Nov
12

Chicago turns to naming rights deals for revenue

By

As transit economics and funding go, we are not living in a golden age. State and city contributions to their public transit systems are on the decline, and as both operating costs and pension obligations climb, transit agencies have left no stone unturned in their quest for revenue. From service cuts to fare hikes to internal reorganization, if the move saves dollars, it’s on the table.

For many transit agencies, advertising remains one of the last great untapped resources. In New York, the MTA draws in over $125 million annually, up from just $36 million in 1997, and yet, the ads we see in subway cars and on buses are often poor in quality. Considering the captive audience, I have to believe transit agencies could be doing a better job of selling space to companies willing to pay a pretty penny for the eyeballs.

Outside of traditional in-car display advertisements, train car wraps and station treatments, naming rights remain a potential, if controversial, source of revenue, and over the past few years, we’ve seen American transit agencies awkwardly and tentatively embrace station naming deals. The MTA faltered in its first attempts when Citi Bank refused to pony up the dollars to name the 7 stop at Willets Point after Citi Field, but it secured a 20-year, $4-million commitment from Barclays to append the name of the Nets’ new arean to the Atlantic Ave./Pacific St. hub. Other than that one failure and one success, all has been quiet on the naming rights front.

Outside of New York, transit officials have engaged in stop-and-go efforts to secure naming rights. In Philadelphia, the Pattison Ave. station at Broad St. has been renamed the AT&T stop. By removing the geographic identifiers from the station name, SEPTA has made it harder for those unfamiliar with the system to reach their destination, and I have long believed the Philly approach is the wrong one to take for station naming deals.

In Chicago, something new and different is emerging. A few weeks ago, the Chicago Transit Authority reopened the renovated North/Clybourn station, and the ceremony was significant because Apple, the computer giant which was opening a store nearby, had paid for the station renovations. The deal Apple signed with the CTA allowed them right of first refusal for the station name if the authority were to sell the naming rights, and now it appears as though the CTA is prepared to do just that.

As Mary Wisniewski of The Chicago Sun-Times reported yesterday, the CTA board has begun to explore corporate naming rights deals. She writes:

On Wednesday, the CTA board asked for bids from firms that would help seek corporate sponsorships to bring in revenues beyond what the CTA already gets from ads on buses, trains and stations.

The deals could involve naming rights or other ideas, such as sponsorship of the CTA’s planned bus rapid-transit route on the Jeffery corridor or the New Year’s Eve “penny-a-ride” program. “I’m not looking for your traditional commitment to just advertise more on the system,” CTA President Richard Rodriguez said. “I’m looking for creative ideas.”

Rodriguez said he was in London on a speaking engagement earlier in the year and realized that across Europe, transit systems are looking into sponsorship ideas. “I can’t even imagine what the opportunities might be,” Rodriguez said. The firm would be paid a portion of the revenues it generated.

For U.S.-based transit, Chicago’s bidding results could be a harbinger of things to come. If companies are willing to pay money to secure these naming rights, there is absolutely nothing stopping other transit agencies from jumping onto this fiscal bandwagon. Rodriguez, the CTA’s head, doesn’t know what to expect, but at least some prominent companies will bid for high-traffic stations or prominent events.

As transit agencies, then, head into uncharted territories, how best should they structure these naming rights deals? Sports stadiums, for instance, have embraced corporate names but have sacrificed any local identity. Would a casual fan know that the Cincinnati Reds play in Great American Ballpark? Where is the Wells Fargo Center and which teams play there? Few people outside of Philadelphia could answer that question.

So the right approach involves appending instead of replacing. Renaming Times Square, originally a corporate name in its own right, to the Walt Disney Station does no one any favors, but calling it Times Square/Walt Disney, while painful to see, doesn’t remove the key geographical signifier. Since a transit system is in the business of getting people from Point A to Point B, it must ensure that people know where Point B is.

Other than that, all bets are off. Whether any substantial amount of money can be generated from these potential deals though remains to be seen.



Categories : CTA

11 Responses to “Chicago turns to naming rights deals for revenue”

  1. Scott E says:

    Naming rights were lucrative a few years ago, but no longer. Take a look at the brand new stadium where the Giants and Jets play. They’ve been looking for a sponsor for years, and other than an an unpopular bid by Allianz, they still have not found interest. (Personally, I’d like to see JetBlue Airlines, or possibly Green Giant vegetables sponsor the building, but that’s besides the point).

