Furniture Brand In Naming-Rights Game
Leon’s Centre in Kingston, Ontario, benefits from fresh category, local buy-in
- by Linda Deckard
- Published: September 5, 2018
The bright yellow Leon's Centre sign was installed on the outside of the Kingston, Ontario, venue Aug. 15. (Courtesy Leon's Centre)
Though overshadowed in scope by the renaming of Scotiabank Arena in Toronto, the new Leon’s Centre in Kingston, Ontario, has a very relevant tale to tell.
The renaming of what was Rogers K-Rock Centre was announced July 1, noted Lynn Carlotto, GM of Leon’s Centre for SMG Canada. That same day, what was Air Canada Centre was renamed Scotiabank Arena. “Interesting factoid,” during the 2018 Canadian Music Week in May, the former was named the No. 1 major venue with 8,000 or fewer seats, while Scotiabank Arena was announced No. 1 over 8,000 seats.
Similarities beyond that are a little more dissimilar. Scotiabank cut an $800 million, 20-year deal with Maple Leaf Sports & Entertainment. The name went up the day of the announcement.
Leon’s Furniture cut a five-year, $250,000-plus-additional-trade deal, with a five-year renewal option, with the Kingston arena. The name went up Aug. 15. Asked about the delay compared with Scotiabank Arena, Carlotto cracked that “$20 million a year covers a lot of rush fees.” Leon’s Furniture, though a provincial brand, was negotiated by the local franchisee, Chris McKercher.
Carlotto had started the ball rolling, having sent a letter to McKercher in December about naming-rights opportunities. She knew McKercher through other sponsorships in the venue and because he was a club seat holder of long standing. “He nibbled,” Carlotto said. “We went back and forth with him and then turned him over to Bonham/Wills.”
Tom Wills of Bonham/Wills negotiated the final deal. “It’s its own art form,” Carlotto said of negotiating title sponsor deals. “When negotiating a sponsorship of this magnitude, you need to have a professional do it. They track and retain every conversation, every mention of what is important, and establish the relationship that gets you to that finish line.”
And she well knew that McKercher “prides himself on being a great negotiator and he is. I want a professional negotiator to be fencing with him, so we end up with the best deal we can get.”
Bonham/Wills did the valuation for Kingston, something the 7,000-seat venue had not had to do since opening in 2008. It opened with K-Rock as a title sponsor. When the station owner, John Wright, sold his stations to Rogers, Rogers added five years and the Rogers name to the arena deal.
Bonham/Wills did the valuation, which actually came in a little higher — $350,000 to $375,000 a year — but they walked it back when Leon’s became the preferred bidder. “Frankly, there has to be a dose of realism in a market with 125,000 in the summer, 165,000 when students are in and a total market area that’s not what one would realize in the States,” Carlotto said. “It’s a matter of taking a look at the nonquantifiable aspects of the opportunity and putting a number on it that makes sense for the market, location, etc.”
Tom Wills, who has been with Bonham/Wills since 2011 and has helped broker 20-25 deals in the last few years, considers the category and the local aspect of the Kingston deal noteworthy.
“Kingston is an interesting place. It’s a wealthy demographic. Kind of a retirement place,” Wills said. “There is a lot of old money from Toronto who, in their golden years, buy a nice piece of land on Lake Ontario.” The airport is small, the financial district very small.
Those traditional categories — airlines, automotive, banks, insurance companies and the financial industry — were not viable avenues in Kingston. “Here in Canada, Rogers and Bell own a lot [of naming rights] and then it’s all financial organizations. Since Rogers was walking away, they took out a big industry category,” Wills said.
He has never done a deal where the local franchise, not the national or provincial brand, stepped up, but Leon’s Furniture did. Wills said they did pass everything through Leon’s legal team in terms of brand identity and the satisfaction of all franchisees, but the deal was done locally.
In the early days, they had a few other organizations looking at it. “Chris had interest but, only owning two stores, he wasn’t going to pay $500,000. Then, as we were negotiating this deal, Scotiabank obviously shook up the industry with an $800 million deal down the road. He was a little hesitant to throw his hat in the ring,” Wills recalled.
That’s where the negotiating skills came in handy. Bonham/Wills has its own proprietary system for valuations, anchored on how many impressions, how many people are impacted, where they come from — VPI (value per impression). Twice a year, they rejigger those valuations based on new deals in the marketplace. Bonham/Wills prepared an extensive book on those value propositions, but it went beyond that.
As McKercher learned more about “who Lynn is and how many awards the K-Rock Centre has won over the years, that it is a regional hub, that SMG has an outstanding reputation across different markets and that they won’t have to worry about too much negative press or that they won’t be able to book shows,” it went a long way in building the case for a partner like this.
“When we can, we like to lean on the fact it is a well-run venue,” Wills said, noting Bonham/Wills will be announcing another naming-rights deal this week. A new name for the Downtown Moncton Arena, which will be showcased in VenuesNow’s October magazine, is supposed to be announced Thursday. And once again, “it’s a very unconventional category,” he said.
The valuation is also tailored toward the needs of the client. In this case, McKercher is looking to drive traffic to his local stores. He is also interested in giving back to the community to build Leon’s Furniture’s brand in the neighborhood, all elements that are built into the deal. “We try to assign a value to most elements,” Wills said.
An element unusual to this deal is talk of furnishing suites and clubs with Leon’s Furniture. They also lined up 12 free-of-charge rental days (except operating expenses), which McKercher will give back to nonprofits to run fundraisers, like skate days, which in turn generate good publicity for Leon’s Furniture, doubling his exposure and impressions, which further drive sales.
McKercher also has a large allotment of tickets to give to local charities to auction off.
“At the end of day we want to drive sales” to Leon’s Furniture, Wills said.
“Companies are looking for novel ways of connecting with customers,” Carlotto said. “Whenever you do a naming-rights deal, you need to connect with more personal amenities or benefits for the sponsor. Because Chris’ franchise is in the city, we’re able to tie in promotions that directly tie into shows and drive people to his stores.”
Since Leon’s has a lot of traffic, it makes sense for the shows and events as well.
For the venue, it means $1.25 million over five years that helps fulfill the city’s pledge to taxpayers that they would not be footing the bill to operate the arena.
“The fundamental difference between an A-market name change and the rest of us is that when Scotiabank cuts a deal worth millions, the venue will use a lot of the money to create new hospitality areas, build out new food and beverage locations and improve the facility and there is the return on the investment there and the argument for doing it,” Carlotto said.
“We’d love to do that, but $250,000 and change does not give you the ability to bust out walls and build new restaurants. What it does do is give you the ability to report solid numbers. The city committed to the citizens when they invested in this building that it would not cost them in terms of higher taxes. Our mandate is to generate a profit in this building so it is a good investment for the city, and we do.”
“Sponsorships and premium seating gives you that base for your annual numbers. Concerts and other events are cyclical and in many ways unpredictable.” At Leon’s Centre, premium seating is always sold out and they come to hockey games, Carlotto said.
As to acceptance of the new, local name, Carlotto has been surprised at how quickly people adapted. She has overheard locals correcting others who refer to it as K-Rock Centre. It’s not.
It’s Leon’s Centre and, given the bright-yellow colors in Leon’s logo, “I think you can probably see the sign from space. It is that bright,” she said.
The only remaining signage that needs to change is the center-hung scoreboard, which changes Sept. 7. The first hockey game for the Ontario Hockey League's Kingston Frontenacs is Sept. 21.
- by Linda Deckard
- Published: September 5, 2018