The Las Vegas Convention and Visitors Authority’s payment of $80 million for naming rights to Las Vegas Ballpark is as much about escaping a big cash drain occurring annually at Cashman Field as it is marketing the city’s brand.
The LVCVA approved a deal Tuesday at its board meeting to pay $4 million per year for 20 years for the naming rights to Las Vegas Ballpark, the future home of the 51s in Summerlin.
The price tag is hefty for a minor league baseball stadium, but LVCVA chief financial officer Rana Lacer projected $1.8 million savings per year and $42 million over the life of the contract.
Lacer told the board that if the 51s remained at Cashman Field, annual losses would “continue to increase over time as personnel, repair and maintenance and capital requirements continue to grow.”
“If it loses money, it’s our headache, not the LVCVA’s,” Howard Hughes Corp. general counsel Peter Riley said of the new stadium. “They get out of an open-ended black pit.”
The Hughes Corp., the owners of the Triple-A 51s, will provide funding for the stadium, which will cost about $90 million, and the land and infrastructure. The total cost will be about $150 million.
With the 51s leaving Cashman, the LVCVA also would avoid having to pay for any capital improvements should something go wrong at the 35-year-old facility.
One recent example?
Team president Don Logan said an air conditioner went out three years ago and the LVCVA had to spend “a couple million bucks within a week.”
“You look at the benefit that the authority is getting by getting out of the Cashman obligation, that’s worth a lot to them,” Logan said.
The naming rights deal allows the 51s to build the stadium they have long wanted.
“Now, the onus is on us,” Logan said. “There was no point in us doing a lot of work on a new stadium until we knew we had some sort of significant financial support, and naming rights is obviously a big thing.”
Some members of the LVCVA board, including Las Vegas Mayor Carolyn Goodman, were concerned about the perception of paying too much for a minor league stadium sponsorship. The LVCVA will pay almost two-thirds of what it cost T-Mobile to buy naming rights for a multi-purpose professional arena on the Strip.
But a better example can be gauged by looking at other Triple-A teams.
The Fresno Grizzlies have a 15-year, $16 million naming rights deal with Chukchansi Gold Resort &Casino. Chukchansi Park opened in 2002.
The Charlotte Knights also have a lucrative naming rights deal, with BB&T Bank, which runs for 18 years. BB&T Ballpark opened in 2014.
Dan Rajkowski, executive vice president and chief operating officer of the Knights, said the term’s were confidential but the deal was “one of the larger naming rights deals in Minor League Baseball.”
“It’s probably the first or second deal. It’s been great for the bank,” Rajkowski said. “I can’t speak for them, but I think the value has been good for them, and it’s been wonderful for us. If we didn’t have the naming rights partner, we wouldn’t have the ballpark. Plan and simple.”
Though the deal in Las Vegas probably eclipses that, Logan cautions that it’s “an apples and oranges comparison” because of the added benefit the LVCVA gets from leaving Cashman Field.
“They get a significant marketing play with the naming rights and all the various marketing elements, and then they realize a significant savings by getting out of the Cashman operation and having to deal with the annual loss there and the potential for the capital expense if something goes wrong,” Logan said.
Rick Velotta contributed to this story. Contact Betsy Helfand at firstname.lastname@example.org. Follow @BetsyHelfand on Twitter.