The BC Place naming rights file: Astonishing in both substance and style

You can debate fair market value on any kind of sponsorship all you want, because that's different things to different people. You can hold out as a purist and not embrace the era of corporate naming rights as deals that often make the difference between profitability or red ink for arenas and stadiums. Yet I simply can't fathom that anyone could suggest the BC Liberal Government's handling of the BC Place file over the past nine months remotely resembles good form or good governnance.

The BC Government's decision to cancel the $40 million naming rights deal that would have re-branded the newly-renovated BC Place as TELUS Park is astonishing to me at several levels.

I'm not sure what's worse: the decision itself or the process the Government took en route to rejecting the naming rights deal, especially after almost two years of negotiation with the largest private sector employer in British Columbia and more than nine months since the sponsorship agreement-in-principle went to Cabinet for final approval.

This is a train-wreck of a political decision that is shocking both in substance and style.

BC Minister of jobs, tourism and innovation Pat Bell showed little acumen in all three areas of his portfolio when he announced Wednesday that: "(BC Pavilion Corp) has terminated their discussions with TELUS. For us, the underlying principle came back to the name BC Place. There are many in cabinet and many across the province who believe that name has tremendous value to it and we wanted to retain that."

That's substance issue #1; claiming that there exists a strong grassroots attachment to the 29-year-old name. The Sport Market has done informal polling that found little if any of that, even in the older demographics. Moreover, three different focus group projects -- including one commisioned by the Government itself and another by PavCo -- do not support the kind of emotional investment in the name that minister Bell suggests.

Substance issue #2 surround claims by both Minister Bell and BC Premier Christy Clark that the proposed TELUS Park naming deal did not represent sufficient value to taxpayers. The evidence suggests exactly the opposite, at least when it comes to the track record of naming rights deals in North America.

The TELUS Park proposal would have ranked it fourth among all Canadian stadium and arena naming rights deals. Moreover, it would rank second only to Rogers Arena across the street as the richest deals in the country pro-rated to market size. Moreover, among the corporate naming sponsorships of more than 100 major league sport venues in North America adjusted to market size, it ranks in the top 20; not too shabby for a stadium that does not house an NFL, MLB, NBA or NHL franchise.

Even pro-rated against the Rogers Arena deal, the rejected TELUS Park deal holds its weight well, given that one building is averaging more than 50 major sports events per year, all on television and all sold out to capacity, and BC Place is home to about 30 CFL and MLS dates each year.

It's important to note that stadium naming rights are built on three major metrics. First is market size and reach, the second is the quantitative value of stadium event dates and capacity and the third is the subjective, qualitative value of those dates and the tenants playing their games there. There are a number of softer factors, ranging from location (downtown versus suburban), surrounding infrastructure (highway traffic and/or access to public transportation) and even time zone (with a definite skew towards higher naming rights deals in the eastern side of the continent).

Most analysts across the country were impressed last year that PavCo was able to get what it did in both cash and in-kind, at least as proposed in the now-cancelled deal.

Even measured against the two richest naming rights deals in North America – Citi Field in Queen’s, New York, and the proposed Barclays Center in Brooklyn, N.Y. – the TELUS Park agreement was on par on a per capita basis.

As suspect as the so-called reasons for the cancellation of the TELUS Park deal is the style with which the Government has handled this, through last summer, into the fall and now in the first quarter of 2012.

Poor form and even poorer governance; how else would you describe it when the largest private employer in the province works with your own crown corporation for close to a year to help launch the new BC Place and gets you through the heavy lifting...only to be told "no deal" once well more than $15-20 million in technology infrastructure and equipment is installed?

“I think TELUS is deeply disappointed with this decision, which we find regrettable,” said TELUS CEO Darren Entwhistle in the company's statement Wednesday. “We believe that TELUS, our brand and our 25,000 team members across British Columbia, would have been a great partner for one of the premier sports facilities in all of North America. We respect the decision that has been taken, and TELUS will instead focus on operationalizing our unparalleled $3 billion investment in this province and the welfare of its citizens.”

By building its case against the TELUS Park proposal on the brand equity held by BC Place, on the value of the deal and by suggesting PavCo should have little difficulty replacing the $40 million in naming rights by selling sub-sponsorships, Cabinet and Government are only encouraging curious minds to figure out what really happened or is happening here. The front story almost begs the back story, especially given how obvious it is that not all of PavCo's tenant ducks were in a row on the naming rights deal.

Unless the Government can somehow find a face-saving way to revisit a naming deal with Vancouver-based TELUS or find a way to bring on another telecom such as Bell, this is a classic case study of politics and political relationships trumping commercial merit. Telecoms are ideal as top-of-the-food-chain partners of sports teams, leagues and venues, especially in this day and age of life made digital and mobile. PavCo was on the right track on that one, just as Canucks Sports & Entertainment was by replacing an automotive partner with a telecom partner across the street.

Yet the options available to PavCo and the Government now to come away with a good deal are much less than if Cabinet had handled this with more elegance and integrity.  

NOTE: Peter Brown is a heavyweight among BC businessmen, best-known for his role as Chairman and Founder of Canaccord Capital, one of the largest investment brokerages in Canada. He was a member of the Board of Directors of the old Vancouver Whitecaps of NASL vintage. He served the province on the Board of the Vancouver 2010 Olympic and Paralympic Winter Games. He's invested in the community through countless donations, including at the Vancouver Aquarium in Stanley Park. One thing he is no longer is a member of the Board of Directors of BC Pavilion Corp. His name was removed from the PavCo web site Friday afternoon. Multiple sources suggested his resignation was linked to his disappointment with the TELUS Park decision and/or process. Yet he himself denied that in an interview with Jeff Lee of The Vancouver Sun Friday night, as did PavCo Chair David Podmore.


TheSportMarket.biz
Facebook.com/thesportmarket, Twitter.com/thesportmarket, LinkedIn.com/companies/thesportmarket