What's in a name?
Money. Lots of it. That's why Texas plans to sell the naming rights to the Erwin Center — and why more and more college teams are playing in venues bearing the brand of the highest bidder!
By John Maher
Saturday, June 28, 2003
In October 1980, 2,000 mourners at the University of Texas' Special Events Center bade farewell to former board of regents chairman Frank Erwin Jr., the man who once ran the university like it was his own private 40 Acres.
"Half of them were there just to make sure he was dead," the late Joe Frantz, a UT historian, once joked.
Loved by some, feared by more, Erwin was the driving force behind most of the buildings that make the University of Texas world class, from the Performing Arts Center to the special events center that bears Erwin's name . . . at least for now.
It might seem easier to expunge the name of a pharaoh from a pyramid than to remove Erwin's name from a building at UT, but in late May the university's athletic department announced plans to sell naming rights for the newly renovated building.
Host Communications of Lexington, Ky., and Team Services LLC of Bethesda, Md., will be trying to put together a deal for Texas. The naming rights could bring in as much as $1 million to $2 million a year for Texas athletics, but might come with the cost of controversy.
"It would be outrageous if they changed the Erwin Center's name. Can they sell it for as much as he raised? That's hundreds of millions of dollars," said Nick Kralj, an Austin businessman who was a close friend of Erwin's.
But Erwin's son Frank III, a Houston businessman, seems resigned to the name change.
"I support the university's effort in marketing the naming rights. It's an essential element that's necessary these days," Erwin said.
Naming-rights deals have become commonplace in professional sports, but are now making inroads on college campuses. For decades, colleges have named buildings after generous donors and prominent alumni. Now, about a dozen have sold naming rights to corporations.
Comcast Corp. has a $25 million, 25-year deal to have its name on a 17,000-seat arena at the University of Maryland. At Texas Tech, SBC Communications is paying $20 million over 20 years to have its name on Jones SBC Stadium, where the Red Raiders play football games, and United Supermarkets has a $10 million, 20-year naming rights deal for the United Spirit Center, the school's basketball arena. Ohio State University plays its basketball games at the Value City Arena, the result of a $12.5 million naming-rights deal with a discount department store chain.
It's a trend that's bringing in millions for athletic departments, but it's also bringing some criticism.
"There is some repugnance about the way corporate money has made its way into athletics," said Bryce Jordan, an Austin resident who's a former president of Penn State University. "Those of us who have served 10 years on the Knight Commission are a little critical of the financial turn that big-time athletics has taken."
The independent Knight Commission was formed by the Knight Foundation in 1989 to help restore integrity in collegiate athletics. The commission has stressed an agenda of reform, including bringing coaches' pay more in line with that of professors, tying eligibility for postseason play to graduation rates and minimizing commercial intrusions at collegiate athletic facilities.
Names for sale
The Penn State facility that's comparable to the Erwin Center is named for Jordan. But in the Big 12, Texas Tech and Colorado, with the Coors Event Center, already have naming rights deals.
"Let me put it in perspective for you," said Dean Bonham, whose Denver-based business specializes in putting together such deals. "In 1988 there were three naming rights deals with professional teams worth (a total of) $25 million. Now there are 64 or 65 deals worth $3.5 billion. College sports are going to be the next frontier. The only question is who is going to be first and how much they'll get."
In the pros, the mother of all naming rights deals is in Houston, where Reliant Energy has a 30-year, $300 million deal for Reliant Stadium. The Houston Texans are one of 15 of the 32 NFL clubs that have naming rights deals. In baseball, 16 of 30 major-league teams have such deals. In basketball and hockey, such arrangements are almost standard operating procedure, as 28 out of 30 NHL clubs and 23 of 29 NBA teams have them.
To date more than a dozen large college naming-rights deals have been made, with the biggest being a $40 million, 20-year deal for the Save Mart Center at Fresno State University. Bonham, however, says that the number of deals should rapidly increase in the next three to five years. A big reason for that is the dwindling inventory of professional facilities to be named, with so many deals already in place. The other big factor is the increasing financial strain on college athletic departments.