    Knowing what subway stations look like today, and even what a newly renovated station might look like five years from now, I’d worry that a company attaching its name to a NY Subway station might do more harm than good for its image. Imagine what might happen in Disney Station: trash, water-damage, pickpockets, panhandlers, rats, rapes, murders. All are, unfortunately, real possibilities that would tarnish Disney’s sparkling-clean image. Theme parks and ball parks are better maintained and patrolled (steep admission fees help keep it that way). AT&T’s biggest risk in San Francisco is the performance of the Giants themselves; they could stink up the NL, but they could also win the World Series.

    I think that, even if the MTA did open up their stations to corporate sponsorships, Dr. Zizmor would be a more likely sponsor in the hot, sweaty, subway.

    • SEAN says:

      Nice & easy now, step away from the edge, that’s it, nice & easy.

      High profile stations like Times Square should haveequally high profile sponcers. Smaller stations could be sponcered by BIDs or or community nonprofits or other local businesses.

      Wall Street station could be sponcered by none other than The Wall Street Journal, while while 14th Street Union Square goes to Barns & Noble since there flagship location & college bookstore are near there.

  2. Kid Twist says:

    We should get The New York Times Co. to buy the naming rights to Times Square.

  3. AlexB says:

    I think the key shouldn’t be naming rights. Subway stations are so integral to the life of a neighborhood, it’s almost silly for the MTA to be solely responsible for upkeep. It would be great if local Business Improvement Districts would take over the maintenance of stations. Imagine if the 23rd St BID took over the cleaning/painting/etc of the 23rd St stop on the R & N, renamed it 23rd St-Flatiron and posted brochures, neighborhood maps, and advertisements in the station for local businesses.

    This type of situation could be great for both the MTA and local businesses. Obviously, stations with nothing much around them will always need the MTA. Sometimes, as in the case of the Barclays arena, the big corporation might be willing to handle all the expenses without local business help, but outside of downtown/midtown and the handful of stadium locations, it’s not likely.

  4. John says:

    New York has done some earlier station rebranding to reflect the above-ground changes, albeit it not on a corporate pay-to-play level — you haven’t see E trains ending their downtown run at Hudson Terminal for a while now. But for the NYC stations where the ornate name tablets are part of the overall wall tiling design (and in many cases have historical designations) I’m not sure how you’d be able to do pure branding without running into possible legal issues.

    The federally-compliant overhanging signs could be easily adapted at the express stops or center-island two-track platforms, but modifying the side platforms at, say, 59th Street on the IRT (changing the 4/5/6 wall tablets to “Bloomingdale’s” or the 1 from “Columbus Circle” to “Time-Warner Center”) without destroying the look of the stations seems like it would be a tough hurdle to get over.

    • The easy answer is that you wouldn’t change the tiled wall tablets. The rest of the signage would have a corporate sponsor but historical elements would go untouched.

      • John says:

        The only question there is would the corporation(s) be willing to pony up the money if there wasn’t a total rebranding? If the main signs on the wall that the majority of people see still carry the original names while the new corporate sponsorship ID signs are in the secondary locations over the platforms, can the MTA get enough money from it to justify the effort needed to make the changes?

        A partial rebranding could end up like Mayor LaGuardia’s effort to rebrand Sixth Avenue as Avenue of the Americas — never accepted by most New Yorkers despite the city’s best efforts (including re-signing the route designation boxes on some of the R 1/9 trains to reflect the new name) and finally pretty much abandoned after a 40-year effort in the late 1980s. The MTA might be able to do a partial rebrand, if they offered up expanded and exclusive advertising space for that company within a complex, but some might decide unless the station is 100 percent branded in their name, it’s not worth the expense.

    • SEAN says:

      Perhaps, but dollars speak very loudly. Also remember the old saying beggers cant be choosers. Right now the MTA needs to get money anyway it can.

Trackbacks/Pingbacks

  1. […] the last year or so, we’ve seen countless cities bring up naming rights deals. Chicago tried to parlay the success of its venture with Apple into a broader attempt to attract corporate […]

  2. […] unique in some of its attempts to close the funding gap. About a year ago, Boston joined New York, Chicago, Philadelphia, Austin, Toronto, and New Jersey in the growing list of North American cities with […]

  3. […] Boston has unsuccessfully put its station names up for sale. Austin, Toronto, New Jersey, D.C. and Chicago all want someone to pay for their stations, but very few people are biting. It’s too hard to […]

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