Harry Grove Stadium - Naming Rights Valuation

Harry Grove Stadium - Naming Rights Valuation

Presented To:

March 13, 2013

Agenda

Team Services Assignment Background

Methodology

Naming Rights Research

Inventory

Findings and Comparables

2

Point of View

Achieving the City’s Goals

3

Team Services was enlisted to identify the true market value for Naming Rights to Harry Grove Stadium

The stadium would be referred to as “Company XYZ Field at Harry Grove Stadium” Our tasks:

Review current lease agreement between Frederick and the Keys Research comparable naming rights partnerships throughout Minor League Baseball (MiLB) Determine a reasonable package of stadium marketing assets to be reserved for a naming rights partner

Methodology

4

We set out to help the City of Frederick understand how the individual “parts” impact the sum of the whole

What individual assets/inventories that both the City and Team can bring to the table to drive maximum value for a partner

We Conducted our research based on:

Drawing upon our track record of success from a sales perspective as if we had to go out and sell it Providing the most realistic valuation based on real-world experience and that we have “lived this” before Evaluating naming rights opportunities based on numerous factors as well as the most applicable comparables

- Creating an “apples to apples” approach

We have built our point-of-view and conducted our research based on the following factors in order to give the City of Frederick the truest sense of what the naming rights proposition could be worth.

Comparables

• We provide information on comparable MiLB agreements, so as to justify the suggested price point for naming rights.

• When looking at these partnerships we investigated contributing factors such as total value of the deal, annual payment, facility characteristics and city population, among other variables.

City-Wide Opportunities

• City-wide opportunities are an important aspect and potential driver of naming partnerships and revenues.

• Building a relationship with the City can lead to additional business for a corporation as a byproduct of their naming partnership

Inventory

• Our analysis itemizes suggested and potential benefits for inclusion in a naming partnership for the stadium.

Methodology

5

6

Naming Rights Value Chart

Minor League Baseball Naming Rights Agreements

Venue Main Tenant City

Term in

Yrs

Total NR

Value

(in $M)

Est. Avg.

Annual

Payments

(in $M)

Chukchansi Park Fresno Grizzlies Fresno, CA 15 $16.000 $1.067

Raley Field Sacramento River Cats West Sacramento, CA 20 $15.000 $0.750

Huntington Park Columbus Clippers Columbus, OH 23 $12.000 $0.522

MCU Park Brooklyn Cyclones Brooklyn, NY 11 $5.500 $0.500

Richmond County Bank

Ballpark at St. George Staten Island Yankees Staten Island, NY 9 $3.600 $0.400

PNC Field Scranton Yankees Moosic, PA 5 $1.925 $0.385

Fifth Third Field Toledo Mud Hens Toledo, OH 15 $5.000 $0.333

Fifth Third Field Dayton Dragons Dayton, OH 20 $6.500 $0.325

The following chart encapsulates all relevant Minor League Baseball naming rights agreements that have been consummated with their corresponding financial terms.

However, we must look at all of these agreements individually to fully understand their relevance and meaning to Frederick’s situation

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Werner Park Omaha Storm Chasers Sarpy, NB 5 $1.530 $0.305

