5 ms·

Dumb question, but what happens to stuff like Miami Heat’s FTX Arena etc in situations like this? Should we expect a name change for the arena at some point so

Dumb question, but what happens to stuff like Miami Heat’s FTX Arena etc in situations like this? Should we expect a name change for the arena at some point soon?

rokhayakebe 4y ago
Suggestion to remove the first one from your question. It is a good one.
theideaofcoffee 4y ago
I also think this is an interesting question. Coming from a lay person I'd imagine it would remain with that name until the contract is up for renewal. Depending on how the naming deal was structured, the money to do the deal would probably have come from FTX' marketing budget in a lump sum up front (presumably) for a fixed number of years. When that's done, the arena will find another source of funds and give the rights anew. Edit: here's [0][1] some sources that says FTX ponied up $135M for the name to remain through 2040. Your question still stands, will that name stay even if the organization that has the name doesn't exist or is circling the drain? All depends on the terms of the contract, I guess. [0] https://www.local10.com/news/local/2021/03/27/nba-still-needs-to-approve-miami-dades-135m-deal-with-ftx-to-rename-miami-heats-home/ https://www.local10.com/news/local/2021/03/27/nba-still-need... [1] https://www.cbsnews.com/miami/news/its-official-miami-heat-home-to-be-named-ftx-arena/ https://www.cbsnews.com/miami/news/its-official-miami-heat-h...
- function_seven 4y ago
  If there's time left on the deal, but the arena would rather not keep the stinky association, can't they sell a new naming rights deal today, and send a portion of the new proceeds from that to FTX? In a way it would be another asset for the bankruptcy liquidator to disperse.
  - enkid 4y ago
    Alternatively, can FTX sell the naming rights (with the approval of the arena)
    - function_seven 4y ago
      Yeah that makes more sense. They have the asset (rights through 2040). Would be pretty funny if it turns out that these naming rights are the single most valuable asset they own today. I just looked up a similar situation from 20 years ago[0,1]. [0] https://www.nytimes.com/2002/02/28/sports/baseball-astros-ballpark-no-longer-enron-field.html https://www.nytimes.com/2002/02/28/sports/baseball-astros-ba... [1] https://www.wsj.com/articles/SB1014832920627596080 https://www.wsj.com/articles/SB1014832920627596080
- indigodaddy 4y ago
  Good info thanks! I had lazily not researched my question yet at all :)
- Brendinooo 4y ago
  A few years ago Consol Energy broke a naming rights deal early; the original deal was $105 million over 21 years, but they were only about 8 years in. The Pittsburgh Penguins found a new partner in PPG Paints pretty quickly. And Consol didn't even go bankrupt! The Heat will find another partner, and they may or may not try to get money out of the FTX bankruptcy proceedings, but I'm guessing the odds of that aren't super high. Probably more efficient to cut bait and move on.
- sgt101 4y ago
  The administrators / bankruptcy courts will try and do a deal with the stadium. Something like "we can auction the rights again and we will keep 90% of what we get for them, you can have 10%, so you are 10% up, for nothing"
  - pbreit 4y ago
    Very unlikely the bankruptcy court will get to do much beyond terminating the deal.
    - cuteboy19 4y ago
      They could probably even claw back some of the money
- rhino369 4y ago
