Representatives from the consulting firm, Superlative, made their presentation to the City Council at the Information Meeting this week. It was an interesting and impressive presentation. They sound like they know what they are talking about and have been successful in past sales campaigns.
We now have two companies that have offered up income projections from naming rights. The first was from Conventions, Sports & Leisure and was included in the Task Force study. The 2nd is from Superlative presented this week at a cost of $65,000.
Between the Title Sponsorship Naming Rights, the Premium Sponsorships, and the Luxury Suites Sponsorships, Superlative is predicting an overall income range of $975,000 to $1,875,000 per year with an industry standard 3% annual fee escalator. This equates to a $26.2 million to $48.3 million income range for 20 years.
The Task Force Study said according to projection from the consulting firm, Conventions, Sports & Leisure, naming rights could generate $250,000 a year which would amount to $5 million in revenue if a company buys naming rights for 20 years plus another $161,000 to $375,000 per year for premium seating. The study went on to say by including that money in the operational costs, the new event center and Arena could make a $185,000 profit annually under one scenario or lose $198,000 under a less optimistic scenario. Removing naming rights and premium seating from the same analysis results in an annual loss of $440,000 to $609,000 as was reported in an Argus Leader article back in 2010.
The Taskforce Study recommended that the naming rights should be used for operations. I didn't hear any mention by Superlative whether this money should be applied to construction or whether it should be used for operations. It is an important distinction. Hopefully, the mayor will address this distinction in his financial plan presentation. The public needs to understand not only the construction cost but also the estimated operational impact to the general fund in order to make an informed decision on their vote.
It's interesting to compare the numbers of the two consulting firms. In reality, its just guesses and estimates and who knows whose guess is on the mark or if all this is just pie in the sky whimsical dreaming.
Eager beaver Councilor Rolfing has already signed up to be on the Title Sponsorship Naming Rights Committee says Economic Czar Smith. He is obviously confident the citizens of Sioux Falls will vote yes on the Event Center vote, whenever that is.
Councilor Entenman asked about a timeline anticipating an opening in 2014. The Superlative consultant stated that the naming rights process takes 12-18 months and the sales process could take one to two years. He recommends the city start now by putting them under contract.
Who is this Mayor going to get to put this kind of money up for naming rights when he couldn't even get anyone from the business community other than Sullivan from the Sports Authority to stand up and support the Arena/Convention Center in the location debate that he sealed with his vote to break the tie?
Really, shouldn't we be waiting until we hear the financial package and move forward with a targeted vote date before we start the sales pitch frenzy? There is a time and place for the naming rights agenda. the mayor has yet to present his financial plan to the city council. They need to affirm his financial plan and instruct the city clerk to prepare the ballot for election. If the citizens pass the Mayor's Event Center plan at the Arena/Convention Center site and support his financial plan to build and operate it, then I would say unleash Superlative sales representatives on the business community. We are far from the starting line and the starting gun has not gone off yet.