After a quarter century, Arco name to come off Kings' arena
Read more: http://www.sacbee.com/2010/09/21/3044469/after-a-quarter-century-arco-name.html#ixzz10EHXHVqJ
After a quarter century, the Arco name is coming down from the arena that houses the Sacramento Kings, forcing the struggling basketball team to scramble in tough times to find a replacement sponsor.
The Kings' contract with the Arco oil company will expire in February, but company officials say the Arco Arena name will remain in place through the end of the upcoming season.
The parting of ways comes at a difficult moment for the Kings, with fewer and fewer businesses willing or able to dole out the millions of dollars that major league naming- rights deals typically draw.
Arco Arena itself has taken a public relations hit in the past few years – characterized by the National Basketball Association as an aging, inadequate facility that needs to be replaced.
The NBA faces player contract negotiations next year, with the possibility that a labor stalemate could cause a lockout, further reducing the advertising value of basketball arenas.
Nevertheless, marketing experts say the NBA and its teams remain powerful brands, and the chance to put the company name on the door of a major entertainment facility – even one the team hopes to vacate – remains compelling.
Kings officials declined Monday to discuss their prospects for landing a new sponsor but said they see the Arco deal's end as an opportunity.
"We are deeply appreciative of the historic 24-year run we enjoyed with our friends at Arco," Kings co-owners Joe and Gavin Maloof said in a news release on Monday. "This was one of the original, pioneering naming-rights partnerships in major league sports and entertainment.
"Now there is an incredible opportunity for a new brand to integrate across all Maloof Sports & Entertainment platforms."
Scott Dean, a spokesman for oil giant BP, which now owns Arco, called the arrangement "a long and fruitful relationship." Dean declined to say why the company is ending its naming-rights sponsorship in Sacramento. The decision was made several years ago, he said, and is not related to BP's financial woes from this year's massive oil spill in the Gulf of Mexico.
The Kings' groundbreaking mid-1980s agreement to put Arco's name atop their arena created a steady source of income over 24 years, estimated by several sources at between $700,000 and $750,000 a year.
Those numbers, however, looked increasingly modest as naming-rights deals boomed nationally in the 1990s and early 2000s, becoming a key income source for teams to help finance new stadiums and pay escalating player payrolls.
Oracle pays $3 million a year for the arena in Oakland that houses the Golden State Warriors and other events. FedEx pays $4.5 million a year for the new arena in Memphis, Tenn.
But the perceived marketing value of high-priced sponsorships for companies has waned notably during the recession.
Paul Swangard, managing director of the University of Oregon's Warsaw Sports Marketing Center, said Arco company officials may have felt the Sacramento deal has run its course.
"It was probably a deal of diminishing returns," Swangard said. Arco might have a "hard time justifying (the expense) in this kind of economy. I'm not sure anyone walks out of Arco Arena and immediately goes and gets their car filled up with Arco gas."
Swangard said companies now are more inclined to put their money into marketing programs that produce an immediate measurable payoff.
Several larger sports franchises recently have been unable to sell naming rights to new facilities.
"The two biggest and best stadiums in the world – Cowboys Stadium (Dallas) and the New Meadowlands Stadium (East Rutherford, N.J.) – have gone without naming rights," said Larry DeGaris, a professor of sports marketing at the University of Indianapolis. "That's an indicator of the market. It's awful, it's a really tough market for sponsorships in general."
The Kings, however, may count some positives as they look for a new name over the door, Swangard and others said.
Their more modest arena and Sacramento's relative small size in NBA terms means more companies may be able to afford a deal here. The NBA is still a powerful brand, Swangard said. "There's not many buildings that are home to NBA basketball."