  >Coming from a lay person I'd imagine it would remain with that name until the contract is up for renewal. As a lawyer, not a transactional lawyer so this is pretty far outside my expertise, I'd imagine they'd include some provisions for this type of scenario in the agreement. Even if it didn't, the stadiums owners would probably offer FTX some sort of partial refund to give up the naming rights, which they would have to to pay back their creditors. They could even just breach the agreement and offer a settlement. Eron field got renamed pretty fast. So will this stadium.
  - theideaofcoffee 4y ago
    Thank you for those points!
- pbreit 4y ago
  Unlikely is was paid up front. The news articles say things like "$90m over 19 years". There is also almost certainly terms in the contract relating to the reputation of the advertiser (FTX in this case). All of this is handled much differently if a party is in bankruptcy (which is the point of bankruptcy).
dub 4y ago
It's been half a year since terra/luna crashed but the name lives on at Nationals Park: https://www.mlb.com/nationals/tickets/premium/nightly/terra-club https://www.mlb.com/nationals/tickets/premium/nightly/terra-...
__derek__ 4y ago
Presumably the naming contract isn't pre-paid. It will be renamed.
georgemcbay 4y ago
The company probably has the yearly naming rights fee cut into payments. When they miss their next payment, their name will be removed from the arena. This happened to Adelphia with the Tennessee Titan's arena in 2002. In that situation the stadium was renamed to a generic "The Colosseum" for a few years because they had trouble finding a new naming partner. I suspect they'll have an easier time finding a replacement in this case, but who knows.
mateo411 4y ago
I don't think this is a dumb question. I was also wondering. They had a 19 year deal 135 million naming rights with the Miami Heat, but I'm fairly certain they didn't pay everything up front. Apparently the county owns the arena, so they will be involved. At least Larry David got paid.
- misiti3780 4y ago
  how much did they pay him?
  - mateo411 4y ago
    I don't think that's public knowledge. I assumed he got paid based on my limited understanding on how actors in TV commercials are compensated. It would be weird for Larry David to be in an ad that aired during the Superbowl and not get paid.
paxys 4y ago
Two possible outcomes: - They miss their next payment and the contract is terminated. The arena owners find a new sponsor. - The naming rights are considered an asset of FTX and are sold off during bankruptcy proceedings to recover cash. The buyer puts their own name on the arena for the rest of the contract term. Considering naming rights are sold for such lengthy terms (20 years in FTX's case) it is incredibly common for companies to go under or get bought out in the middle of it.
- pbreit 4y ago
  Both of those are unlikely. The whole point of bankruptcy is to mitigate things like contract terminations. Further, the bankruptcy court will have little, if any involvement in the eventual sale of the naming rights to a new sponsor.
  - paxys 4y ago
    > The whole point of bankruptcy is to mitigate things like contract terminations Except in this case both parties involved will want the contract to be terminated.
deleted 4y ago
[deleted]
AndreLock 4y ago
The Sacramento Kings' old arena was called the Power Balance Arena in 2011-12. Power Balance went bankrupt in 2011, and the arena naming rights went to Sleep Train the following year.
indigodaddy 4y ago
Well that didn’t take long: https://www.espn.com/nba/story/_/id/35004915/miami-heat-cut-ties-bankrupt-ftx-rename-home-arena https://www.espn.com/nba/story/_/id/35004915/miami-heat-cut-...

