Selling naming rights to events or public facilities should be done only after careful consideration of the possible ramifications.
By Willie Cheng, Published The Straits Times, 30 Nov 2013
EARLIER this month, when OCBC was named as the largest sponsorship partner of the new Singapore Sports Hub, some believed that their worst fears had come true.
The sponsorship, which was in excess of $50 million, gave the local bank naming rights to several facilities in the new 35ha facility. These included the multi-purpose indoor arena, the aquatic centre, the National Stadium Club Lounge at the north and south wings of the National Stadium, and the VIP lounge in the Singapore Indoor Stadium.
Criticism of the move dates back to November last year after it was reported that the two parties signed a memorandum of understanding. Straits Times Forum letter writer Soon Sze Meng, for example, urged the Government to “stop selling the naming rights to our public infrastructure built with public funds”.
Acting Minister for Culture, Community and Youth Lawrence Wong subsequently announced that there would be limits on the sale of naming rights. The Sports Hub, National Stadium and Indoor Stadium would not be renamed, as previously feared, so as to “preserve our national icons”.
But is the practice of selling naming rights really such a bad thing? Charities and public institutions have been doing this for events, buildings and even entire institutions for a long time. In some sectors, particularly in education and increasingly in health care, this has become a well-honed craft.
For purists, however, the very idea of commercialising community structures and facilities is abhorrent. The International Olympic Committee and the Fifa World Cup organisers prohibit the use of corporate-sponsored names on stadiums, arguing that such a practice is a form of ambush marketing.
Nevertheless, it is hard to turn the clock back. Naming rights are very much par for the course in today’s market-oriented society.
Therefore, most debates often hinge on issues at the margins. Whether certain naming rights are deemed to be right or wrong seems to revolve around three key issues. These are name quality, part or whole naming, and living or deceased names.
Name quality
DONORS and sponsors are paying to honour or promote the name of specific persons or organisations.
Often, if a name is simply less known or even unknown but not negative, it is deemed acceptable. For example, I have met many people who have asked about the couple named in the College of Alice and Peter Tan at NUS University Town. (According to a Straits Times report, the couple are Mr and Mrs Tan Eng Sian, whose six children all went to the National University of Singapore. Mr Tan, who died a few years ago, was a descendant of pioneer and philanthropist Tan Kim Seng.)
But most institutions take a stand when the name carries negative connotations. Singaporeans will no doubt be familiar with Ashley Madison, the infamous website that facilitates extramarital affairs. In 2010, the company approached the city of Phoenix, Arizona, with an offer of US$10 million (S$12.6 million) to change the name of the Sky Harbor Airport to Ashley Madison International Airport over a five-year period. Even though the city was in financial trouble, it rejected the offer.
Part or whole naming
A SECOND area of debate is whether naming rights to an entire event or institution, or only part of it, should be sold. Sports event organisers, for instance, have had few qualms about selling an event name outright in their search for maximum sponsorship dollars.
With a prize money of US$6 million, the Barclays Singapore Open was billed as Asia’s richest golf tournament for the last six years. Before this, it was called the Alcatel Singapore Open. Now that Barclays Bank is not renewing its sponsorship, golfers and the public must reorient themselves to a new tournament name next year.
The situation is trickier for institutional names.
The Singapore Sports Hub is one such example. In fact, the resolution of the controversy involving its naming rights has perhaps drawn a line in the sand. In future, only the name of a facility or building and not the institution itself (at least not for that of a “national icon”) will be sold.
This has not always been the case. The Tan Tock Seng Hospital and Gan Eng Seng School were named, without controversy, after former philanthropists.
Then there are the more recent controversies regarding the naming of the Khoo Teck Puat Hospital and Ng Teng Fong Hospital. This followed donations of $125 million each given by the estates of the two late tycoons. The hospitals are fully funded by the Government and the donations are meant to fund health care for needy patients and other programmes. Critics said government- funded hospitals should not be named after private donors.
Living or deceased names
A PARTICULARLY sensitive area is whether the name of a living person should be permitted.
The Lee Kuan Yew School of Public Policy was, in many respects, the first modern day exception to naming after a living person – and for an institution at that. But then it was generally accepted that Mr Lee Kuan Yew is exceptional and the occasion of his 80th birthday was an event worthy of exception.
But following that exception, living names have crept into many naming rights. Today, at NUS alone, there are at least six schools or premises named after living persons.
There are two arguments against living names.
The first is a commonly held view that names, especially in philanthropic giving, should be used to honour and memorialise rather than promote individuals and organisations. Highlighting the names of the living is crass and commercial.
The second argument harks to the earlier issue of name quality.
With a living person, there is no guarantee that the person’s reputation will remain unblemished. Imagine a medical school named after a doctor who is subsequently charged with malpractice, or a business school named after a businessman who later gets embroiled in a business scandal.
Tiger Woods is a prime example. The world’s No. 1 golfer was, for several years, among the world’s highest-paid athletes with most of his earnings coming from sponsorships. But when news of his infidelities and marriage woes broke in 2009, major sponsors including Accenture, AT&T, Gatorade, General Motors and Tag Heuer terminated their sponsorships.
To some extent, institutions protect themselves by limiting the tenure of the rights. They can also insert termination clauses covering exceptional circumstances, but these are tricky to define.
In 2000, the baseball stadium in Houston, Texas, was christened Enron Field in a 20-year US$100 million deal with Enron.
But after the energy trading company became embroiled in the infamous accounting scandal, the stadium’s tenant, the Houston Astros, faced a public relations nightmare. In the aftermath of Enron’s eventual collapse, the Astros paid US$2.1 million to buy out the contract.
Right way for naming rights
ONE easy way to view naming rights is to be clear from the start about whether the money is being offered as a commercial deal or as a philanthropic contribution.
If it is a financial transaction, then it is a form of advertising in which a corporation buys the right to name an event or facility for a stipulated period.
This is the nature of most sports-based sponsorships.
The receiving institution needs to decide whether the sponsorship exchange is fair and how its own reputation and position will be enhanced or eroded by the association with the sponsor.
If it is a philanthropic contribution, which is the way most naming rights are presented, then the naming should be done in a way that avoids the perception of crass materialism.
In my view, this usually means naming the building or event after a deceased person who is deserving of being memorialised in this way.
The writer is a former managing partner at management and technology consulting firm Accenture who now sits on the boards of several commercial and non-profit organisations.
No comments:
Post a Comment