Stadium critics: Taxpayers thrown for loss

State deserves bigger cut of sponsor deal, they say

January 27, 1999|By Jon Morgan | Jon Morgan,SUN STAFF

The blockbuster, $105.5 million sponsorship agreement with a computer services company that the Ravens announced yesterday has critics claiming the taxpayers have lost out.

The team paid the Maryland Stadium Authority $10 million in 1997 for the right to sell the name. Stadium authority officials said at the time that they expected the team would make a profit.

The bulk of the $223 million stadium cost was borne by the state; the team contributed $12 million.

Del. Robert H. Kittleman, a Howard County Republican and the House minority leader, said the state should have gotten more of the money from the sale of the name of a state-built building.

"If we had that money, we could make some of the payments on the stadium," said Kittleman, who led efforts to stop the project before construction began in 1996.

Republican lawmakers last year failed in their efforts to pass legislation so the state would keep more of the naming-rights money.

"That's one thing we didn't have to give away. We knew at the time that it was a big windfall, but we didn't have the votes," Kittleman said.

Stadium authority general counsel Alison Asti said yesterday the state got a good deal. The initial lease called for the team and state to mutually agree on a non-commercial name for the building, as was done at Oriole Park. When the Ravens project ran over budget, the state agreed to sell the naming rights to the team to raise cash.

"The state could only sell the name on the outside of the building. The state doesn't have the right to sell skyboxes or seats or radio and advertising or promotional items or signage within the stadium and Internet and video production," Asti said.

The team's deal with PSINet, a Herndon, Va.-based Internet service provider, is a wide-ranging, "presenting sponsorship." In exchange for paying $105.5 million over 20 years -- or the equivalent of $79 million as a lump sum in today's dollars -- the company will get its name on the stadium, commercial time on team-produced TV and radio shows and the right to establish a pair of specialized Ravens Web pages and keep some of the revenues from them.

Sources familiar with the deal say it is difficult to break out the value in terms of naming rights and other elements. Asti estimates the peripheral elements are worth more than $4 million of the $5.3 million annual average payments. That would value the naming rights by themselves at about $1 million a year, or $20 million over its term.

But others familiar with the deal say the naming aspect may be higher. PSINet will get two commercials in each of the team's pre-game and "Ravens Report" television shows, and two spots in the preseason games, for a total value of $84,500 a year. Radio and print ads bring the media component of the deal to about $600,000 a year.

PSINet will also have access to a pair of skyboxes, which would normally rent for $400,000 a season. Perhaps the most lucrative component is the right to produce a pair of Web pages, one free and one for members only -- elements that probably can't be considered stadium-related.

Depending on what is or isn't included, that leaves at least several million dollars a year attributable to the naming rights.

Dean Bonham, a Denver-based consultant who helps arrange naming-rights deals, said the state probably underestimated the value, but noted that most recent stadium leases give all naming rights to teams anyway.

"One can look at it as a glass that is half full and say you got $10 million more than most cities got," he said.

Pub Date: 1/27/99

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