ$278 million).
Type of sponsor: Airline.
Expires: 2020.

NEW ZEALAND
Alpine Energy Stadium Timaru
Type of sponsor: Energy network.

BlueChip Stadium Tauranga
Type of sponsor: Financial services and property investments.

ITM Stadium Whangarei
Type of sponsor: Building services.

Jade Stadium Christchurch
Type of sponsor: Software.

TelstraClear Pacific Events Centre Auckland
Type of sponsor: Telecommunications.

TSB Bank Arena Wellington
Type of sponsor: Banking.

Westpac Park Hamilton
Type of sponsor: Banking.

Westpac Stadium Wellington
Type of sponsor: Banking.

Yarrow Stadium New Plymouth
Type of sponsor: Bakery.