Fourteen years ago, then Nets CEO Brett Yormark pulled off a coup in getting Barclays, the big British bank, to sponsor the new arena not yet under construction at the corner of Flatbush and Atlantic.
Barclays, then planning on opening retail banks in the U.S., reportedly agreed to pay $20 million a year for 20 years, a $400 million bonanza that Yormark’s boss, Bruce Ratner needed to prove the arena could be viable financially. The deal got reworked twice with the annual payments reduced to $10 million along with a reported $2 million for the Nets.
Barclays never built a network of retail banks but now, with the Nets success, the $10 million is a bargain for the bank even without that network. With new ownership, new management and a new marketing team, is a change of name at the nine-year-old possibility?
Not likely, according to materials unearthed by NetsDaily on Tuesday. Instead, it appears the arena will stay remain the “Barclays Center” for a long time, at least another 12 years.
Brian Lewis and Josh Kosman of the Post reported Sunday that the Nets parent company, BSE Global, is mounting an aggressive campaign to wring more dollars out of the arena and team sponsorship agreements. The effort, the Post reported, is driven by CEO John Abbamondi, hired last July after a stint with MSG. Abbamondi has been pushing to find ways to add or enhance revenue sources. Those revenue sources, wrote Lewis and Kosman, would include the agreement for arena naming rights which they report has an “out” next year — 10 years after the arena opened — that would permit new bidding.
However, the new information seems to indicate there is no “out,” that the deal runs through 2033. The parent company of the arena and the Nets, then owned by Mikhail Prokhorov, went through a refunding process for Barclays Center bonds back in 2016. The naming rights agreement was referenced in those materials, which are publicly available.
The only “out” mentioned in the documentation is if the NBA was shut down for more than two seasons because of a “work stoppage” ,,, and that “out” is only available to Barclays. There’s no reference to an “out” after 10 years for BSE Global. A source familiar with the agreement tells NetsDaily that it remains in place.
Here’s the wording. (“ArenaCo” is the operating company for the arena.)
Barclays Center Naming Rights Agreement
ArenaCo, Nets LLC and Barclays Services Corporation (“Barclays”) have entered into an Amended and Restated Naming Rights Agreement, dated January 17, 2007 (as amended, including by a Naming Rights Agreement Assignment, the “Barclays Center Naming Rights Agreement”). The Barclays Center Naming Rights Agreement has a term of approximately twenty (20) years from inception that expires June 30, 2033. The Barclays Center Naming Rights Agreement contains termination rights, including the right for Barclays to terminate due to a work stoppage by the NBA and/or NBPA that continues for a single sustained period longer than an aggregate of two (2) full NBA seasons plus one (1) Nets regular season Home Game.
Pursuant to the Barclays Center Naming Rights Agreement, the official name of the Arena is “Barclays Center” (or such other names as may be established in accordance with the Barclays Center Naming Rights Agreement), and Barclays has various other marketing, media, promotional and hospitality rights in connection with the Arena and certain Arena-related products.
Similarly, on Sunday night, BSE issued a statement to NetsDaily saying no change is planned. “BSE Global has a great relationship with Barclays. Neither side is looking to change the name of our iconic building.”
Hours later, Tsai tweeted out the statement as if to emphasize the point...
BSE Global has a great relationship with Barclays. Neither side is looking to change the name of our iconic building. https://t.co/p9dNCpuput— Joe Tsai (@joetsai1999) May 10, 2021
Putting aside the arena naming rights, Abbamondi and Tsai’s other managers are looking at possible new deals for the uniform patch, which is up after this year, and the entrance plaza, named for GEICO, the insurance giant, the Post reported.
Sources say they expect the team to snag as much as $13 million a year for the uniform rights alone — or more than British bank Barclays currently pays each year for the naming rights to the team’s 17,732-seat arena known as the Barclays Center.
And it’s just one reason industry sources expect the Nets will soon be on the lookout for a new corporate sponsor to replace Barclays.
How much for the arena naming rights if they were available? Lewis and Kosman believe they would be lucrative.
Now, branding experts say, the NBA team could easily snag $15 million to $20 million for naming right to stadium, especially if the team continues on its current trajectory.
Indeed, Swiss investment bank UBS reportedly secured naming rights for the Islanders arena at Belmont Park, with the deal reportedly worth more than US$300 million over 20 years.
Of course, having stars like Kevin Durant, Kyrie Irving and James Harden on the roster (and on national television) is a big selling point for any naming rights, arena, patch etc. ... as is the team’s location in the heart of Brooklyn, as hip a place as there is, period.
“Brooklyn and the Barclays Center is at the epicenter of sports, entertainment, media, and culture,” Octagon executive Woody Thompson, who advises major brands and clients on sponsorship opportunities, told the Post.
“There is an opportunity here to be in a part of the city, and in a landmark facility, that is gaining a lot of steam and exposure.”
The Post writers didn’t dismiss the possibility that the current sponsors could retain their arrangements but when the naming rights to the season ticket holders lounge went out for bid two years ago, Qatar Airways paid BSE multiple times what Calvin Klein had.
And just as Barclays, Qatar Airways and Motorola Mobiiity’s Chinese parent Lenovo are all international, expect the range of new possibilities for sponsorship to be global.
Michael Wandell, the BSE Global executive who’s directly in charge of sponsorships, said as much in an interview with Sports Business Journal three months ago. In fact, he said the international aspect of the job was one reason he left the Los Angeles Dodgers.
“You had a team with new ownership, in the No. 1 market with a committed ownership group and a desire to sell internationally,” Wandell said. “That made it more interesting and relevant to me than any property.”
Wandell has also expressed a desire to cut down the sponsorships, do more with quality than quantity.
Tsai’s BSE Global, of course, is in the same financial situation as many sports entities because of the pandemic. Lewis and Kosman point to data the arena provided its bondholders.
Tsai is personally responsible for covering all the stadium’s losses. For the year ending June 30, 2020, the Chinese internet billionaire shelled out $13.5 million to cover Barclays Center arena expenses, according to Moody’s. This despite annual operating income of $44 million for the team during calendar year 2021, according to Forbes.
Moody’s doesn’t see the team’s financial situation improving this year, but notes that Tsai is furiously trying to turn things around.
Norman Oder, the critic and chronicler of the arena and overall Atlantic Yards/Pacific Park project, was first to report the financial arrangement. (Oder also reported a few days ago that the arena owners are expanding their marketing to places like the subway entrance on the arena’s mall.)
“Turning things around” will be more about putting people in seats emptied by COVID-19, but the sponsorship push is one way to shore things up until that happens.
- Brooklyn Nets seeking new uniform sponsor amid Joe Tsai’s push - Josh Kosman & Brian Lewis - New York Post
- Post: owner of Nets/arena operating company will renegotiate Barclays Center naming rights, uniform patch, Geico entrance (Tsai: not “looking to change” arena name) - Norman Oder - Atlantic Yards/Pacific Park Report
- If annual naming rights to UBS Arena at Belmont cost $15M+, the $10M Barclays deal seems a bargain. Will it be reopened? (Would public get a slice?) What about transit hub? - Norman Oder - Atlantic Yards/Pacific Park Report