Desert deals and naming trends: At midseason, NFL, owners focus on facilities

The Sports Professor Rick Horrow, in conjunction with promotional partner Northern Trust, reviews some of the major NFL issues – themed around next week’s owners meetings and this week’s showcase game in the new University of Phoenix Stadium.

Three weeks ago, New Orleans, and the newly refurbished and reopened Superdome, were the center of the NFL’s universe. The Monday night Saints-Falcons game not only attracted the likes of U2, Green Day, former President George H.W. Bush, Spike Lee, Harry Connick, Jr., and Winton Marsalis, ESPN's broadcast of the game was the second most-watched cable television broadcast ever, averaging close to 15 million viewers. (It was also ESPN’s all-time highest rated broadcast of any sport.) On October 24, New Orleans will again be the focal point for the National Football League, as the League’s 32 owners and new Commissioner Roger Goodell meet to ponder international expansion, the new revenue-sharing formula, and the future of professional football in Los Angeles, among other topics.

But first, there’s another big Monday Night Football celebration, this time in the newly-minted University of Phoenix Stadium in Glendale. While no former Presidents are anticipated, the $455 million NFL showplace will make its primetime debut to yet another sellout crowd at home (not surprisingly, Cardinal ticket sales are up 40.3 percent this year) and to a television audience that will no doubt include a large percentage of the more than 250,000 alumni and current students of the stadium’s new naming rights holder. As the primetime cactus curtain goes up in Glendale, it’s interesting to examine the anatomy of that facility deal; check in on the NFL’s other stadia under construction, along with the latest in facilities naming and sponsorship trends; and take a hard look at what’s on NFL owners’ agenda in New Orleans.

Raising Arizona: Behind the Scenes of a $455 Million Deal Mere days ago, the Arizona Sports and Tourism Authority gave its blessing to the Arizona Cardinals $154.5 million naming rights deal with the University of Phoenix. Under the terms of the 20-year deal, the NFL’s newest destination will be called University of Phoenix Stadium. The University of Phoenix is the largest private university in North America, with locations in 34 states. Headquartered in Phoenix, AZ, the University has more than 170 brick-and-mortar campuses and learning centers; none of those, however, contain the architectural marvels and engineering innovations of the University’s new Glendale namesake, for which ground was broken in July, 2003. Among other amenities and its famous “roll-in field” tray of natural grass for games, the University of Phoenix Stadium seats 63,400 fans, with additional seating capable of bringing that total to 73,000, all with uninterrupted sight lines. Just outside the stadium, a massive storage tank – likely the world’s biggest radiator – pumps 8,000 tons of cooling fluid through the venue on game and convention days. The retractable roof is made of 157,000 square feet of translucent fiberglass that fills the stadium with natural light even when the roof is closed. It also boasts 37 concession stands, six club-level bars, 10 public elevators, and 10 escalators. “It’s an architectural, technical, and construction marvel,” raved the Arizona Republic. Further, the full “utility grid” embedded in the stadium floor gives trade and consumer shows and other promoters another off-season venue option in the region, guaranteeing additional revenue streams to the community and the team alike. The $395 million stadium was primarily funded by the passing of Arizona Proposition 302 in 2000.

The measure levied a one percent hotel tax and a 3.25 percent rental car tax in Maricopa County to generate revenues not only for the stadium, but also for such other projects as youth/amateur sports and Cactus League baseball. Fifty two percent of voters supported the bill, which is estimated to generate $2 billion in economic impact annually over the next 30 years. Included in that number are revenues from the 2008 Super Bowl; more than 30 years’ worth of Fiesta Bowl games; six 2007 high school graduations and 15 proms; and hundreds of concerts and conventions. (The Rolling Stones are due November 4.) The naming rights deal itself was not without controversy. In August, the Cardinals rejected a $30 million proposal from the Morton family, owners of the Morton’s Steakhouse and Hard Rock Café chains, to name the stadium after their Pink Taco Mexican restaurant chain. The University of Phoenix deal, in which the University will pay an average of $7.7 million per year for 20 years for stadium naming rights, signage, and a range of marketing and merchandising opportunities, was announced by the Cardinals prior to receiving formal approval by the Arizona Sports and Tourism Authority. (The situation has since been rectified.) The deal, according to University officials, represents roughly three percent of the institution’s annual marketing budget – and is the first educational institution naming rights deal in NFL history.

