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Qualcomm paid $18 million for the stadium name for 20 years

"Just a standard boilerplate"

— Next month it will be Qualcomm Stadium, but ten years, five years, maybe even one year down the road, San Diego sports fans could be trooping down to watch the Chargers play at the Bud Bowl, the Dorito Dome, or Sony Stadium.

So say critics and outside observers who have scrutinized the contract the high-tech telecommunications firm has inked with the city - and which is scheduled to be ratified next week by the city council.

Qualcomm may portray itself as a white knight whose $18 million purchase of the stadium name for 20 years has saved the city's stadium expansion scheme and, with it, the Chargers and the 1998 Super Bowl. But Qualcomm got an incredible bargain, critics and observers agree - including the ability to sell the stadium name to a third party, with a promise by the city not to interfere or to take a cut; millions of dollars in free Super Bowl ads and other perks, and a total price tag significantly below sums attached to naming deals in other cities.

The "name assignment" clause is raising the most eyebrows. According to the contract, the naming agreement may be "assigned, sold, transferred, bartered, or otherwise exchanged by Qualcomm, with or without consideration." Any exchange hinges on the city's approval, but the contract specifically states "consent shall not be unreasonably withheld or delayed." The city would receive no compensation.

Dan Pegg, senior vice president of communications with Qualcomm, calls the assignment clause "just a standard boilerplate, an example of an attorney looking out for the interest of his client, something to protect oneself when one tries to speculate on all the different issues that could arise and protect oneself.

"If there's ever a name change, or the company is acquired or it went bankrupt, it would still be an asset of the corporation, having paid $18 million for it for 20 years," Pegg says of the stadium name. "So obviously, any successor would be entitled to it." Chris Carey, a reporter with the St. Louis Post-Dispatch, has doubts. In 1994, the St. Louis Convention and Visitors Commission signed a similar 20-year deal with TWA to put its name on a new stadium for the St. Louis Rams football team. The deal was signed just eight days after TWA emerged from its second bankruptcy, Carey says, and there were concerns about the airline's viability.

Even so, he says, twa did not get the right to assign the name in the event of a bankruptcy or merger. The contract specifically stated that if TWA "went under," the name would revert back to the city, Carey says. "The convention and visitors commission never would have allowed it [TWA to assign the name]," he says. Pam Klein, business editor with the Indianapolis Star, likewise marvels at Qualcomm's right to sell the stadium name without getting any money in return. "That sounds weird," she says, noting that no such clause exists in rca's ten-year deal with Indianapolis, signed in 1994, under which the venerable Hoosier Dome became the rca Dome. "The city made a deal with the rca people for the rca name," Klein says, "and letting the rca people assign the name to someone else is not part of the contract." Bruce Henderson, the former city councilman who led the legal fight to put stadium expansion on the ballot, says he is most troubled that in the event of a name assignment, there is no contractual requirement for Qualcomm "to disclose how much money they receive for the assignment." He adds, "It is conceivable that [Qualcomm] may have already sold the stadium name for, say, $50 million. We don't know. If they did, they made an immediate profit of $30 million, and the city receives nothing." Qualcomm's Pegg says Henderson's assumption is "utter nonsense. The fact is this is a tremendous opportunity for Qualcomm to keep their name up there and visible as long as we can. The [cellular phone] technology developed by the founders of Qualcomm has now been proved and translated into products, and those are products that every consumer needs to know about."

But Henderson insists, "There is something unbelievable about what Qualcomm is doing. If they are truly trying to establish a national, perhaps international brand name, then this $18 million is just a drop in the bucket, and they must have an incredible program in mind, because establishing a brand name costs hundreds of millions of dollars. But if that's the case, then why did they want the right to assign the name?"

Qualcomm's contract with the city also calls for the National Football League and nbc to give the company "designated spots during Super Bowl XXXII for Qualcomm to tell their stadium story." "That's big money," says Carl Moritz, a senior editor with The Sporting News. "Thirty-second spots during the Super Bowl go for more than a million dollars, so you can subtract at least a million from what they're paying."

Other Super Bowl perks include a full-page ad in the Super Bowl XXXII magazine, a private suite with at least 39 seats at this next Super Bowl "and for any subsequent Super Bowl held at the stadium during the terms of this agreement," ten tickets to the commissioner's party, and the right to set up a promotional booth "to provide information and product display."

