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The White Sox's new stadium naming rights deal with Chicago-based mortgage lender Guaranteed Rate is worth a fraction of the team's previous contract with U.S. Cellular.
Under the 13-year agreement announced last week that renames the South Side ballpark Guaranteed Rate Field on Nov. 1, the Sox will get $20.4 million over the next 10 years for naming rights, or about $2 million per year, Illinois Sports Facilities Authority records show.
That compares to the $3.4 million that U.S. Cellular paid the team on average per year since it bought naming rights to the park in 2003 for a 20-year term.
It is also substantially less than the average fee for naming rights to MLB venues. Including U.S. Cellular Field, the 20 Major League Baseball parks that have naming rights partners pull in an average of $4.4 million per year from those deals, according to data from Chicago-based sponsorship trend research group IEG.
Removing the outlier that is Citi Field in New York, where the bank pays $20 million per year to put its name on the Mets' stadium, that average is reduced to $3.6 million per year.
FULL VALUE OF THE DEAL
But naming rights alone may not paint the full picture of the value the Sox get from the Guaranteed Rate deal.
The company also signed a second, separate sponsorship agreement with the Sox that includes "various branding, promotional and hospitality benefits, along with joint marketing opportunities," according to a team statement. The Sox announced yesterday, for example, that Guaranteed Rate will be a presenting partner of its SoxFest convention in January.
That means the team could still be pulling in as much or more overall from Guaranteed Rate than it did from U.S. Cellular.
The team declined to share financial details of that second agreement.
Being an involved corporate partner is something U.S. Cellular—which is no longer active in the Chicago market, despite its local headquarters—had no apparent plans to do for the final six years of its contract.
U.S. Cellular "realized that (the Sox) were losing an opportunity with a naming rights partner to really activate the partnership and help us drive people to the park," White Sox marketing chief Brooks Boyer said last week on a conference call with reporters. In a follow-up email yesterday, he noted "fans can expect aggressive co-promotion in addition to the naming rights."
Keeping a naming rights partner that is no longer promoting itself in the market is an unenviable position that likely played a role in the team's decision to cut ties with U.S. Cellular with six seasons left on their contract, said IEG Senior Vice President Jim Andrews.
"There is value to a team or any property to having your sponsors doing some of your marketing for you," said Andrews, adding that some sponsorship contracts explicitly require minimum levels of activation in the market. "It will get you into channels that you're probably not going to be marketing to yourself."
TIES TO THE PREVIOUS DEAL
The financial terms of Guaranteed Rate's deal, disclosed to in an amendment to the Sox's lease with ISFA, the government agency that owns and operates the park, are tied to the structure of U.S. Cellular's agreement.
That deal coincided with a 2003 ISFA bond sale to fund a series of renovations to the park, including re-configuring sections of the upper deck to make it less steep.
At that time, the Sox agreed to forgo a portion of ballpark maintenance funding it would have received from ISFA. The agency put that money toward retiring the bonds. But the Sox still pocketed all naming rights fees from U.S. Cellular.
The team was due to receive $20.4 million more from U.S. Cellular between now and the end of the deal in 2022. The company will pay a one-time buyout fee—the amount wasn't revealed—toward that total, with Guaranteed Rate picking up the rest.
But at $2 million per year, payments to the Sox won't equal what the team would have received from U.S. Cellular until 2027.
That's when Guaranteed Rate will begin paying its naming rights fee to ISFA; the agency estimates it will receive between $4.7 million and $6.4 million from the company during the final years of the agreement.
Additional revenue and savings late during the next decade will be critical for ISFA, which uses hotel tax revenue and annual city and state subsidies to pay off the debt from the renovation of Soldier Field and the construction and maintenance of the Sox's park.
That annual debt obligation will steadily balloon from $38.5 million for the year ending June 30, 2017, to $87 million in 2032.
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