In The News

U.S. Cellular sticking (or stuck) with White Sox

Crain's Chicago Business, November 07, 2012

By Danny Ecker

Despite bolting the Chicago market, U.S. Cellular will maintain its naming rights deal with the White Sox, a contract that runs through 2023.

That deal, signed in 2003 and worth about $3.4 million annually, was one of the most lucrative stadium naming contracts in baseball at the time. Now, it's close to average among MLB stadiums.

"We will continue to be headquartered here in Chicago and our enthusiasm for Chicago sports remains the same," U.S. Cellular Chief Marketing Officer Dave Kimball said in a statement. "The White Sox are a great partner and we look forward to continuing our relationship with them."

The reality is, they may have no other choice, even though the marketing benefits of the naming rights are now drastically reduced with the closure of the majority of its retail stores in the Chicago area.

"I can't imagine (U.S. Cellular) is happy to keep this deal if they are exiting the market," said Jim Andrews, senior vice president at Chicago-based sports marketing consulting firm IEG.

From a marketing standpoint, "it is primarily a local or a regional buy." he said

The rare opportunities for the naming deal to pay off on a national level come only when the Sox play on national television or make the playoffs.

When that happens, it's a huge marketing victory, at least according to Ann Arbor, Mich.-based sports sponsorship firm Joyce Julius & Associates Inc., which estimated that AT&T got about $80 million in exposure during the San Francisco Giants eight playoff home games last month at AT&T Park, comparing the cost of reaching the series' audience through traditional advertising.

"That's really icing on the cake," said Mr. Andrews. "It's not why you buy the sponsorships."

It's hard to believe that U.S. Cellular got a similar bump from the White Sox's World Series win in 2005, given the explosion in media coverage on the web that has only become the norm in recent years.

Most stadium naming deals in Major League Baseball are 20-year deals (as is the case on the South Side), though a recent trend in such contracts is including mechanisms to renegotiate terms every few years based on changing circumstances for both the team and the sponsor company.

That was the case in Minnesota, where the Twins signed a 25-year deal with Target for naming rights to their new stadium, which opened in 2010.

The value of those rights can be re-evaluated every few years, says Mr. Andrews, whose firm was a consultant on the Target-Twins deal.

It is unclear whether the White Sox and U.S. Cellular have such a clause, or whether the cost of buying out the contract would be much higher than the estimated $38 million remaining on the deal.

Let's also remember the context of the deal when it was signed nearly a decade ago.

At the time, it was part of a marketing blitz that included Joan Cusack as the company's celebrity spokesperson.

The Sox were just months away from hosting the MLB All-Star game, which might have added to the high price tag, and then-U.S. Cellular CEO John E. Rooney described himself as a lifelong fan of the team.

It was also a relatively "immature" time for stadium naming deals, says Mr. Andrews, a few years before the market value of such contracts really settled in.

My sense is that, while the company remains proud of its partnership, the return on investment for this pricey piece of advertising is suspect at best.

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