Campbell's Field Camden Riversharks Camden, NJ 20 $6.000 $0.300

Parkview Field Fort Wayne TinCaps Ft. Wayne, IN 10 $3.000 $0.300

Classic Park Lake County Captains Eastlake, OH 15 $4.260 $0.284

Coolray Field Gwinnett Braves Lawrenceville, GA 16 $4.500 $0.281

Dow Diamond Great Lakes Loons Midland, MI 10 $2.800 $0.280

Trustmark Park Mississippi Braves Pearl, MS 10 $2.750 $0.275

Sovereign Bank Stadium York Revolution York, PA 10 $2.700 $0.270

Clipper Magazine

Stadium Lancaster Barnstormers Lancaster, PA 10 $2.500 $0.250

Oneok Field Tulsa Drillers Tulsa, OK 20 $5.000 $0.250

FirstEnergy Park Lakewood BlueClaws

Lakewood Township,

NJ 20 $4.800 $0.240

TD Bank Ballpark Somerset Patriots Bridgewater, NJ 15 $3.500 $0.233

Metro Bank Park Harrisburg Senators Harrisburg, PA 15 $3.500 $0.233

U.S. Steel Yard Gary SouthShore RailCats Gary, IN 10 $2.300 $0.230

Bethpage Ballpark Long Island Ducks Central Islip, NY 10 $2.100 $0.210



Term in

Yrs

Total NR

Value

(in $M)

Est. Avg.

Annual

Pymts

(in $M)

8


FirstEnergy Stadium Reading Phillies Reading, PA 15 $3.000 $0.200

Modern Woodmen Park Quad Cities River Bandits Davenport, IA 10 $1.850 $0.185

Principal Park Iowa Cubs Des Moines, IA 14 $2.500 $0.179

Frontier Field Rochester Red Wings Rochester, NY 20 $3.500 $0.175

AutoZone Park Memphis Redbirds Memphis, TN 25 $4.300 $0.172

Bright House Field Clearwater Threshers Clearwater, FL 10 $1.700 $0.170

Dell Diamond Round Rock Express Round Rock, TX 15 $2.500 $0.167

Silver Cross Field Joliet Slammers Joliet, IL 15 $2.250 $0.150

O'Brien Field Peoria Chiefs Peoria, IL 7 $1.050 $0.150

Alliance Bank Stadium Syracuse Chiefs Syracuse, NY 20 $2.800 $0.140

Cooley Law School

Stadium Lansing Lugnuts Lansing, MI 11 $1.480 $0.135

Security Service Field Colorado Springs Sky Sox Colorado Springs, CO 12 $1.500 $0.125

Appalachian Power Park West Virginia Power Charleston, WV 10 $1.250 $0.125

Regions Park Birmingham Barons Birmingham, AL 10 $0.990 $0.110

Pringles Park Jackson Generals Jackson, TN 15 $1.600 $0.107

Digital Domain Park

St. Lucie Mets & Gulf

Coast Mets Port St. Lucie, FL 9 $0.954 $0.106



Term in

Yrs

Total NR

Value

(in $M)

Est. Avg.

Annual

Pymts

(in $M)

9



Term in

Yrs

Total NR

Value

(in $M)

Est. Avg.

Annual

Pymts

(in $M)

Citibank Ballpark Midland RockHounds Midland, TX 20 $2.100 $0.105

Standard Bank Stadium Windy City ThunderBolts Crestwood, IL 10 $1.000 $0.100

Roger Dean Stadium

Jupiter Hammerheads, Palm

Beach Cardinals; Gulf

Coast Marlins & Gulf Coast

Cardinals Jupiter, FL 20 $2.000 $0.100

Hanover Insurance Park

at Fitton Field Worcester Tornadoes Worcester, MA 3 $0.300 $0.100

GCS Ballpark Gateway Grizzlies Sauget, IL 10 $1.000 $0.100

Louisville Slugger Field Louisville Bats Louisville, KY 20 $2.000 $0.100

AT&T Field Chattanooga Lookouts Chattanooga, TN 10 $1.000 $0.100

Avista Stadium Spokane Indians Spokane, WA 10 $0.900 $0.090

The Hangar (Clear

Channel Stadium) Lancaster JetHawks Lancaster, CA 10 $0.770 $0.077

Ogren Park at Allegiance

Field Missoula Osprey Missoula, MT 20 $1.000 $0.050

Melaleuca Field Idaho Falls Chukars Idaho Falls, ID 20 $0.600 $0.030

Centene Stadium Great Falls Voyagers Great Falls, MT 20 $0.200 $0.010


Based on all the naming rights agreements listed, it is important to note the impact of the agreements relative to Frederick:

Agreements by Total Value

• The average total value for MiLB naming rights deals is $3.193 million per agreement over 13.82 years.

