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Enron woes written on wall?
graphic November 30, 2001: 4:24 p.m. ET

Energy company joins list of financially troubled stadium sponsors.
A twice-weekly column by Staff Writer Chris Isidore
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  • SportsBiz: Cash the name of the game - Aug. 24, 2001
  • Enron cuts jobs in Europe - Nov. 30, 2001
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    NEW YORK (CNN/Money) - The collapse of Enron Corp. shouldn't have been a big surprise to sports fans. For many people, the mammoth energy trading company was best known before its current financial crisis as the name on the outside of the new baseball stadium in its hometown of Houston. And attentive sports fans can tell you that having your name on a stadium is one of the worst things for the prospects of a company.

    OK, truth be told, the collapse of Enron (ENE: Research, Estimates) or any other company's finances generally is not due to the millions the company is paying in naming rights. In the world of big-time marketing, the price of having a stadium or arena to call your own is relatively modest. Enron agreed to pay $100 million for the name of the baseball stadium, but that is spread out over a 30-year period, or an average of $3.3 million a year. Payments to accountants and bankruptcy lawyers could dwarf that amount soon.

    But sports is a land filled with more curses and jinxes than true champions. If having a team pictured on the cover of Sports Illustrated is supposed to be enough to bring defeat, who's to say that having the name of a company on a stadium or arena isn't equally responsible for failure?

    While Enron may end up being the biggest stadium sponsor to seek shelter in bankruptcy court, it won't be the first, even this year. Even this month. ANC Rental Corp., the owner of National Car Rental, filed for bankruptcy protection in November. It joined Internet service provider PSINet Inc. and Trans World Airlines as stadium sponsors filing for bankruptcy this year alone.

    And this has been a bad year for sponsors, even those who didn't visit bankruptcy court. I've created a Stadium Sponsors Stock Index to try to track the performance of 50 publicly traded companies paying for the right to have their names on stadiums, and it's not something that would inspire investing in the next company to sign such a deal.

    Year-to-date, the total value of those companies' stocks is down about 19 percent, with a loss of about $265 billion in market capitalization. About a fifth of the companies lost half or more of their value. That's worse than either the Standard & Poor's 500 or Dow Jones industrial average performance in this bearish year.

    Click here for the latest action of the Stadium Sponsors Stock Index

    The burst of the dot.com bubble may have hurt advertising and luxury box sales in some markets, but it didn't appreciably weaken the market for naming rights. That's because a tiny fraction of sponsored names, such as PSINet Stadium, come from the world of the Internet.

    Most of the companies are established, old-economy names selling beer, soft drinks, telephone or banking services. The strong presence of airlines is one of the factors in the SSSI's weak performance - five of the nation's major airlines have their names on six arenas.

    Still, with the general weakness in the advertising market, it may get more difficult for teams to find the big-dollars for a stadium or arena's naming rights, and for other advertising signs inside stadiums and arenas.

    "We have not seen a huge difference in interest or in ability to sell in this market at this point, but it's really early," said Pam Gardner, president of business operations for the Houston Astros, the tenants of Enron Field. "Call me back in February, it may be different."

    She said at this point there have been no discussions about Enron not being able to continue as a sponsor. While she won't say how much, if anything, Enron owes for next year, she said the company is current in its payments to the club.

    "We love our name," she said. "I don't know what the market is for that (a new stadium naming deal). We haven't been out there soliciting for that. At this point, we're hoping we don't have to."

    Click here for a look at CNNSI.com

    The name Enron Field could survive into next season, even if the company does not. The Baltimore Ravens continue to play at PSINet Stadium, even though the company filed for bankruptcy protection in June, well before the start of the current season. But the TWA Dome in St. Louis became The Dome at America's Center this season. It is among a number of arenas or stadiums looking for new names, and corporate dollars, that have been unable to find them yet.

    If I were a CEO, I'd think long and hard before I paid to emblazon my company's name on a sports building, no matter what the cost. Sports curses should not be taken lightly. graphic

    Click here to send mail to Chris Isidore

      RELATED STORIES

    SportsBiz: Cash the name of the game - Aug. 24, 2001

    Enron cuts jobs in Europe - Nov. 30, 2001

      RELATED LINKS

    Business of sports column archive

    CNNSI.com





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