Transit center finds a sponsor
Salesforce buys naming rights for $110 million
San Francisco’s new downtown transit center will have something in common with AT&T Park and Oracle Arena — a corporate name.
Salesforce, a software company with its headquarters and 6,600 employees in the Bay Area, has agreed to a 25-year, $110 million sponsorship of the 2½-block-long facility set to open next spring at Fremont and Mission streets. The deal includes naming rights, which means that the complex would be known as the Salesforce Transit Center.
Similarly, the 5.4-acre rooftop open space will become Salesforce Park if the board of the Transbay Joint Powers Authority approves the contract Thursday at its monthly meeting.
The cloud-like Salesforce logo that adorns two towers near the transit center would not appear on the exterior of the new facility, however. Nor would Salesforce have veto authority on events held in the park, even those of rival corporations.
“That was an important negotiation point,” said Mark Zabaneh, the authority’s executive director. “Anybody can hold events. Anybody can buy advertising. There are no restrictions” imposed by Salesforce.
The deal would bring $1 million to the authority at the time of signing, and $9.1 million when bus service begins, expected next spring. There would be no payments the next two years. In year four, Salesforce would pay $3.28 million, and that rate would increase annually by 3 percent for the remainder of the agreement.
When train service begins — there is no projected date — the annual fee would jump by another 20 percent.
The sponsorship money would go toward the estimated $20 million annual cost of operating the transit center and the rooftop park. The park will include an amphitheater, a children’s playground and a large restaurant.
“This brings us a steady stream of funding to help operate at less of a deficit,” Zabaneh said. “The goal is that after the first few years, the center will pay for itself.”
For Salesforce, the sponsor-
ship emphasizes its presence in the center of the city — a much different approach than companies such as Apple and Google, which call Silicon Valley home.
“We’re committed to growing here and continuing to help make this city a better place for all its citizens,” Elizabeth Pinkham, Salesforce executive vice president for global real estate, said in a statement. “We are thrilled to partner on this world-class, state-of the-art transportation hub, which will provide better access to and from San Francisco and a sprawling green park in the hub of downtown for all to enjoy.”
If the idea of a huge tech firm placing its name on a work of public transportation facility seems unusual — it is.
Sports arenas often double as corporate billboards, as anyone who watched the Golden State Warriors at Oracle Arena can attest.
Other civic infrastructure is another story.
“There has been lots of conversations in government about ideas of exploring (naming) opportunities, but there really haven’t been a lot of success stories,” said Jim Andrews, a senior vice president at ESP, a firm that specializes in sponsorship arrangements and worked on the deal between the San Francisco 49ers and Levi Strauss & Co. for the naming of Levi’s Stadium.
There are a few cases of convention centers getting the corporate mark, such as the Duke Energy Convention Center in Cincinnati.
“When we talk about transit centers, that’s a different animal,” Andrews said. “You run the risk of having your brand associated with a derailment or an accident.”
In the case of what for now remains the Transbay Transit Center, the search for corporate funding began in February 2015 with a request for bids on everything from the bike parking areas to full sponsorship of what was billed as “an inspiring and iconic civic landmark in the heart of a vibrant new downtown.”
Nobody bit, perhaps because the quest had an air of desperation about it — the authority at the time was grappling with how to close gaps in a budget that now stands at $2.2 billion, $600 million above the estimate when construction began in 2010.
But when Zabaneh became executive director in May 2016, discreet talks with Salesforce were already under way. The two entities are already neighbors: Salesforce Tower, which opens this fall next to the transit center at First and Mission streets, will have a fifth-floor bridge leading to the rooftop park.
“It’s a very good fit,” Zabaneh said. “Negotiations are never easy, but they’re genuine people.”
The sponsorship agreement with Salesforce doesn’t include 10 days of rent-free use of the park each year, one lure dangled in 2015. The firm will pay for access to event space like anyone else — though it does have priority during the week each fall when Salesforce holds its huge Dreamforce conference.
More important for casual visitors, security and maintenance are also part of the agreement.
“Salesforce wanted to make sure security is kept at an agreed-upon level,” Zabaneh said, no matter what budget strains might occur in the future. “We guarantee that the center is going to be safe, and it’s going to be well-maintained.”
The sponsorship is one piece in a much larger transit center funding puzzle.
In the spring, the authority hired Lincoln Property Co. to manage the center and find tenants for the 103,000 square feet of retail space inside. The upkeep of the park and public areas will be helped by a $1.7 million annual contribution from the East Cut Community Benefit District, funded by property owners.
And then there’s the second phase of the project — bringing commute trains and high-speed rail service into an already built concrete shell below the transit center. There’s no firm timeline or funding strategy for how that will happen, but the estimated cost is $4 billion.