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U.S. Cellular Sticks With Baseball Park, Or Is Stuck With It

Suntimes.com, November 07, 2012

By Francine Knowles

As U.S. Cellular exits the Chicago cell phone market, the company said it keeps its headquarters and its name on the White Sox baseball stadium: U.S. Cellular Field.

But the company, which in 2003 signed a 20-year naming rights contract for the Chicago White Sox stadium valued at $68 million, likely couldn’t drop out of the deal even if it wanted to, said Jim Andrews, senior vice president at sponsorship consulting and research firm IEG, LLC.

“Pretty much in these situations, there would not be an easy out for them,” he said.

“For us, it’s a great partnership we’ve had with the White Sox, and we’ll continue that relationship,” U.S. Cellular President and Chief Executive Officer Mary Dillon said in a Chicago Sun-Times interview Wednesday.

“We’re going to continue to be headquartered here in Chicago, and in the Chicago area, we’ll have several offices. We will have a strong presence. In fact, we’ll still be a top 40 employer by revenues in Chicago.”

But the benefits of the naming rights are diminished, given U.S. Cellular’s planned exit from the market, Andrews said.

“A sponsorship buy like a stadium really is a local or regional buy, so if you’re not really doing business in that marketplace, it doesn’t make a lot of sense to spend that kind of money,” he said. “They will have some presence in Chicago, but their major presence was as a consumer brand, and if that’s going away, then having the naming rights really doesn’t make a lot of sense.”

He noted stadium naming rights contracts signed in more recent years are more likely to have flexible options compared to contracts signed when U.S. Cellular inked its deal.

“You still may have a 20-year deal, but there are certain checkpoints where both the sponsor and the team can look at the terms every few years and say, ‘Is this still mutually beneficial, do we need to open it up and renegotiate some of the terms,’ ” Andrews said.

When U.S. Cellular signed the naming rights deal, it made sense in part because the company was growing and had a significant presence in the Chicago market that they were trying to increase, Andrews said.

“They were really very active in lots of different marketing activity at the time,” he said. “They had Joan Cusack. They were running television commercials with her. They were then and continue to be a smaller player in a world of giants among the AT&Ts and Verizons and Sprints. This kind of established them very quickly as kind of a name to be reckoned with. [It gave] the perception that a company that’s big enough to put their name on a major league stadium like that must have some serious resources behind it.”