Both Carey and Klein say corporate sponsors in their respective cities' stadium naming deals are entitled to no such perks. Carey, in particular, marvels over the free Super Bowl ads Qualcomm is entitled to. "Jeez, that's a million dollars for 30 seconds," he says. "No one ever mentioned that here."

Qualcomm's Pegg says no city money will be spent on the Super Bowl ad. "That's something we asked for that the nfl will have to grant," he says. "The city had nothing to do with that except they put us in touch with the people at the nfl." According to the terms of the deal, if the nfl balks, and the city does not come up with the cash for the spots, Qualcomm could declare the agreement null and void.

Even without the "name assignment" provision or the Super Bowl freebies, observers say, Qualcomm got a good deal. "Adidas, for example, just struck a deal for $9 million a year with the Yankees, and they don't even get to put their name on the stadium," Henderson says. "This raises the question of was the price really adequate, or was it just coincidence that the price was ostensibly what the city needed [to cover the final $18 million part of the expansion package]."

In New York the Adidas deal made headlines. According to a March 4 New York Times story, the sporting goods company has promised to spend $90 to $95 million through 2006 "to plaster its name on signs at Yankee Stadium, advertise on Yankee telecasts, promote its connection to the team in local marketing, contribute to team charities, and supply minor leagues with footwear."

Outright naming deals more along the lines of the San Diego-Qualcomm pact are also pricier in other cities throughout the country. In Washington, D.C., MCI pays the Bullets $4.4 million a year for arena naming rights. Continental Airlines pays the New Jersey Nets $2.4 million a year, the Fleet Financial Group pays the Boston Celtics $2 million a year.

In St. Louis, reporter Carey says, TWA pays the convention and visitors commission $1.3 million a year, subject to an automatic annual increase of 3.5 percent. The deal is good for 20 years and can be extended an additional 10 years at twa's request.

In Indianapolis, editor Klein says, RCA is paying $10 million for a 10-year contract. But a movement is afoot in the state legislature to restore the previous Hoosier Dome name, because a year after the 1994 deal was struck, rca announced it was relocating its Thomson Consumer Electronics plant from Indianapolis to Mexico. "It's always been fairly controversial, because the dome was built with taxpayer money and the Hoosier name is something that's kind of sacred to some people," Klein says.

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— Next month it will be Qualcomm Stadium, but ten years, five years, maybe even one year down the road, San Diego sports fans could be trooping down to watch the Chargers play at the Bud Bowl, the Dorito Dome, or Sony Stadium.

So say critics and outside observers who have scrutinized the contract the high-tech telecommunications firm has inked with the city - and which is scheduled to be ratified next week by the city council.

Qualcomm may portray itself as a white knight whose $18 million purchase of the stadium name for 20 years has saved the city's stadium expansion scheme and, with it, the Chargers and the 1998 Super Bowl. But Qualcomm got an incredible bargain, critics and observers agree - including the ability to sell the stadium name to a third party, with a promise by the city not to interfere or to take a cut; millions of dollars in free Super Bowl ads and other perks, and a total price tag significantly below sums attached to naming deals in other cities.

The "name assignment" clause is raising the most eyebrows. According to the contract, the naming agreement may be "assigned, sold, transferred, bartered, or otherwise exchanged by Qualcomm, with or without consideration." Any exchange hinges on the city's approval, but the contract specifically states "consent shall not be unreasonably withheld or delayed." The city would receive no compensation.

Dan Pegg, senior vice president of communications with Qualcomm, calls the assignment clause "just a standard boilerplate, an example of an attorney looking out for the interest of his client, something to protect oneself when one tries to speculate on all the different issues that could arise and protect oneself.

"If there's ever a name change, or the company is acquired or it went bankrupt, it would still be an asset of the corporation, having paid $18 million for it for 20 years," Pegg says of the stadium name. "So obviously, any successor would be entitled to it." Chris Carey, a reporter with the St. Louis Post-Dispatch, has doubts. In 1994, the St. Louis Convention and Visitors Commission signed a similar 20-year deal with TWA to put its name on a new stadium for the St. Louis Rams football team. The deal was signed just eight days after TWA emerged from its second bankruptcy, Carey says, and there were concerns about the airline's viability.

