(by Danny Ecker chicagobusiness.com 3-31-17)
The village of Bridgeview is taking steps to make money from naming rights to Toyota Park after more than a year of letting the automaker put its name on the venue for free.
Fifteen months after the southwest suburb's branding deal for the 20,000-seat soccer stadium expired, village officials have hired Chicago sponsorship sales and marketing firm W Partners to sell naming rights to the stadium as well as other developments going up around it.
Toyota logos still adorn the 11-year-old home of the Chicago Fire, but the hundreds of thousands of dollars the village pulled in annually from stadium naming rights have stopped, putting a greater burden on local taxpayers to pay off a mountain of debt from financing construction of the facility.
The sea of empty lots that surrounds the stadium has seen little change in the dozen years since Bridgeview officials predicted that a new soccer stadium would transform into an economic engine for the area and pay for itself. That lack of development has forced the village to borrow furiously and raise property taxes drastically to meet its annual debt obligations. Property taxes for its 16,000-plus residents doubled between 2009 and 2013. And S&P has downgraded the village's credit rating for the second time in less than two years, this one by four notches to BB–.
After ten bond sales since 2003—most recently one in 2015 for $16 million to resolve debt shortfalls from previous bond sales—Bridgeview taxpayers are on the hook for $241.2 million in long-term debt that the village plans to pay off by 2045.
But that plan relies on robust stadium revenue to avoid refinancing the debt again or continuing to lean on property tax revenue. Which is why Bridgeview residents need W Partners, led by former Chicago Cubs marketing chief Wally Hayward, to strike it big with sponsors.
Every dollar it pulls in from naming rights is one it doesn't have to pull from its own coffers to pay off the debt, says Dan Denys, the village's financial adviser. "And if it takes us 40 years rather than 30 years, that's better than trying to jam all the shortfalls down taxpayer throats," he says.
The stadium generated $3.6 million in revenue in 2015, the final year of Toyota's deal. Sponsorship revenue accounted for 24 percent of that, mostly from Toyota but with other stadium sponsors in the mix as well.
Denys projects a new naming rights partner could bring in a seven-figure annual sum, significantly more than the Toyota agreement, which started at $760,000 per year with annual 3 percent escalations, according to the contract. Under the Fire's 30-year stadium lease, the village keeps 70 percent of the naming rights fee and the Fire get the rest if the stadium meets certain financial goals.
But it hasn't in any year since it opened. As a result, the village has taken half of the Fire's share, collecting 85 percent of the annual fee.
The village's confidence in getting a higher fee from a new partner stems from developments going up around the stadium. Bridgeview is spending close to $4 million to build a 90,000-square-foot indoor turf field dome just north of the stadium, set to open this spring. The venue will host year-round recreational soccer leagues and have an adjacent clubhouse with concessions, locker rooms and offices.
The village also reached a deal last fall with Rosemont-based hotel developer First Hospitality Group, which is planning a 109-room Hampton Inn & Suites on a lot near Toyota Park's northeast corner, slated to open next year. And a venture of Glendale Heights-based Heidner Properties is building a structure that will house two restaurants just east of the stadium along Harlem Avenue.
Hayward will leverage those developments to sell brands on a vision for the whole area. He likens it to Wrigley Field, where he signed sponsorship deals on behalf of the Chicago Cubs that include rights to a brick-and-mortar presence near the stadium. Hayward structured such deals with brands including Wintrust and Anheuser-Busch InBev.
"It's really about trying to find a partner that wants to transform this area and create an epicenter for soccer," he says.
The Fire are far from the only user of the venue, which this year will host 75 major event nights including Chicago Red Stars professional women's soccer matches and concerts.
But Hayward may be handicapped in his sale by the fact that the village is selling naming rights independent of the Fire. That's different from the Toyota agreement, which regional dealers for the car brand struck with the Fire's former owner, Los Angeles-based Anschutz Entertainment Group and included branding with the team.
The Fire decline to comment on the matter, but there is nothing contractually preventing the team from signing a sponsorship deal with a direct competitor of a brand that buys naming rights to the stadium.
Selling naming rights to a venue without a marketing rights deal with its anchor tenant, which is the only entity that regularly puts the venue on national television, "makes the negotiation tougher in the end" for a brand, says Darren Marshall of Chicago-based sports marketing firm Revolution.
Hayward says he has had discussions with Fire executives about incorporating a team sponsorship agreement into a stadium naming rights deal, noting that it would help raise the value of such a deal for both the team and the village.
"It's in the village's best interest to bring all the parties together and create a winning partnership across the board," he says.
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https://www.chicagobusiness.com/article/20170331/ISSUE01/170339990/bridgeview-seeks-to-rename-its-debt-ridden-soccer-stadium-toyota-park