• When removing the largest (Chukchansi Park) and the smallest (Centene Stadium) agreements, the average total value is $2.993 million per agreement over 13.67 years.

Agreements by Annual Value • Currently twenty plus universities and colleges have secured naming rights for their

home stadiums. The average annual naming rights value for MiLB teams with corporate partners is $227,000 per agreement .

• Once again removing the largest and smallest deals the average annual value of naming rights deals is $214,000 per agreement.

Agreements by Stadium Capacity • The average capacity of MiLB stadiums with corporate naming partners is 7,874. Since

Harry Grove’s capacity is less than the average capacity of stadiums with corporate naming partners, it is valuable to note the average value and term of stadiums with comparable capacities.

• Capacities 4,500-6,500: total value of $2.500 million over 12.5 years • Capacities 7,000-8,500: total value of $2.963 million over 12.46 years

Agreements by City Population • Using the city populations of the eight cities most comparable to Frederick’s population of

approximately 66,000, ranging from 55,000-77,500 the average total naming rights value is $1.98 million per agreement and the average annual payment value is $154,000 per agreement.

Key Findings

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Agreements by Year Naming Rights Were Sold

• Naming rights partnerships since 2008 have averaged $2.874 million in total value over 10.88 years. In the eight years prior to that, the average naming rights agreement had a total value of $3.048 million over 13.42 years.

• *Reasons for these decreases include the state of the national economy as well as the trend of MiLB organizations in smaller markets adding naming rights partners.

Agreements by League Affiliation • The average total value of a naming rights agreement for Single-A MiLB teams is $2.651

million with a yearly average of $217,000. Teams that are not affiliated with the Single-A league have naming rights deals with an average total value of $3.335 million and $225,000 per year.

Agreements by Naming Rights Category • The most common naming rights categories for MiLB include banks with an average

naming rights value of $3.771 million and a yearly average of $257,000 and energy companies with an average naming rights value of $3.242 million with a yearly average of $198,000

Agreements by New or Existing Stadium • Out of the 51 MiLB stadiums with naming rights partners 32 were new facilities and 19

were existing. The average total naming rights value was $5.117 million for new arenas and $2.639 for already existing arenas while the average annual payments was $338,000 for new and $218,000 for existing.

Key Findings

11

Naming Rights Comparables

12

Team Long Island Ducks Worcester Tornados Harrisburg Senators Frederick Keys

City Central Islip, NY Worcester, MA Harrisburg, PA Frederick, MD

Stadium Bethpage Ballpark

Hanover Insurance Park

at Fitton Field Metro Bank Park TBD

Year Built 1999 1924 1987 1989

NR Sold 2011 2005 2003 TBD

Category Bank Insurance Bank TBD

Nielsen DMA 1 7 43 8

City Pop. 31,950 181,045 49,528 66,164

Capacity 6,002 3,000 6,187 5,500

League ALPB Can-Am AA-EL A-Carolina

Attendance (AVG

2012) 5,551 1,364 4,132 4,724

Total Naming

Rights Value (in

$M) $2.10 $0.30 $3.50 TBD

Term in Years 10 3 15 TBD

Est. Avg. Annual

Payments (in $M) $.210 $.100 $.233 TBD

The following is a snap-shot of comparable agreements that match up with Frederick based on various factors:

Comparative Analysis of Inventories

13

The following chart illustrates the potential inventory to be included in a naming rights agreement as noted by who may control such inventory:

