NEW ORLEANS (AP) - The New Orleans Hornets have hired the Virginia-based Octogon sports marketing firm, which represents team stars Chris Paul and David West, to sell the naming rights to New Orleans Arena.
The Hornets are entitled to revenue from the sale of the naming rights as part of the deal that brought the franchise to New Orleans in 2001. But efforts to sell naming rights to the arena, as well as to the neighboring Louisiana Superdome, have been unsuccessful.
That's one reason state lawmakers earlier this year voted to use $26 million in state surplus cash to fill a shortfall in annual contractual payments promised to keep the New Orleans Saints and the Hornets in the city. Another reason is lower-than-projected revenue from the New Orleans area hotel tax, particularly since Hurricane Katrina shut down the city for weeks after hitting in August 2005.
The slumping economy and lower consumer spending makes it a tough time to sell naming rights, said Andrew Zimbalist, a Smith College professor who studies sports economics. "The advertising expenditure is going to have a lower payoff during a time of recession, especially during a time of severe recession," he said.
And the effect of naming rights is less certain than a television commercial providing information on a product, Zimbalist said. "Firms will, because of their more stringent financial circumstances, cut back on less certain types of advertising first."
In 2004, it was hoped that the naming rights to the arena would bring in $2.5 million a year or more. Octogon's senior vice president for athlete and property marketing, Tom George, wouldn't estimate how much a naming rights contract might bring in now. However, George was adamant that Octogon would be able to sell the rights, even at a time of recession.
"I'd rather take a good product into a bad market than take a bad product into a good market," George said, stressing that the arena is a good product due largely to New Orleans being an international "destination city" for travelers.
George said Octogon knows the city well because of its representation of Paul and West. He said the firm will tailor pitches to individual corporations, domestic and foreign, hoping to find the right match for the arena. International corporations seeking to make an entry into the United States' market would be among the targets, he said.
For a foreign company that wants to get its name before the public quickly and in a big way the purchase of naming rights might make sense, Zimbalist said. One example, he said, was British-based Barclay's, the global financial corporation that committed in January 2007 to a naming rights deal for the New Jersey Nets' facility.
Some companies that traditionally have been in the business of purchasing naming rights are not going to be high on the Octogon list. "We're not going to be making calls to the automobile or banking industries," George said.