Even so, he says, twa did not get the right to assign the name in the event of a bankruptcy or merger. The contract specifically stated that if TWA "went under," the name would revert back to the city, Carey says. "The convention and visitors commission never would have allowed it [TWA to assign the name]," he says. Pam Klein, business editor with the Indianapolis Star, likewise marvels at Qualcomm's right to sell the stadium name without getting any money in return. "That sounds weird," she says, noting that no such clause exists in rca's ten-year deal with Indianapolis, signed in 1994, under which the venerable Hoosier Dome became the rca Dome. "The city made a deal with the rca people for the rca name," Klein says, "and letting the rca people assign the name to someone else is not part of the contract." Bruce Henderson, the former city councilman who led the legal fight to put stadium expansion on the ballot, says he is most troubled that in the event of a name assignment, there is no contractual requirement for Qualcomm "to disclose how much money they receive for the assignment." He adds, "It is conceivable that [Qualcomm] may have already sold the stadium name for, say, $50 million. We don't know. If they did, they made an immediate profit of $30 million, and the city receives nothing." Qualcomm's Pegg says Henderson's assumption is "utter nonsense. The fact is this is a tremendous opportunity for Qualcomm to keep their name up there and visible as long as we can. The [cellular phone] technology developed by the founders of Qualcomm has now been proved and translated into products, and those are products that every consumer needs to know about."

But Henderson insists, "There is something unbelievable about what Qualcomm is doing. If they are truly trying to establish a national, perhaps international brand name, then this $18 million is just a drop in the bucket, and they must have an incredible program in mind, because establishing a brand name costs hundreds of millions of dollars. But if that's the case, then why did they want the right to assign the name?"

Qualcomm's contract with the city also calls for the National Football League and nbc to give the company "designated spots during Super Bowl XXXII for Qualcomm to tell their stadium story." "That's big money," says Carl Moritz, a senior editor with The Sporting News. "Thirty-second spots during the Super Bowl go for more than a million dollars, so you can subtract at least a million from what they're paying."

Other Super Bowl perks include a full-page ad in the Super Bowl XXXII magazine, a private suite with at least 39 seats at this next Super Bowl "and for any subsequent Super Bowl held at the stadium during the terms of this agreement," ten tickets to the commissioner's party, and the right to set up a promotional booth "to provide information and product display."

Both Carey and Klein say corporate sponsors in their respective cities' stadium naming deals are entitled to no such perks. Carey, in particular, marvels over the free Super Bowl ads Qualcomm is entitled to. "Jeez, that's a million dollars for 30 seconds," he says. "No one ever mentioned that here."

Qualcomm's Pegg says no city money will be spent on the Super Bowl ad. "That's something we asked for that the nfl will have to grant," he says. "The city had nothing to do with that except they put us in touch with the people at the nfl." According to the terms of the deal, if the nfl balks, and the city does not come up with the cash for the spots, Qualcomm could declare the agreement null and void.

Even without the "name assignment" provision or the Super Bowl freebies, observers say, Qualcomm got a good deal. "Adidas, for example, just struck a deal for $9 million a year with the Yankees, and they don't even get to put their name on the stadium," Henderson says. "This raises the question of was the price really adequate, or was it just coincidence that the price was ostensibly what the city needed [to cover the final $18 million part of the expansion package]."

In New York the Adidas deal made headlines. According to a March 4 New York Times story, the sporting goods company has promised to spend $90 to $95 million through 2006 "to plaster its name on signs at Yankee Stadium, advertise on Yankee telecasts, promote its connection to the team in local marketing, contribute to team charities, and supply minor leagues with footwear."

Outright naming deals more along the lines of the San Diego-Qualcomm pact are also pricier in other cities throughout the country. In Washington, D.C., MCI pays the Bullets $4.4 million a year for arena naming rights. Continental Airlines pays the New Jersey Nets $2.4 million a year, the Fleet Financial Group pays the Boston Celtics $2 million a year.

In St. Louis, reporter Carey says, TWA pays the convention and visitors commission $1.3 million a year, subject to an automatic annual increase of 3.5 percent. The deal is good for 20 years and can be extended an additional 10 years at twa's request.

In Indianapolis, editor Klein says, RCA is paying $10 million for a 10-year contract. But a movement is afoot in the state legislature to restore the previous Hoosier Dome name, because a year after the 1994 deal was struck, rca announced it was relocating its Thomson Consumer Electronics plant from Indianapolis to Mexico. "It's always been fairly controversial, because the dome was built with taxpayer money and the Hoosier name is something that's kind of sacred to some people," Klein says.

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