Ravens' deal with PSINet pays off

Team to be paid $93.5M over 20 years

November 18, 1999|By Jon Morgan | Jon Morgan,SUN STAFF

The Ravens, who paid the state $10 million for the right to sell the name of their stadium, have already made that much -- and more -- on their deal with PSINet Inc.

In January, the fast-growing, Virginia-based computer services company paid the Ravens $11.8 million. It expects to pay $93.5 million during the agreement's 20-year term, according to documents that PSINet filed earlier this year with federal regulators.

The documents provide a detailed look at the agreement, which was met by derision by many fans because it left the state-owned stadium with an awkward name. Critics also assailed the deal as a taxpayer giveaway.

But state officials defended the arrangement and said they got the Ravens to pay more than many other teams around the country had paid for naming rights.

When the stadium project ran over budget in 1997, the Maryland Stadium Authority sold the naming rights to the team for $10 million to raise money. Stadium authority officials said they only held the right to name the building, not sell a broader sponsorship of the team, and couldn't expect to make much more on the open market.

In fact, Ravens spokesman Kevin Byrne said the stadium name is only a part of the team's deal with PSINet, and accounts for only part of the $93.5 million. "We were looking for more than a naming rights sponsor. We were looking for a corporate partner," Byrne said.

Other elements of the deal include a double-decker skybox at the stadium for PSINet executives, free advertising on team broadcasts and in the stadium, and development of special Internet services for Ravens fans. The team and company share in the profits of the Internet services.

PSINet's first installment, paid in January, included a "one-time prepayment" of $9.25 million, in addition to the first annual payment of $2.55 million. Next year the company will pay the Ravens $2.6 million, and subsequent payments will grow by about 5 percent a year, according to the PSINet documents.

The company noted that the arrangement is "expected to bring revenues to both organizations through service and membership fees, e-commerce and promotional ventures."

The Ravens anticipate gaining a total of $105.5 million from the arrangement, a figure that apparently includes money made on endeavors jointly developed with PSINet.

The state built the downtown stadium for $229 million, not including the cost of roads, land preparation and an adjacent light-rail station. Stadium bonds are being repaid by state lottery proceeds, city contributions, ticket taxes paid by fans and some revenue from use of the stadium.

The team contributed the equivalent of $12 million, as required by the General Assembly, in addition to the $10 million for the naming rights.

In its most recent quarter, PSINet posted revenue of $140.6 million, more than twice the same period a year before. Expenses, however, were also up, in part due to marketing costs associated with the Ravens deal. The company posted a loss of $81.3 million for the quarter but its stock value has grown briskly as it establishes itself as a major force in providing Internet service to business customers.

Michael P. Binko, senior manager for sports marketing and business development, said the Ravens deal has been a good investment, raising the company's profile and developing new business in an important market.

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