Pens- FNB deal raises questions on value of name rights
With the way things are going, First National Bank’s Vincent Delie Jr. soon might be anchoring the first line for the Pittsburgh Penguins.
FNB and Mr. Delie, its president and CEO, have reached a partnership deal with the Penguins that includes naming rights to one of the gates at PPG Paints Arena and other sponsorships.
The bank is stepping up at a time when many arenas, including PPG Paints and other sports venues, have been shuttered because of COVID- 19 — raising questions about the value of naming rights in the pandemic era.
That could have implications for the Steelers and the Pirates, whose naming rights deals with
the Kraft Heinz Co. for Heinz Field and PNC Financial Services Group for PNC Park, respectively, expire next year.
Some experts don’t expect COVID- 19 to have a significant impact — unless the company holding the rights to the big- money deals, which can net the sports teams tens of millions of dollars, is struggling financially because of the virus.
“I think across the country, when you’re starting to look at naming rights deals, you have to look at the fiscal health of the partner as well,” said Dave Synowka, professor of sport management at Robert Morris University.
The new FNB agreement comes nearly a year after the North Shore- based bank decided to move its headquarters to a 26- story office tower to be built at the former Civic Arena site in the lower Hill District, which the Penguins are redeveloping.
“The Penguins are a premier sports organization and are part of the spirit of our headquarters city,” Mr. Delie said in a statement. “We are proud to support such a valuable cultural asset and to add this partnership to our extensive commitment to Pittsburgh and the organizations, projects and experiences that make it so unique.”
As part of FNB’s multiyear partnership deal, the PPG Paints entrance on Centre Avenue across from Logan Street will become the F. N. B. Gate, replacing Verizon, which had held the naming rights.
In addition, a premium seating section inside the arena will be renamed the F. N. B. Club, replacing KeyBank, whose sponsorship has ended.
FNB also will join a dozen other companies such as UPMC, FedEx and 84 Lumber in becoming a Penguins founding partner. It will become the official retail banking partner and official digital banking partner of the team. The latter includes the placement of bank ATMs throughout the arena and the creation of a new digital center that incorporates banking services with promotions.
No terms of the partnership agreement were released.
With its future presence at the old arena site, the bank will become the first company to bridge that development and PPG Paints Arena itself.
Deals for naming rights to gates and other sections inside sports venues are typically shorter in length than agreements involving the stadium or arena itself and usually don’t pay as much money.
Still, Michael Leeds, a professor of economics at Temple University who has studied naming rights deals, said agreements involving a main gate at a stadium could run as high as seven figures.
“It would surprise me if it’s not in the high six figures,” he said.
The value of name deals
While a study co- authored by Mr. Leeds found that naming rights have no discernible impact on a company’s fortunes, that hasn’t stopped many firms from bidding for them. He doubts that the pandemic will change that, even if fans are forced to stay away from games. He used Lincoln Financial Field in Philadelphia as an example.
“You have 70,000 people going into that facility. They’re pretty much the same 70,000 people every game compared to the tens of millions who hear the name, see the name on a TV broadcast,” he said. “So I doubt seriously that it’s going to have a major impact. I’m not even sure it’s going to have a minor impact on the value of naming rights.”
One area where the pandemic appears to have had an effect, according to one study, is in the value of mentions.
Joyce Julius & Associates, an Ann Arbor, Mich.- based analytics firm, found that corporations with their names on Major League Baseball ballparks averaged $ 12.5 million worth of value in terms of mentions in print, digital and TV mediums over six weeks in spring 2019.
That compares with $ 3.6 million in value, meaning the amount the company would have to pay for the equivalent in paid ads, this spring over the same period when the venues were shut down. That represents a 70% decline.
Jeremy Creutz, director of sponsorship analytics for Joyce Julius, said the firm hasn’t revisited the numbers since ballparks reopened for play without fans in the stands.
If arenas remain closed or seasons continue to be shortened because of the pandemic, it conceivably could prompt companies with naming rights to seek concessions, Mr. Synowka said.
“It will be interesting to see if they ask for some accommodation, particularly in the upcoming season, if that continues,” he said.
Mr. Synowka noted that New Era Cap Co. in July pulled out of a naming rights deal with the Buffalo Bills that paid the team about $ 4 million a year. The decision came after the firm furloughed about 70% of its U. S. workforce in March because of COVID- 19. However, New Era and the Bills had been trying to restructure the deal for more than a year.
Heinz Field? PNC Park?
Just where all of this leaves the Steelers and the Pirates remains to be seen.
Street & Smith’s Sports Business Journal reported last year that Kraft Heinz might give up its naming rights deal to Heinz Field, which netted the Steelers $ 57 million. The agreement expires next year.
“We are committed to our partnership with Kraft Heinz through the 2020 season. We will continue to explore possibilities for the naming rights for Heinz Field after this season, but we will have no further comment on our discussions,” Steelers spokesperson Burt Lauten said.
A Kraft Heinz spokesperson did not respond to an email Thursday seeking comment.
Even with the pandemic, Mr. Synowka expects a new Heinz Field naming rights deal to exceed $ 57 million. “I anticipate that would increase, probably significantly, depending on the length of the deal,” he said.
Neither spokespersons for the Pirates nor PNC returned emails seeking comment on the naming rights to PNC Park. The bank paid $ 30 million over 20 years for the opportunity to affix its name to the North Shore ballpark.
In 2016, PPG reached a 20year deal with the Penguins to plaster its name on the new arena. One industry expert estimated the deal was worth $ 4 million to $ 9 million a year.
The change in arena signage will begin immediately and will be in place for the start of the Penguins’ preseason.
FNB and the Penguins recently partnered to provide $ 100,000 toward the creation of a technology- driven learning center at Ammon Recreation Center in the Hill District.
The bank also has agreed to advance $ 11 million in investment to the middle and upper Hill District, part of a deal to use tax revenue generated by the former arena redevelopment to help other parts of the neighborhood. FNB’s share will be paid when it closes on the land needed for the office tower.