NEW YORK (CNN/Money) - The bulls have not killed the stadium sponsor jinx, but they have kicked and bruised it a bit.
Readers of this column know, and are fond of, the bad luck and poor business performance that has befallen companies with the hubris to put their names on the sides of major sports stadiums and arenas across North America.
Between early 2001 and April of this year, 11 companies with their names on stadiums or arenas filed for bankruptcy court protections or had one of their divisions file for such protection. That's equal to one out of every six companies that had such a rights deal and publicly-traded U.S. stock during that same period.
Of course, bankruptcy was not the only effect of the curse. The stocks that make up what I call the Stadium Sponsor Stock Index (or SSSI) also took hits, losing about a third of their value in 2002, following a decline of more than 20 percent the year before.
This year, with the return of bulls to Wall Street, losers have been as tough to find on the SSSI as gainers were in the past, with only 9 stocks down for the year. Overall the index is finally in the black.
Still, the curse was enough to make even potential sponsors consider whether to join the rather dubious club. Jay Ellison, executive vice president of operations for wireless phone provider US Cellular, told me this week executives there talked about the curse before agreeing in January to pay $68 million to turn Chicago's Comiskey Park into US Cellular Field.
"That (the curse) is an issue you have to be cognizant of," he said. "But we're in a strong growth position, and I don't think we're in same position as the others who have put their names on parks."
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| US Cellular execs discussed the stadium sponsor curse before putting their company's name on Comiskey Park. |
Of course, US Cellular reported an unexpected first-quarter loss in its first report after the naming rights deal. And while its stock is up 22 percent since then, its performance trails rival wireless phone companies' shares.
Still, Ellison and the company said its pleased with the attention the naming rights brought the company as it moved into the Chicago market. "It's absolutely been everything we had hoped and maybe a little more," he said.
US Cellular isn't the only sponsor that has shrugged off some bad news to see stocks gain.
Xcel Energy unit NRG Energy filed for bankruptcy in May, the second bankruptcy on the index after Air Canada's April filing. But NRG's filing did little to damage shares of parent company, whose name is on the hockey arena in St. Paul, Minn. -- its shares are up about 3 percent since the filing.
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Overall, the SSSI has seen a market cap-weighted gain of 10 percent so far this year. Of course that's still lagging the gains on such major market indexes such as the Nasdaq (30 percent), the Dow Jones industrial average (11 percent), or perhaps the best broad market measure, the Standard & Poor's 500 (13 percent).
Given what Ellison said about debate within US Cellular, it's possible that some weaker companies are learning their lessons about their names on stadiums.
Only three companies have joined the SSSI this year with new naming rights deals: M&T Bank, which is putting its name on the football stadium once named for bankrupt PSINet; Pet supply retailer Petco, which will have its name on the new baseball stadium in San Diego; and US Cellular. That compares with eight companies that joined the index in 2002, six of them by August of that year.
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Two other companies signed naming rights deals. FedEx, which was already on the index for the Washington area football stadium, will also have its name on the new Memphis basketball arena, and the new Philadelphia baseball stadium will be named for Citizens Bank, a unit of Royal Bank of Scotland, which is not traded here.
Of course, there are still new stadiums and arenas looking for sponsors. So the curse probably will still claim future victims, even if the bulls have taken away some of its bite so far in 2003.
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