OCTOBER 5 2008 09:39h
Any time you take a brand, an identity, and you change that identity, you cause confusion amongst the public.
The stunning takeovers of big banks like Washington Mutual (WaMu) and Wachovia are forcing venues with long-term naming-rights deals with these institutions to grapple with unexpected branding challenges. Some even face the prospect of losing a partner at a time when replacing one lucrative naming-rights deal with another could be a difficult task at best.
The WaMu Theater at Madison Square Garden in New York, the WaMu Theater at Qwest Field in Seattle, the Wachovia Center in Philadelphia and the Wachovia Arena in Wilkes-Barre, Pennsylvania, are among the venues being forced to deal with the fallout of the U.S. financial crisis.
Mergers, acquisitions and takeovers are nothing new, so name changes have become relatively common in this age of widespread corporate branding of venues. But millions of dollars are spent positioning and branding arenas and theaters, so a name change creates unwanted headaches.
"It's a difficult situation," said Bob Cavalieri, senior vice president of business development for Philadelphia-based facility management firm SMG, which runs the Wachovia Arena in Wilkes-Barre. "Any time you take a brand, an identity, and you change that identity, you cause confusion amongst the public. You really have to start spending some money to change the brand in consumers' minds."
For the Wachovia Center in Philadelphia, rebranding has become old hat. The building opened as the CoreStates Center in 1995 in a 29-year naming-rights deal that brings in an estimated $3 million per year in fees. CoreStates became the First Union Center in 1998 before being renamed Wachovia Center in 2003.
Branding efforts related to the name changes have cost about $1 million each time, with the tab picked up by the banks that acquired the naming assets, according to Peter Luukko, president of Comcast-Spectacor, the Philadelphia-based management firm that runs the Wachovia Center.
"It's unbelievable how many things the name of your building is on, from signs in the facility to chairs, trash barrels, napkins," Luukko said.
Luukko said he's not sure what to expect in the wake of Citigroup's acquisition of Wachovia's retail banking assets. But he doesn't believe any of the previous name changes have cost the arena any business. "People come to see the Sixers, the Flyers, Bruce Springsteen, the Rolling Stones," he said. "They know where the building is."
A Wachovia representative in Philadelphia who oversees the Wachovia Center deal couldn't be reached for comment.
Rebranding a major venue is an effort that includes advertising and promotional efforts in addition to physical changes. Who pays for what is "completely dependent upon the deal," Cavalieri said. "If it's a bankruptcy situation, the court will just reject that deal -- it's done, it's over, it's gone. If it's a buyout, it becomes legal in nature."
DECISIONS YET TO COME
The Theater at Madison Square Garden became the WaMu Theater at the Garden in 2007 in what was announced as a multiyear deal, although financial details weren't released. Following JPMorgan Chase's deal to acquire WaMu, Garden spokesman Barry Watkins released the following statement: "Today's news will have no impact on the operation of the WaMu Theater at Madison Square Garden or on our customers. We empathize with our business partner and its employees and, at the appropriate time, will speak with the proper people regarding the future."
Garden executives declined to comment on the future of the WaMu Theater. JPMorgan Chase spokesman Joseph Evangelisti said, "It's in the very early days for us and we haven't made these decisions yet."
But it may well be that JPMorgan Chase considers having its name connected to such a high-profile venue in the country's largest market as an asset more than a liability.
"You never know how these things will work out in the corporate boardrooms," SMG's Cavalieri said. "Take Citibank's acquisition of the retail banking operations of Wachovia. Citibank may decide if they're going to flip those (Wachovia) branches to Citibank branches that having the naming rights on the buildings indeed enhances their ability to establish their brand in these ... marketplaces."
Citigroup spokeswoman Christina Pretto said that Citigroup expects to complete its acquisition of Wachovia by the end of the year, noting that decisions on naming-rights deals have "not yet been made and will be made in due course."