Dumb question, but what happens to stuff like Miami Heat’s FTX Arena etc in situations like this? Should we expect a name change for the arena at some point soon?

rokhayakebe 4y ago

Suggestion to remove the first one from your question. It is a good one.

theideaofcoffee 4y ago

I also think this is an interesting question. Coming from a lay person I'd imagine it would remain with that name until the contract is up for renewal. Depending on how the naming deal was structured, the money to do the deal would probably have come from FTX' marketing budget in a lump sum up front (presumably) for a fixed number of years. When that's done, the arena will find another source of funds and give the rights anew. Edit: here's [0][1] some sources that says FTX ponied up $135M for the name to remain through 2040. Your question still stands, will that name stay even if the organization that has the name doesn't exist or is circling the drain? All depends on the terms of the contract, I guess. [0] https://www.local10.com/news/local/2021/03/27/nba-still-needs-to-approve-miami-dades-135m-deal-with-ftx-to-rename-miami-heats-home/ https://www.local10.com/news/local/2021/03/27/nba-still-need... [1] https://www.cbsnews.com/miami/news/its-official-miami-heat-home-to-be-named-ftx-arena/ https://www.cbsnews.com/miami/news/its-official-miami-heat-h...

function_seven 4y ago
If there's time left on the deal, but the arena would rather not keep the stinky association, can't they sell a new naming rights deal today, and send a portion of the new proceeds from that to FTX? In a way it would be another asset for the bankruptcy liquidator to disperse.
- enkid 4y ago
  Alternatively, can FTX sell the naming rights (with the approval of the arena)
  - function_seven 4y ago
    Yeah that makes more sense. They have the asset (rights through 2040). Would be pretty funny if it turns out that these naming rights are the single most valuable asset they own today. I just looked up a similar situation from 20 years ago[0,1]. [0] https://www.nytimes.com/2002/02/28/sports/baseball-astros-ballpark-no-longer-enron-field.html https://www.nytimes.com/2002/02/28/sports/baseball-astros-ba... [1] https://www.wsj.com/articles/SB1014832920627596080 https://www.wsj.com/articles/SB1014832920627596080
indigodaddy 4y ago
Good info thanks! I had lazily not researched my question yet at all :)
Brendinooo 4y ago
A few years ago Consol Energy broke a naming rights deal early; the original deal was $105 million over 21 years, but they were only about 8 years in. The Pittsburgh Penguins found a new partner in PPG Paints pretty quickly. And Consol didn't even go bankrupt! The Heat will find another partner, and they may or may not try to get money out of the FTX bankruptcy proceedings, but I'm guessing the odds of that aren't super high. Probably more efficient to cut bait and move on.
sgt101 4y ago
The administrators / bankruptcy courts will try and do a deal with the stadium. Something like "we can auction the rights again and we will keep 90% of what we get for them, you can have 10%, so you are 10% up, for nothing"
- pbreit 4y ago
  Very unlikely the bankruptcy court will get to do much beyond terminating the deal.
  - cuteboy19 4y ago
    They could probably even claw back some of the money
rhino369 4y ago
>Coming from a lay person I'd imagine it would remain with that name until the contract is up for renewal. As a lawyer, not a transactional lawyer so this is pretty far outside my expertise, I'd imagine they'd include some provisions for this type of scenario in the agreement. Even if it didn't, the stadiums owners would probably offer FTX some sort of partial refund to give up the naming rights, which they would have to to pay back their creditors. They could even just breach the agreement and offer a settlement. Eron field got renamed pretty fast. So will this stadium.
- theideaofcoffee 4y ago
  Thank you for those points!
pbreit 4y ago
Unlikely is was paid up front. The news articles say things like "$90m over 19 years". There is also almost certainly terms in the contract relating to the reputation of the advertiser (FTX in this case). All of this is handled much differently if a party is in bankruptcy (which is the point of bankruptcy).

dub 4y ago

It's been half a year since terra/luna crashed but the name lives on at Nationals Park: https://www.mlb.com/nationals/tickets/premium/nightly/terra-club https://www.mlb.com/nationals/tickets/premium/nightly/terra-...

__derek__ 4y ago

Presumably the naming contract isn't pre-paid. It will be renamed.

georgemcbay 4y ago

The company probably has the yearly naming rights fee cut into payments. When they miss their next payment, their name will be removed from the arena. This happened to Adelphia with the Tennessee Titan's arena in 2002. In that situation the stadium was renamed to a generic "The Colosseum" for a few years because they had trouble finding a new naming partner. I suspect they'll have an easier time finding a replacement in this case, but who knows.

mateo411 4y ago

I don't think this is a dumb question. I was also wondering. They had a 19 year deal 135 million naming rights with the Miami Heat, but I'm fairly certain they didn't pay everything up front. Apparently the county owns the arena, so they will be involved. At least Larry David got paid.

misiti3780 4y ago
how much did they pay him?
- mateo411 4y ago
  I don't think that's public knowledge. I assumed he got paid based on my limited understanding on how actors in TV commercials are compensated. It would be weird for Larry David to be in an ad that aired during the Superbowl and not get paid.

paxys 4y ago

Two possible outcomes: - They miss their next payment and the contract is terminated. The arena owners find a new sponsor. - The naming rights are considered an asset of FTX and are sold off during bankruptcy proceedings to recover cash. The buyer puts their own name on the arena for the rest of the contract term. Considering naming rights are sold for such lengthy terms (20 years in FTX's case) it is incredibly common for companies to go under or get bought out in the middle of it.

pbreit 4y ago
Both of those are unlikely. The whole point of bankruptcy is to mitigate things like contract terminations. Further, the bankruptcy court will have little, if any involvement in the eventual sale of the naming rights to a new sponsor.
- paxys 4y ago
  > The whole point of bankruptcy is to mitigate things like contract terminations Except in this case both parties involved will want the contract to be terminated.

deleted 4y ago

[deleted]

AndreLock 4y ago

The Sacramento Kings' old arena was called the Power Balance Arena in 2011-12. Power Balance went bankrupt in 2011, and the arena naming rights went to Sleep Train the following year.

indigodaddy 4y ago

Well that didn’t take long: https://www.espn.com/nba/story/_/id/35004915/miami-heat-cut-ties-bankrupt-ftx-rename-home-arena https://www.espn.com/nba/story/_/id/35004915/miami-heat-cut-...