Compaq Center at San Jose Articles
Deal Reached For Renaming San Jose Arena
Lucrative agreement with Compaq
Alan Gathright, Chronicle Staff Writer
Saturday, October 21, 2000
SAN JOSE -- The San Jose Arena will soon become the ``Compaq Center at San Jose'' if city officials approve what marketing experts call one of the most lucrative sports-facility marketing deals in the nation.
On Tuesday, the San Jose City Council is expected to give tentative approval to a deal in which Compaq Computer Corp. will pay $3.13 million a year to place its name on the home of the San Jose Sharks hockey team, according to David Vossbrink, spokesman for Mayor Ron Gonzales. Final approval of the deal could come next month.
``Wow!'' said Matthew Freedman, editor of Team Marketing Report, which covers sports-marketing resources. ``That's the biggest deal around for an existing arena to be renamed.''
The $3.13 million annual payment, which the hockey team and the city would share through 2015, outstrips all similar Bay Area deals, including San Francisco's Pacific Bell Park at $2.1 million a year, Network Associates Coliseum in Oakland at $1.16 million and 3Com Park at $800,000, according to the Team Marketing Report's 2000 Naming Rights Deals listing.
Renaming an existing facility is not as lucrative as naming a brand-new one, Freedman said, because fans and the media are often to reluctant to start calling, say, Candlestick Park ``3Com Park.'' For example, Royal Philips Electronics paid $180 million over 20 years, or $9 million annually, to stamp Philips Arena on the Atlanta Hawks' home. And when Dallas' new hockey and hoops palace becomes American Airlines Center next year, it will cost the locally based airline $195 million over 30 years, or $6.5 million annually.
Yet, Freedman said, for the city and the Sharks, the Compaq offer ``would be a great deal for even a new arena.''
Compaq beat out as many as 10 Silicon Valley firms that were vying to slap their name on the 7-year-old arena, said Eileen Quinn, a local spokeswoman for the Houston computer manufacturer.
Mayor Ron Gonzales stressed that the Compaq compact would help keep the Sharks in San Jose until 2018, because of the extra revenue the deal would generate for the team. It would also increase the revenue the city collects from the team.
Under the new agreement, the team's rent to the city would jump from a total of $24 million paid over the next seven years to a total of $97 million paid over the next 18 years. Some $70 million of that would go to the city general fund for police, parks and libraries, while $27 million would be earmarked for the arena maintenance fund.
``This is a winning goal for the people of San Jose,'' Gonzales said.
But why would Compaq want to pay millions to rename the San Jose arena when it already renamed Houston's Summit Arena ``Compaq Center'' for a mere $900,000?
Quinn said that while the firm has been in Silicon Valley for 25 years -- employing 3,000 workers and reaping $4 billion annually -- it felt like ``a little valley secret.''
The company hopes that having TV and radio announcers invoke Compaq during Sharks games and other arena events will change that.
``All of our customers are involved with the Internet, and this is really the heart of where high tech is happening,'' she said.
For the Sharks, the revenue would boost the team's ability to compete in the National Hockey League for skyrocketing player salaries.
``In the NHL's Western Conference, there are 15 teams, and 13 of them had naming-rights deals,'' said Greg Jamison, Sharks president and chief executive. ``Now, we're the 14th. In light of the tremendous expense that we have in putting together a hockey club, you need to put together new revenue streams to be competitive.''
Jamison said everyone wins in the deal, because Compaq gets recognition, the Sharks and the city get revenue -- and the Sharks' hometown still appears in the name Compaq Center at San Jose.
``We wear San Jose on our uniforms with great pride,'' Jamison said.
E-mail Alan Gathright at email@example.com.