The name game: Telecom companies spend big on naming rights

The Gator Bowl is no more. The 49ers don't play in Candlestick Park. Jack Murphy Stadium, named after the newspaper editor who helped bring Major League Baseball to San Diego, is now Qualcomm Stadium.

In what has become a trend, owners of sports venues are selling the naming rights, and companies in telecom-related fields are high on the list of buyers, with at least 14 companies having purchased stadium naming rights. Telecom is a major player in the stadium naming game.

But playing the name game costs a high price - tens, even hundreds of millions of dollars for deals ranging from just a few years to three decades. What motivates a company to spend such huge sums to have its name on a stadium?

"It's a consumer play. It's all about trying to establish yourself as a consumer brand," said Meredith Rosenberg, senior analyst of consumer markets at The Yankee Group.

When a business has naming rights to a stadium, it has more than just a sign that people see when they drive by, she said. With a naming rights deal, a company's name is put in front of people consistently, creating name recognition.

"It's fairly pervasive, I think," Rosenberg said. "Someone has tickets in their hands for 3Com Park. It's not just a name on a stadium."

The pervasive nature of stadium naming motivated PSINet. Though the ISP is well-known in the industry, its name is not highly recognized by the general public. The company paid $105.5 million to enter an extensive sponsorship deal with the NFL's Baltimore Ravens, which includes putting its name on the Ravens' stadium for 20 years. The deal is, in part, aimed at getting people to recognize the PSINet's name.

"It's extremely helpful on cold-calls," said Robert D. Leahy, senior vice president of marketing and communications for PSINet. "If [potential customers have] never heard of you, then you have to take two minutes to explain who you are, and the average call lasts 45 to 75 seconds."

Now with the Ravens playing in PSINet Stadium, practically everyone in the Baltimore area has at least heard the company's name. PSINet also gets more widespread recognition from the sponsorship, with the stadium being named on national media outlets. "[PSINet] gets in front of millions of people. Our name is blasted across the sports page," Leahy said.

While name recognition is good, some question whether the price tags are too high. Rosenberg wonders where the money spent on naming rights would on otherwise go.

It's not a frivolous expenditure, said John Britton, media director with Pacific Bell, which bought the naming rights to the new home of the San Francisco Giants for $52 million for 23 years. That money was spent to get Pacific Bell in the public eye," he said. "It's a marketing sponsorship with existing dollars."

Companies often buy naming rights to stadiums in the cities where they are based to increase their presence at home, as is the case with Pacific Bell.

"I don't know if there is any better way to demonstrate [Pacific Bell's] commitment to our customers and our employees," said a Pacific Bell spokesman.

A company making such a large, public investment can also reap intangible benefits, Rosenberg said. "If I have the capital [to invest in a stadium naming deal] then I must be doing well. It sends a strong message to employees."

The message goes beyond name recognition and is an ego boost, acknowledged PSINet's Leahy. "We were the first ISP to do this. There are only X number of NFL teams and X number of stadiums, and to have your name on one is a status symbol. [The stadium deal has] made its people very proud. [PSINet] is proud it's in the limelight."