Heinz could leave Heinz Field
Heinz Field may be gone in a couple of years.
Not the stadium itself, but the name.
That’s according to Street & Smith’s Sports Business Journal, which cited industry experts in reporting that Kraft Heinz Co. may give up naming rights to the North Shore venue when its 20- year deal expires in 2021.
In a statement released Monday, the company did not exactly sack such speculation, committing only to finishing out the last two years of its current agreement.
“Kraft Heinz and the Pittsburgh Steelers have enjoyed a long and beneficial relationship over the past 18 years,” it said. “Both organizations are committed to the partnership for at least the next two seasons and we look forward to ongoing discussions related to the future.”
A Steelers spokesman gave a nearly identical statement.
Pittsburgh’s H. J. Heinz Co. paid $ 57 million for the naming rights to the Steelers home turf in 2001, just months before the new stadium opened to the public. The agreement cemented the relationship between two of Pittsburgh’s iconic franchises.
But a lot has changed since then. Heinz isn’t even Heinz anymore. It merged with Kraft Foods in 2015 to become Kraft Heinz. The company is now co- headquartered in Chicago and Pittsburgh, although its local presence has steadily diminished.
And this year has been a rocky
one for the big food company. In February, it took a $ 15.4 billion writedown and reported weaker- than- expected profit.
It also has replaced its CEO and disclosed that it received two subpoenas related to its procurement practices.
Despite the recent turbulence, Kraft Heinz would be “penny wise and pound foolish” not to renew the naming rights deal, one sports business consultant said.
“I suspect a lot of people would be surprised Kraft Heinz does not do this. It’s a layup for them,” said Marc Ganis, president of Chicagobased Sportscorp Ltd, a sports business consulting firm. “They’re a huge local company. They’re an iconic brand. They benefit anywhere on the planet where the building gets attention because they sell their product everywhere.”
Mr. Ganis said many in the industry thought the original deal was done at belowmarket rates when it was signed and that certainly was true a few years later. The Steelers, he added, are not known for being overly aggressive in maximizing revenue from naming rights and sponsorships.
“Heinz received a great deal. They received a tremendous amount of advertising value for their advertising dollars,” he said.
While the first naming rights deal for the Steelers’ stadium averaged about $ 3 million a year, the next one “should average well over six,” Mr. Ganis said. Even at that level, the going rate nationwide could be substantially higher.
“The Steelers have historically forgone maximizing the amount of revenue they can get for a sponsorship deal in exchange for branding, community considerations, and people they want to partner with,” he said. “It’s rare those three go together with the highest dollar amount.”
If it makes that call, Kraft Heinz would not be the first company to give up naming rights to a Pittsburgh sports venue.
In 2016, Consol Energy Inc. gave up the naming rights to the Penguins new arena six years into a deal that was slated to run 21 years, although the company remained as a corporate sponsor. It gave up the naming rights at a time when it was struggling with losses due to low natural gas and coal prices.
PPG, the venerable Pitstburghbased coatings company, took over the naming rights to what is now PPG Paints Arena under a 20year agreement with the hockey team.
Terms were not disclosed, although Mr. Ganis estimated at the time that the deal could be worth $ 4 million to $ 9 million a year.
All three of the local sports venues are owned by the Pittsburgh- Allegheny County Sports & Exhibition Authority. But the teams get to negotiate the naming rights deals and keep the money from them.
Should Kraft Heinz give up the rights to Heinz Field, any number of local companies could be contenders to replace it.
They include UPMC, which has its name high atop U. S. Steel Tower, Downtown’s tallest building; PNC, the bank with the naming rights to the Pirates’ ballpark; Highmark, which has naming rights to the Pittsburgh Riverhounds Station Square stadium; and First National Bank, which has been expanding.
Mr. Ganis stressed the most likely contenders would be local companies with a national presence, such as Kraft Heinz and PPG. Purely regional firms typically do not go after such deals because they don’t get as much value out of national advertising.
In the end, he believes Kraft Heinz will renew the deal. Well, sort of.
“It just seems like this is perfect for them. It is exactly right for this company. But you know, maybe not. Maybe they’re under such financial pressure [ that] a few million dollars a year in the marketing budget is more than they want to take on,” he said.