Breaking More Ground: Other NFL Facilities, Naming Rights Trends

Just across the street from the University of Phoenix Stadium is another monument to sports facilities innovation – the $1 billion Westgate City Center, a mixed use mega development with the Glendale Arena as its centerpiece. Notes the Wall Street Journal last week, “As the entertainment value of professional sports has grown, sports venues have become selling points. Now they figure prominently in the pitch by many urban centers to ‘live, work, and play’ in the same place.”

Mixed-use developments anchored by a major sports facility have been a cornerstone of downtown revitalization efforts in communities for more than 20 years, and have indeed been a major part of my sports facility dealmaking career. But the Westgate City Center, Victory Park in Dallas, and Ballpark Village in St. Louis are hallmarks of a brand new trend – sports-anchored urban districts built from scratch.

Similar ground-up mixed-use developments are being considered adjacent to the three NFL stadiums currently under construction: in Indianapolis (due to open in 2008), Kansas City (2009), and Dallas (2009).

On a slightly different scale, even training camps are getting their own naming rights deals. In Houston, the Methodist Hospital has acquired naming rights to the Texans’ practice facility. The six-year, roughly $14 million deal includes the health care provider's existing team sponsorship. (Only three other training camps in the National Football League are named – the Eagles’, the Steelers’, and the Titans’.) Finally, always the innovator, Redskins Owner Dan Snyder has developed a system called “Digital VideoDrop” that enables the team to sell press conference sponsorships, according to the Washington Post. The rotating display allows the Redskins to earn fees from several press conference sponsors simultaneously, and enables the team to add or drop sponsors at a moment’s notice. FedEx, Toyota, Siemens, and Bud/Bud Light are all in rotation on the system.

In the Big Easy, Owners will focus on Far East, Way Out West

Facility- and naming rights-related revenues represent a big percentage of NFL owners’ earnings, and are sure to command a big percentage of the discussion when owners convene in New Orleans next week.

Commissioner Goodell just last week issued a document that, for the first time, outlined his vision of and formula for how each team will pay into the NFL’s revenue-sharing program moving forward. The program, according to an Associated Press report, “sticks closely to the model owners approved when they ratified the league’s Collective Bargaining Agreement in March.” The program, which includes a $100 million revenue-sharing pool for the 2006 season, the article states, allows smaller-market teams “to draw money from what’s called a supplemental pool funded mostly by top revenue-generating teams.” The next step for the league is “determining how to distribute the money and which teams will qualify.”

Also high on the agenda is international expansion. The NFL is considering a proposal to play two regular-season games a year on foreign soil, beginning in 2007 (as far away as Germany and Britain). After years of playing preseason games overseas – and holding one highly successful 2005 regular-season game in Mexico City – the NFL is hoping that playing “real” games outside North America will increase international fan interest in pro football following the same success formula that Major League Baseball and the NBA have followed for years. Last month, a contingent of NFL, Olympic, and NBC Sports officials announced the first ever China Bowl, to be held at Gillette Stadium on September 24, 2007. This international showcase event will follow a preseason game between the Patriots and the Seahawks set for August 8, 2007 in Beijing. Also on the agenda – the long-running but not yet resolved agenda item on what to do about Los Angeles.

Last week, the LA Coliseum Commission met to explore “other options” for the Coliseum, prompted by what they view as endless foot-dragging on the NFL’s part and the Commission’s soon-to-expire lease agreement with USC. Fresh from their grand opening of the Galen Center, the school’s long-awaited 10,258-seat athletic facility, the Trojans would be “very interested” in a master lease agreement that would transfer day-to-day operations and third party facility rentals to the University, according to a USC spokesman. Commissioner Goodell reiterated that the NFL had spent $4 million “over the past three months on engineering, architecture and marketing studies” of the proposed LA stadium sites, and that the issue would be addressed at the owners’ meeting. As NFL Executive Vice President Joe Browne said after the Commission’s purported leverage play, “The October date is what we’ve all been shooting for.... It’s not like we missed any deadlines.”