After nearly two years of negotiations, The Government of British Columbia has revoked a proposed $40 million contract with TELUS Corporation to rename BC Place Stadium.
In a move that has left sports marketers scratching their heads and the provincial government looking dazed and confused, the cabinet of Premier Christy Clark announced last week that it was scuttling a stadium re-naming rights deal that would have been worth an estimated $40 million over the 20 year length of the contract.
BC Place is home to the Canadian Football League team BC Lions, Major League Soccer team Vancouver Whitecaps FC, and hosts innumerable other sporting and cultural events.
The stadium is owned and operated by the BC Pavilion Corporation (PavCo) – a Provincial Crown Corporation of the Ministry of Jobs, Tourism and Innovation. As such, it was built and rebuilt with taxpayer dollars. BC Place was constructed as part of the preparations for the 1986 World Expo at a cost of $126 million. The 30-year-old stadium recently received a $563 million dollar upgrade which included a retractable roof, 54500 new seats, 300 miles of fiber optic cable, the creation of 800 Wi-Fi access points, 100 new wireless sites, 1,150 high-definition digital screens and the second biggest screen in North America after the Dallas Cowboys. It opened for business in September 2011.
PavCo three times courted TELUS to apply for the stadium rights sponsorship and then spent 21 months negotiating the deal. In March 2011, TELUS signed a letter of intent with PavCo which covered both the naming rights and the extensive digital technology services package previously described.
The government intends on retiring the cost of the stadium in 20 to 40 years. A key part of paying down the debt was the tax revenue generated from a $500 million adjacent hotel-casino development which the City of Vancouver had the temerity of turning down in April 2011. The next month, the Minister of Jobs, Tourism and Innovation Pat Bell said the government was actively seeking potential opportunities for naming rights.
The re-naming rights contract was worth $1.75 million per year for 20 years plus another $5 million in activation and leveraging. Further, TELUS was to retain approximately 30 percent of the display rights inside the stadium, leaving the remaining 70 percent available for sale to other advertisers.
Killing the deal on March 8, 2012, Minister Bell said the name BC Place was sacrosanct and was in effect non-negotiable. Cabinet felt it was important to retain the integrity of the BC Place brand and Premier Christy Clark and Finance Minister Kevin Falcon said the deal was not in the best interests of taxpayers. Minister Bell said cancelling the deal now enables PavCo to sell advertising sponsorships on the inside of the building that he thinks will amount to more than $40 million over the same 20 year term.
With respect, the Premier and Minister’s views are naïve, simplistic and just plain wrong. $40 million over 20 years is a good deal. By way of comparison, naming rights for the Air Canada Centre, home to the NHL Toronto Maple Leafs and the NBA Toronto Raptors, are worth about $1.5 million per year and the Bell Centre, home to the NHL Montreal Canadiens is worth about $2.5 million.
Also, assigning stadium naming rights to TELUS would not have precluded PavCo from entering into sponsorship agreements with businesses who are not competitors of TELUS. This is standard practice and, despite Minister Bell’s admission that the re-naming deal would not have given TELUS exclusive advertising rights inside the stadium, is evidently lost on the provincial government.
It appears the provincial government was in over their head. Thinking they could commercially exploit the naming rights to the stadium, they allowed TELUS’s arch competitor Bell Canada to name the soccer field – Bell Pitch Downtown – when the Vancouver Whitecaps FC played at TELUS Park. TELUS has been insistent – and quite properly so – that the naming rights be exclusive. The government wished to retain some vestigial connection to BC Place. TELUS wanted no part of it.
In its mishandling of the stadium re-naming file, the provincial government has come across as country bumpkins. TELUS is no backwater business. They are a BC-based national telecommunications company in Canada with $10.1 billion of annual revenue. It has invested $7 billion in provincial capital projects in the last decade and has budgeted spending another $3 billion over the next three years in BC alone.
It has been said that trust takes a lifetime to earn but seconds to break. Relationships are grounded in trust. Business relationships are no different. It appears the provincial government blundered the negotiation and squandered an opportunity. Future businesses will have second thoughts about entering into any negotiation with government.
Apparently ignorant of the adage, “A bird in the hand is better than two in the bush,” the provincial government backed away from a good deal at the eleventh hour thinking there is a better suitor in sight.
It is doubtful that there will be any in view for some time.
