U.S. Airways Center will have a different name soon. American Airlines, which merged with U.S. Airways, announced it will not renew the name rights contract for the basketball arena. Scott Harkey, President of Owens Harkey, an ad agency in Phoenix, will discuss the business of naming rights.
Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. The Phoenix Suns are looking to find a new naming rights sponsor for U.S. Airways Center. American Airlines announced yesterday that it will not renew its naming contract for the arena. Here to talk about the world of corporate sponsorships through naming rights is Scott Harkey, president of the Owens Harkey ad agency here in Phoenix. Good to have you here, welcome to horizon. Any surprise that the U.S. airways center will no longer be that?
Scott Harkey: It's not a big surprise. I think after a while, sponsorships run its course and, of course, in U.S. Airways' case, them moving over to Dallas and merging with American Airlines, that really solidified that deal.
Ted Simons: They have an American arena in Miami and Dallas and I guess they figured a third was a little bit too much.
Scott Harkey: You don't need three naming sponsorships. Those are expensive. You want to make sure you're doing the right ones and not too many of them.
Ted Simons: Will the Suns have any problem finding a replacement do you think?
Scott Harkey: You know, I think they have enough time to really find a good partner. It's not going to be easy. As we all know, there's not a ton of Fortune 500 companies here ready to spend seven figures a year on those types of deals. But I think they have enough time if they can get it done. They're a well-known franchise. That's the premier sponsorship in town.
Ted Simons: Is the corporate sponsorship market, is it strong right now?
Scott Harkey: I think the economy's gotten better and people are spending more money on advertising. In Phoenix's case, not only do we not have a lot of Fortune 500 companies, but we have a lot of competition. Phoenix is one of eight big four markets in the United States. We've got football, pro football, pro basketball, pro hockey and pro baseball. So there's a lot of competition. I haven't even mentioned the Waste Management Open and all those other things.
Ted Simons: That have corporate sponsorship. The age of the arena, it's not brand-new, it's not all shiny and new, the location downtown, it's not out in the hinterlands, that would be not necessarily a plus, but the location could be a plus?
Scott Harkey: Absolutely. You would hope the Suns would be playing a little better basketball and there would be more excitement about a Suns team like there is about the Heat a few years ago or now some of the teams like Cleveland, a lot of excitement about the team now or ASU. You wish you had a better team when you're stopping for sports sponsorships, but I think they're going to get it done.
Ted Simons: As far as naming rights in and of themselves, do they really help a business? AT&T spent $500 million on one of these things, does it really matter?
Scott Harkey: That's a great question and I get this question a lot. We've analyzed it up and down until we're blue in the face to try to figure this out and it absolutely makes a big difference. You know, today, an average consumer sees almost 5,000 promotional messages a day. There's a lot going on. And so you need to stick out in consumers' minds and being involved in a sports sponsorship, if they have a lot of affinity to as their favorite team, is a big deal and you're not in just a commercial break. You're involved as part of the content, part of the act. You're not a side show. You're part of the main stage.
Ted Simons: Are there ancillary deals that go with this kind of thing? Whoever goes to the arena downtown, will there be other signage, other benefits that we don't think about?
Scott Harkey: There's not only just the signage, there's television commercials, there's integrated promotions, there's activation where you can come back, you want to get people to come back to your location. There's all sorts of other benefits and other, you know, media opportunities inside that naming sponsorship deal.
Ted Simons: Are naming rights ever bad for a business? Or ever bad for an event? I bring this up because when the Waste Management Phoenix Open team announced it, everyone went oh, no, they've named a golf tournament after waste management.
Scott Harkey: Most of the ones I've looked at have been very good because when you're buying that big of an investment for a naming rights deal, there's so much P.R. that comes with it. Every nationally televised game, they see your logo. When you look at the impressions, you're talking about millions and millions of impressions so it pencils out most of the time. There are other times you could negotiate a bad deal, the Levi sponsorship came up for the San Francisco football stadium. I don't know what they paid for that, but I would guess in the 10 to $12 million range. So, you know, you just got to make sure it pencils out. It's not for, everyone. If you were just a regular local brand that didn't have aspirations to be going outside of Arizona, those big, big national sponsorships, even if they are local, the national TV deals, you want to make sure that you're doing a sponsorship that can hit potential customers and you're not just in an Arizona type focus. You've got to go beyond that.
Ted Simons: I was going to add, any difference if the sponsor is local? We're thinking about Jobbing.com that will now become Gila River Arena out there for the hockey team. That's local. Does that help?
Scott Harkey: In their case, it does help and I think that is a good fit. However, you know, there are going to be national impressions when, you know, the Coyotes are on national TV, that Gila River is reaching people that aren't going to go down to their properties. There is a little waste in that, it's something you've got to evaluate on a case-by-case basis.
Ted Simons: And half the people around the country who see Gila River can't even pronounce it away.
Scott Harkey: It's a good brand, maybe they remember Gila River and go stay down there but there is potentially some, you know, I call them wasted impressions that aren't your core demo.
Ted Simons: Impressions and you've mentioned recall, that's basically what you're talking about. It's not necessarily you're going to go buy a ticket to Neverland, you just have that -- you're conscious of it.
Scott Harkey: How many times, you know, have we said we're going to go to the U.S. Airways Arena to watch the concert, the Suns play or we're going to go to University of Phoenix Stadium to watch the Cardinals? You're saying a brand name in conversation with friends. That's worth a lot of money.
Ted Simons: With that in mind, will corporate sponsorship, will this market ever dry up? You mentioned running its course. Can the market run its course?
Scott Harkey: I think right now we are in a market that has too many opportunities, absolutely, for corporate sponsorships. You look at the fiesta bowl sponsorship stuff. There's a lot of sports sponsorship and just sponsorship in general, opportunities in this market. So I do think for the size of our market, we're the number 12 media market in the country, there is probably too many sports sponsorship opportunities for this market.
Ted Simons: Fear not for the Suns, they'll survive.
Scott Harkey: The Suns will survive. I think they will. They've got a good brand, they've got a great history in this market and they're going to do just fine. Again, they have time. If they had a month, might be a little scared but a year? They're going to get a good partner.
Ted Simons: Good stuff, good to have you here.
Scott Harkey: Thanks a lot, Ted.
Scott Harkey:President, Owens Harkey;