It Remains the CLink to You

June 17, 2017

CenturyLink extended its naming rights deal for the stadium shared by the Sounders and Seahawks for another 15 years at roughly $10M/yr, reportedly doubling the previous agreement.  The value reflects a stadium in a growing, upper medium sized market that houses teams that consistently make the playoffs in their leagues.

The CLink is one of three facilities that serve as permanent homes for NFL/MLS teams in their markets, along with Gillette (New England) and Mercedes Benz (Atlanta).  The Atlanta stadium’s opening has been delayed multiple times and now is expected to open in August.  With both of these other stadiums being in larger markets, one can expect those naming rights deals to be larger, especially the new Atlanta stadium.  But the newness of the stadium is just one of many factors considered when such agreements are signed, as the linked article notes.

This season, the Chargers will join the Galaxy at StubHub Center for a three season stay until the new NFL facility in Inglewood is completed.  Additionally, Vancouver and Toronto both have MLS/CFL stadium sharing agreements.  So the economics behind the naming rights deals for shared football stadiums will continue to be focused on the long term nature of the setups in Seattle, Atlanta and New England (Foxboro) for the foreseeable future.  And in the case of Seattle, the agreement is more valuable than expected if based on market size alone.

Your turn, Mariners.

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First & Goal Hospitality Launched

March 11, 2017

First & Goal Inc. announced the creation of First & Goal Hospitality (FGH), which took over the management and operations of all concessions at CenturyLink Field and related venues as of March 1st.  FGH takes over from Delaware North, a big, long time player in the hospitality business.

It makes sense for Paul Allen’s F&G to do this as a way to increase incremental revenue at a facility the group already operates.  FGH is also believed to be the first locally team owned organization to break into the hospitality sector.  It’s a competitive sector nationally, from Delware North to Yankees and Cowboys’ owned Legends Hospitality to Centerplate (Safeco Field, Tacoma Dome), to Levy Restaurants (KeyArena, Moda Center), to the big heavyweight, Aramark (UW facilities), with over $14B a year in revenue and a market cap of $9B, dwarfing any sports franchise multiple times over.  And these groups have long branched out from concessions, ranging from marketing and sponsorships to ticketing and consulting.

The local venues noted above serviced by the national players make obvious targets should FGH look to expand.  None more so than Allen owned Moda Center in Portland.  And just as the more established hospitality businesses broadened their product offerings, it wouldn’t be surprising to see FGH eventually go that route as well.  So Seahawks and Sounders fans can look forward to new concession offerings this year, knowing that the genesis for those options are indeed, created close to home.

 


Franchise Values – What’s Media Got To Do With It?

March 30, 2013

Forbes recently released their estimated MLB franchise values, which are often highly debated by the teams for their accuracy.  Nonetheless, it’s the closest thing the public has to understanding the values of their local clubs.  Having already released their franchise value estimates for the other major leagues in the past handful of months, we can now see how the values compare within and across metro areas.

The Mariners are 12th (out of 30) at $644M, versus a league average of $744M.  The Seahawks come in 17th (out of 32) at $1B, versus a league average of $1.1B.  And while MLS teams are not easy to value due to the league’s single entity model, former LA Galaxy head Tim Leiweke valued the his club and the Sounders as the highest in the league at $150M.  More than comparing Seattle franchise values to league averages, which are skewed towards the big media markets, I prefer to see how the values relate to market size.  The M’s appear to be generally performing at about what their market size says they should.  The Sounders are outperforming their market size relative to the rest of MLS.  On the other hand, the Seahawks are performing a bit under their market size compared to their NFL counterparts.  Because the NFL TV deal spreads the wealth equally, one can surmise that the team is not getting as much revenue out of the stadium as they could.  This could be due to lower corporate sponsorship revenue or fewer high revenue seating opportunities.  Look for continued updating of CenturyLink Field to try to alleviate these revenue generating discrepancies.

While game day revenues such as ticket sales and concessions are obviously important, the big driver today in team values is media revenue, which is highly correlated to market size.  Locally, the Seahawks benefit from the huge NFL TV deals.  The Mariners are reaping the benefits of a local TV deal that eclipses its immediate market size.  And as local TV contracts are the primary MLB franchise value drivers, there’s much speculation as to what the M’s will do next when they get the chance to renegotiate their deal.  The Sounders are thought to be one of the highest revenue generating teams in MLS.  Their jersey sponsorship with Microsoft (XBox Live) ends after this season and rumors abound that the club is seeking a significant increase in its deal.

As a comparison to the Seattle market, here are the values of franchises in what I consider peer markets.  As a reminder, labor agreements, corporate sponsorships and stadium deals, among other things, help shape the value of franchises along with the TV deals and game day sales mentioned above.

Minneapolis-St. Paul – Twins $578M; Vikings $975M; Timberwolves $364M (NBA avg. $509M); Wild $218M (NHL avg. $282M)

Denver – Rockies $537; Broncos $1.1B; Nuggets $427M; Avalanche $210M

Phoenix – Diamondbacks $584M, Cardinals $922M; Suns $474M; $Coyotes $134M