Next stop a Walmart station?
Marketing experts question Metrolinx plan to sell naming rights for GO stations
Marketing experts say Metrolinx shouldn’t expect private companies to be banging down the agency’s door to buy naming rights for GO Transit stations, but there could be limited opportunities to raise revenue from its plan to sell sponsorships of transit assets.
On Thursday, Metrolinx, the provincial transit agency for the GTHA, issued a notice seeking proposals for a “naming rights opportunity” for GO rail stations.
Transportation Minister Caroline Mulroney said the Progressive Conservative government hopes the plan will send the message that “Ontario is open for business.”
“Transit riders are looking to have an experience that is continually improving, and governments are looking to ways those ways to fund those service improvements in ways that don’t affect fares. So this is one way to do that,” she said in an interview. The document posted Thursday, which was first reported by the Toronto Sun, states the naming rights opportunity is open to “interested parties in any category,” and Metrolinx will enter into deals that provide “the most financial benefit.”
The document also said companies could, as part of a potential sponsorship agreement, have access to anonymized GO Transit ridership data.
Mulroney said it was too early in the process to say whether the government would bar companies from certain sectors, such as liquor and cannabis or political groups, from bidding.
Although her government is planning to take ownership of the Toronto’s TTC subway network, the minister said the current proposal doesn’t include selling naming rights to those stops.
The notice says Metrolinx is seeking proposals for naming rights at five stations on GO’s busy Lakeshore East and Lakeshore West lines: Whitby, Pickering, Exhibition, Clarkson and Oakville.
According to Metrolinx, the five stops were chosen “based on ridership and strategic geographic locations,” but the agency is also open to proposals for other stations.
The notice doesn’t list how much revenue Metrolinx expects to generate, but the Toronto Sun reported that, according to documents it obtained, the agency estimates the value of naming rights at up to $500,000 per station per year.
The document states Metrolinx is open to other arrangements, including offering companies the right to use the GO brand in its promotions, “experiential opportunities” such as branded areas or retail spaces on station property, and discounted tickets for events cosponsored by private entities.
Chris Gibbs, an associate professor at Ryerson University’s Ted Rogers School of Management, said Metrolinx shouldn’t expect a lot of interest from companies wanting to slap their names on a transit stop.
“My experience with sponsors and brands is that’s not something they’re going to be interested in,” he said.
According to Gibbs, the goal of any sponsorship is to exploit the positive emotional connection the public might have with assets such as sports stadiums or iconic buildings and transfer those feelings to a brand.
“Transportation is not an emotional connection. It’s a dreary thing that people have to do five days a week to go to their job,” he said.
Gibbs predicted Metrolinx would have better luck selling naming rights to positive features within stations, such as an upgraded passenger lounge or free Wi-Fi network.
David Soberman, a professor in the University of Toronto’s Rotman School of Management, agreed that in many cases companies would see little value in having their name associated a transit system, because passengers may have negative associations with a service that’s vulnerable to breakdowns and service delays.
But he suggested companies might want to sponsor a station like Exhibition, which people use to get to the Canadian National Exhibition as well as Toronto FC and Toronto Argonauts games at BMO Field.
“That’s something where people are going and they’re going to have a good time, so that as a strategy makes a lot more sense versus just sort of some random stop in a suburban area that has not got real distinction,” he said.
This is not the first time that Premier Doug Ford has backed selling naming rights to transit stations. While a city councillor in 2011, he and his brother, the late mayor Rob Ford, supported a controversial plan to auction off naming rights to TTC stops. Then-councillor Doug Ford famously floated the idea of a “Spadina-McDonald’s station.”
Although that year the TTC board approved a policy that allowed selling naming rights, the plan doesn’t appear to have gone anywhere. On Thursday TTC spokesperson Stuart Green couldn’t immediately say why.
He said under the agency’s station-naming policy, which dictates stations should be named after a local major crossstreet, TTC staff wouldn’t recommend using corporate names.
Transit agencies in other North American cities have tried to sell off naming rights, with varying levels of success. Last year, Philadelphia’s SEPTA agreed to a five-year, $5.3million (U.S.) deal with NRG Energy Inc. to rename the southern terminus of its Broad Street subway line, which is near a major professional sports complex, after the company. Before that, AT&T held the station naming rights.
But in 2014, Boston’s Massachusetts Bay Transit Authority abandoned plans to sell naming rights for nine stations and three transit lines after it received only one bid, which failed to meet the agency’s minimum asking price.
The opposition Ontario NDP slammed the government’s plan on Thursday.
Whereas previous proposals like that to sell TTC station names prompted concerns from critics over the propriety of putting private brands on public assets as well as the potential to confuse riders about stop locations, NDP deputy leader Sara Singh said her main worry about Metrolinx’s proposal has to do with privacy.
The notice issued Thursday said sponsorships could include data exchanges that would involve the “potential to share aggregated and anonymized GO Transit ridership data” with companies for “customer mapping research.”
“We don’t know the extent to which how that information will be collected, used or shared with other entities … In this day and age with big data, I think people are very concerned about privacy breaches happening,” Singh said.
She wrote to the provincial privacy commissioner Thursday asking him to investigate the proposal.