The Jake to Get A New Name

by Sportsbiz

While the Cleveland Indians battle the Detroit Tigers for the AL Central Division and a spot in the playoffs, the suits have been quietly trying to peddle naming rights to the Tribe's home field. For the last three to four months, Indians' executives have been seeking new naming rights sponsors for Jacobs Field as the existing deal has about run its course. Not yet finding a deal they like, the club has hired IMG to conduct an international search for a new naming rights deal.

It's hard to guess a value for the Jake, as it's an existing stadium unlike almost all of the recently concluded naming rights deals, which were for newly constructed facilities. Depending on the length of the deal, the Indians should be able to receive at least $3- 4 million. The average price in 2006 was $5.25 million, but that number was abnormally high due to the freakish nature of a year in which there were three deals for new stadiums or arenas in metropolitan New York City completed, Citi Field (Mets), Prudential Center(Devils) and Barcalys Arena (Nets). Any deal in New York skews the market just because of its size. Also, an older arena is always going to be priced lower because it faces the built-in discount of "brand loyalty" by folks just naturally referring to it by its old name. That is a discount worth several hundred thousand dollars a year.

In an interesting analysis at the Biz of Baseball, Kurt Hunzeker attempts to construct a mathematical model for calculating the loss of value in naming rights by becoming the second holder. He has constructed a formula that he believes can be applied to derive the percentage loss in value so that any potential naming rights holder should know what to bid. It is consistent with the idea that Jacobs Field is worth less to the next holder as a result of the brand value already established. No matter who buys the rights to the Jake, it will be the Jake to people in Cleveland for as long as the Indians play there.