High-Tech Bust Leaves Stadium Names in Doubt
April 16, 2001 -- There's a 69,000 seat stadium in Baltimore that could have your name on it.
To be precise, that would be the venue currently known as PSINet Stadium, home of the Super Bowl champion Ravens.
Two years ago, PSINet, a large Internet access provider, signed a 20-year, $105.5 million deal for naming rights to the stadium — the kind of deal companies make in hopes that the teams they back will win and win big, earning the sponsor plenty of valuable publicity.
So with the Ravens having whipped the Giants 34-7 in January's Super Bowl to become world champs, Virginia-based PSINet would seem to have hit the jackpot. In the second week of next season, for instance, the stadium will be the setting as Baltimore hosts Minnesota in a prime-time showdown.
One problem, though: PSINet could go broke before the Ravens even return to training camp this summer.
Company in Debt, Deal in Doubt
Earlier this month, PSINet — which carries $3.6 billion in debt and lost $416 million in 1999 — announced it may file for bankruptcy and requested extra time to file its annual report for 2000.
PSINet's stock, which was valued at $60 a share in March 2000, is down to 19 cents and trading has been halted. It may be de-listed by Nasdaq.
Still, PSINet officials have publicly insisted they will stick with the deal.
"PSINet is a proud partner of the Baltimore Ravens and there is currently no change in our 20-year agreement," says PSINet spokesman Eric McErlain. "Any change will be announced through standard channels."
In turn, team officials are standing behind the company.
"PSINet is our partner right now, and that hasn't changed," says Kevin Byrne, vice president of public relations for the Ravens. "We look forward to continuing that partnership."
According to SEC documents, the company made an $11.8 million down payment as part of the deal in 1999. Published reports have stated that PSINet has since made two $2.5 million annual payments and has another due this summer, but company officials declined to discuss details of the contract.
If PSINet does go under, however, the Ravens will soon be looking for another backer.
Ravens officials say the team retains the rights to re-sell the stadium name. Although the stadium was publicly funded, the Maryland Stadium Authority sold naming rights to the Ravens for $10 million in 1997.
Patriots and Blues Could Be Shopping for Sponsors
And the Ravens are just the best-known team currently looking at an uncertain stadium sponsorship deal.
The New England Patriots are having a new stadium built in Foxboro, Mass., set to be named for technology-company incubator CMGI when it opens in 2002.
But CMGI, which struck a deal with the Patriots that could earn the team as much as $114 million over 15 years, is in a financial spiral of its own. The company's stock, once worth $163, is trading for under $3 a share these days.
Although CMGI's first annual payment of $7.6 million is not due until January 2002, the Patriots could be looking for a new stadium sponsor by then.
In St. Louis, where the NHL's Blues play their hockey games in the Savvis Center, a name change could soon be in order as well. Savvis Communications, a high-speed Internet service provider for businesses, has struggled, partly because of the bankruptcy filing of its biggest customer (and shareholder), financial information provider Bridge Information Systems.
Should PSINet, CMGI or Savvis go under, though, don't look for the affected teams to give the venues names based on geography or local history, as often used to be the case. Corporate branding of stadiums, while rare even in the mid-1990s, has quickly become standard practice in big-league sports.
Despite a soft advertising market, there figure to be potential backers out there — especially for a championship team like the Ravens, named after one-time Baltimore resident Edgar Allen Poe's most famous poem.
It is highly unlikely their stadium will remain — as Poe's "Raven" says in the second verse — "nameless here for evermore."