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July 3, 2006

Nets face losses, tough naming-rights market

An article in Sports Business Journal predicts that the Nets mounting losses will probably NOT be offset by a big corporate-naming-rights windfall.

The Nets are counting on their relocation to Brooklyn to reverse their mounting losses, but find themselves facing a saturated naming-rights market for their planned new arena, a deal seen as a key revenue stream for owner Bruce Ratner, who paid $300 million in 2004 for the franchise.

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In addition to the proposed Nets arena expected to open in 2009, the New York Giants and New York Jets are planning a new $1 billion stadium to open in 2010. The New York Yankees and Mets have both announced plans for their own ballparks to open in 2009; the New Jersey Devils already have broken ground on a new arena in Newark; Cablevision, which owns Madison Square Garden, is planning a renovation or new construction of the famed arena; and the New York Islanders are pushing for a new facility in Nassau County. In addition, ISC has targeted Staten Island for a new motorsports race track.

Add it all up and experts said there will be vicious competition for the teams to land corporate naming-rights deals.

Full article after the jump.

Nets face losses, tough naming-rights market
Sports Business Journal

The New Jersey Nets continue to lose money, with the team suffering a $5.7 million operating loss for the three months ended April 30, according to a filing by one of its top investors.

The loss follows a 12-month loss ended Jan. 31, 2006, of approximately $24 million. The Nets are counting on their relocation to Brooklyn to reverse their mounting losses, but find themselves facing a saturated naming-rights market for their planned new arena, a deal seen as a key revenue stream for owner Bruce Ratner, who paid $300 million in 2004 for the franchise.

In addition to the proposed Nets arena expected to open in 2009, the New York Giants and New York Jets are planning a new $1 billion stadium to open in 2010. The New York Yankees and Mets have both announced plans for their own ballparks to open in 2009; the New Jersey Devils already have broken ground on a new arena in Newark; Cablevision, which owns Madison Square Garden, is planning a renovation or new construction of the famed arena; and the New York Islanders are pushing for a new facility in Nassau County. In addition, ISC has targeted Staten Island for a new motorsports race track.

Add it all up and experts said there will be vicious competition for the teams to land corporate naming-rights deals. The Jets and the Giants last week tabbed Wasserman Media Group to secure naming rights for their new stadium.

"It's not that there will be stadiums coming on line, it is that they are coming on line at the same time and it will be tough," said E.J. Narcise, co-founder of Team Services, a naming-rights consultant that reportedly also bid on the Jets/Giants deal. "But the reality is that there will be the Jets and Giants first and foremost and virtually everyone else."

So where do the Nets, a franchise that has been hemorrhaging cash, fall in the expected glut of New York area naming-rights deals?

"It's the NFL, then MLB followed by the NBA, and then the NHL," Narcise said.

Added Marc Ganis, president of SportsCorp Ltd., a Chicago-based sports consulting firm, "The Giants and Jets are so high profile that they will be immune to a price drop, but the Nets are going to feel the pinch, as will the Devils."

Nets officials did not return calls, but that's not the pecking order of choice for Ratner and his Forest City Enterprises, the publicly traded real estate company that owns about 21 percent of the team and is responsible for 31 percent of the operating losses.

For the first quarter, the Nets reported a pretax loss of $8.7 million, which includes approximately $6.8 million in amortized assets related to the company's purchase of the team in 2004. The remainder of the loss, or $1.9 million, is related to the operations of the team. Extrapolating the percentage over the entire Nets ownership structure brings the total operating loss to $5.7 million. That is on top of the 12-month loss of approximately $24 million on Jan. 31.

Officials at Wasserman Media said that should the Giants/Jets naming-rights deal exceed the current record deal in Houston where Reliant Energy pays the NFL's Texans $10 million annually to put its name on the city's sports complex, the other New York teams could benefit.

"Depending on which deal goes first, the naming-rights cash value will be increased," said Jeff Knapple, president of Wasserman Media Group Marketing. "The fact that we will go to market early on will help set the tone."

Posted by lumi at July 3, 2006 10:12 AM