COMPARATIVE ANALYSIS OF NAMING RIGHTS INVENTORIES

Element Description

Harry Grove

Stadium

Comprehensive

Naming

Rights Package

CATEGORY EXCLUSIVITY

Product Category Exclusivity x

SIGNAGE

Entrance Signs located at front entrance of the venue x

Ballpark Roof Sponsor/Venue name displayed on roof x

Marquee Ballpark name and logo on outdoor marquees (at the

junction of I70 and MD 355) x

Exterior Signage Venue identification signage on the ballpark exterior

(facing I70 and MD 355) x

Interior Directional Signage Signage directing patrons within the ballpark x

Exterior Directional Signage Signage directing patrons to the ballpark x

LED Signage Company /Venue name advertising on LED x

Highway/Street Directional signage leading to ballpark on surrounding

surface roads and highways x

Parking Signage throughout parking areas x

Street Name Street name leading to facility changed to incorporate

partner name x

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Element Description

Harry Grove

Stadium

Comprehensive

Naming

Rights Package

Team Dugouts Logo positioned over home and/or visiting team dugout

Scoreboard Corporate logo on main scoreboard panel

Stadium name above scoreboard x

Home plate Sponsor name/logo on the field behind home plate x

Interior Fascia Signage located on each baseline of the ballpark

MEDIA/ADVERTISING

Television Game Broadcasts Spot advertising during broadcasts of games x

Opening/closing billboards

Radio Game Broadcasts Spot advertising during broadcasts of games x

Print Advertising Stadium logo on cover placement on the Keys Game

Program x

Corporate full page Ad in Keys Game Program x

Corporate back cover advertisements for all Keys

pocket schedules x

Internet Advertisement on web stream broadcast of games

Exposure through ad placements on team website x

Exposure through link to sponsor website from team

sponsor page


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Element Description

Harry Grove

Stadium

Comprehensive

Naming

Rights Package

Media/Press Media/press backdrop for all events x

HOSPITALITY & ENTERTAINMENT

Corporate Suite Luxury suite for all regular season and playoff games x

Access to VIP lounge or Club Area x

Access to private meeting space x

Party Suite Party suite for corporate events

Season Tickets Four (4) prime season tickets in the lower level behind

home plate x

Charter Trips Road game charter trip x

Parking Four (4) VIP parking passes x

Appearances Player/coach/staff appearances x

Premiums Autographed merchandise by team personnel

Facility Usage Partner to use facility on non-event day(s) x


PROMOTIONS

Community Corporate name tie-in to various community relations

programs and promotions

x

In-Stadium

One (1) giveaway night sponsorship

x

One (1) firework night sponsorship

In-Game

One (1) video spot at start of the game

One (1) video promotion per game

x

x

One (1) In-game promotion between innings

x

ADDITIONAL EXPOSURE

Stadium Logo/Branding Development of a Sponsor stadium logo x

Logo and name exposure on miscellaneous items

throughout the venue (employee uniforms, cups,

tickets, , letterhead and collateral materials etc.)

x

Ballpark merchandise to be sold in the Team Store x

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Element Description

Harry Grove

Stadium

Comprehensive

Naming

Rights Package



Element Description

Harry Grove

Stadium

Comprehensive

Naming

Rights Package

Tabling Opportunities Informational marketing booths at selected games x

Themed Area In-Ballpark Branded Theme Area

Networking Use of database for marketing E-blast/ Introduction to

other partners


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Point of View

18

Based on Team Services thorough review of the specific factors that come into the naming rights equation, we have concluded that the City of Frederick could command a partnership in the range of $150,000-$250,000 on an annual basis.

• Based on a 15-year agreement, this partnership could generate between $2,250,000 and $2,750,000

Team Services recommends the City of Frederick and The Keys make every attempt to include an annual escalator clause in its agreement.

• Incorporating a standard escalator rate of 3% would push a $200,00 first year price to average $247,000 over the life of a 15-year agreement.

Our final value is based on many factors outlined throughout the presentation including:

• Relevant corporate named venues to draw the most direct comparisons • Compelling package of inventory devised to maximize such an agreement • Trend of leveraging a broad based relationship to drive a partnership for the team and City. Team Services believes that with the City assisting by providing business opportunities to a naming rights partner, the upper end of the valuation range is achievable.

Harry Grove Stadium - Naming Rights Valuation

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