Naming rights battle rages over FNB Stadium
Gloves come off as City of Joburg and Department of Public Works face-off
ANOTHER t ug- ofwar has erupted over FNB Stadium’s naming rights – this time pitting the City of Joburg and the Department of Public Works against each other.
The face-off over the corporate branding revenue for Soweto’s iconic 94 000-seater stadium in Nasrec has been described as a government-vs-gover nment tussle that could spill into the courts.
The department owns the stadium by virtue of owning the land on which the sporting arena is built, and has leased it to the city for 99 years. The city has, in turn, appointed Stadium Management SA (SMSA) to administer it.
The lease agreement does not include the naming rights, meaning all revenue generated from this goes to the department. FNB’s naming rights contract lapsed in June – and now runs on a month-to-month basis.
The Saturday Star can reveal that Joburg and the department have separately appointed companies to conduct valuations for the naming rights value.
“We’re now checking how much the naming rights would be worth,” said a well-placed source within the city.
“Now, we’re telling the department that ‘you gave us a 99year lease without the naming rights’, so we want the naming rights as part of the lease. The terms of the new contract should (include) the naming rights.”
This was corroborated by another source, who said the department was reluctant to cede the naming rights. “Six months ago, a determination (to temporarily renew FNB’s contract) was made on the naming rights. The department and FNB wanted a second opinion and appointed Nielsen (the marketing firm).”
Nthatisi Modingoane, spokesperson for the city, confir med naming rights were “part of the discussions” with the department. “The only process that is under way is the valuation, determining the market value of the (naming) rights. Public Works has appointed a service provider that is doing that exercise.”
He declined to comment further on the dispute, saying only “this is subject to a government to government discussion and agreement”.
However, insiders insisted that the City of Joburg had embarked on a valuation process of its own through SMSA. “SMSA, on behalf of the city, conducted the market value of the naming rights, using Sail (a marketing company) as a specialist consultant. All we can do is sit back and see what happens between the department, the city and FNB,” said another source.
Jacques Grobbelaar, SMSA chief executive, would not confirm this, only stating: “As SMSA, we would have preferred that the department and the city come to an amicable agreement.”
Thami Mchunu, spokesperson for the department, responded: “A joint steering committee has been established between the city and the department to develop the terms of reference for the governance framework on the future management of the stadium. The naming rights have been sub-leased to FNB and nothing has changed.”
Sources said FNB was unlikely to make any bid to renew its contract. “FNB had two suites at the stadium, but their contract has since expired. They’ve indicated they won’t renew, which gives us an indication that they might not renew (their naming rights to the stadium),” said one source.
In 2010, FNB won a protracted legal bid by the city and SMSA to alter FNB Stadium to Soccer City after the 2010 Fifa World Cup, when the Supreme Court of Appeal upheld an earlier ruling by the high court in Joburg.
The city and SMSA had argued that FNB’s contract ended with the demolition of the stadium in 2007 for its construction for the global showpiece.
A source warned that if the dispute was not resolved urgently, it could escalate into a similar legal battle.