Jordan said that athletic department finances would be the No. 1 concern for a third Knight Commission, if one is formed. While there are concerns about universities chasing corporate dollars, Bryce acknowledged, "Private money is absolutely essential to running a university these days."
The second Knight Commission report, however, questioned, "What does higher education sacrifice when a school names its football stadium after a pizza chain or its new stadium club after any other commercial product or corporation?"
The commission concluded that such an atmosphere was appropriate for professional sports, but not academic institutions.
`A high-profile brand'
Rick Horrow, a visiting expert on sports law at Harvard Law School, said that colleges have been selling names on their buildings for decades. In the past, however, that would likely be as an award to a donor.
"The interesting thing is colleges were way ahead in naming rights. They've had endowments and stadium seats for years. Now colleges are finally opening their doors to corporations. This is the next rational step," said E.J. Narcise, a partner with Team Services.
Texas has facilities such as the Lee and Joe Jamail Texas Swimming Center, the Denton A. Cooley M.D. Basketball Pavilion and the Mike A. Myers Stadium for track and field and soccer.
"Individual and corporate gifts are done for totally different reasons," Narcise said. "A personal gift is done out of generosity or a heartfelt feeling. A corporate gift is done because they feel there's a branding or a business-back opportunity there or in the future."
Corporate naming rights can create a steadier and larger stream of revenue.
The athletic department took over the operation of the Erwin Center from the university in September 2000, and it didn't take long for athletic administrators to consider naming rights as a way to improve the balance sheet. The Erwin Center, now is the midst of a $55 million renovation, is home for men's and women's Final Four-caliber basketball teams. It hosts 250 events a year and is visible from highly traveled Interstate 35.
"We're a very high-profile brand now," said Chris Plonsky, senior associate athletic director at Texas.
"You're going to see their men's and women's basketball teams in the mix on national broadcasts. That hasn't always been the case," Narcise said.
Picking the name
Employees at the athletic department have been involved in other forms of fund-raising, but naming rights is a field where a handful of firms do most of the deal brokering. In January, Texas issued a request for proposal and at least three firms submitted bids, including Bonham's.
Team Services partners Fred Fried and Narcise were involved with Comcast's deal with Maryland when they worked for another firm. Their 18-month-old firm now counts Maryland, the University of Connecticut, the Baltimore Ravens and the Pittsburgh Penguins among its clients.
Narcise, a friend of former Kentucky and current Baylor football coach Guy Morriss, met Host's chief executive officer, Jim Host, at halftime of the Kentucky-Louisiana State football game last fall. He said they decided there were projects their companies could team up on.
Narcise said, "We know Madison and Michigan Avenues; they have ties in Dallas and Houston."
Host -- a frequenting marketing partner with UT -- and Team Services will engage in several months of paid consulting work and also receive a commission on a naming rights deal, Plonksy said. Narcise said putting together such a deal would typically take six to 18 months.
UT officials have refused to disclose the terms of the deal, saying the contract is not yet final. They have asked the Texas attorney general to deny the American-Statesman's request for the contract.
Plonsky said university officials such as men's athletic director DeLoss Dodds, senior associate athletic director Doug Messer and John Graham, an associate athletic director in charge of the Erwin Center, would also be involved in talking with potential corporate clients.
"We'll be involved in most of these meetings. We're not going to send Host and Team Services off on a cruise and say, `Come back with a naming-rights deal,' " Plonsky said.
She said Texas would have the right not to accept deals that weren't appropriate or lucrative enough. There also are no plans to pursue a naming rights deal for Royal-Memorial Stadium.
According to the request for proposal, Texas "will reserve the right to review the list of prospects and decide which will be approached and in what order they will be approached."
Plans are for the complex with the events center and the basketball practice facility to retain Erwin's name.
"I would hope they leave Frank's name on it," Jordan said.
Jordan was asked if he thought his own name might some day be erased from Bryce Jordan Center by a corporate one.
"I do not believe that will happen at Penn Sate. They just raised $1.3 billion there," Jordan said. "But I suppose that if, in their wisdom, the board decided it needed to be done, I would not be bitter about it."