Hubris!
bloomberg.com
From Stadiums to Bankruptcy
David Wilson is a columnist for Bloomberg News. The opinions expressed are his own.
By David Wilson
Princeton, New Jersey, Dec. 3 (Bloomberg) -- Add Enron Corp. to the list of companies that have gone into bankruptcy or had major setbacks after obtaining the right to name professional sports stadiums.
Enron signed a $100 million, 30-year agreement in April 1999 to put its name on a new ballpark for baseball's Houston Astros. The stadium, Enron Field, opened the next year.
Now the Houston-based company, formerly the largest energy trader, has made the largest-ever Chapter 11 bankruptcy filing. The company and 13 units listed total assets of $49.8 billion, exceeding the $35 billion record that Texaco Inc. set in 1987.
Yesterday's filing made Enron the fifth owner of stadium- naming rights, and the second in less than a month, to go into bankruptcy. This number is rather high, because only about 65 companies have bought rights for U.S. and Canadian pro-sports stadiums in the decade or so that they have been available.
Others to suffer financially include Edison International, whose name adorns the home of baseball's Anaheim Angels. Edison's main utility unit might also be in bankruptcy court if not for the state of California's help. Also, CMGI Inc. has posted billions of dollars in losses since winning the right to name a new home field for football's New England Patriots.
Two for Huizenga
Last month's bankruptcy filing came from ANC Rental Corp., the Fort Lauderdale, Florida-based owner of the Alamo and National car-rental chains. The company sought protection because of a drop in travel that worsened after the Sept. 11 terrorist attacks.
National Car Rental owns naming rights to the home arena of hockey's Florida Panthers under a 10-year, $22 million agreement signed in July 1998. Its parent belonged to AutoNation Inc., run by billionaire H. Wayne Huizenga, before a spinoff 16 months ago.
Huizenga also has a connection with a second bankruptcy: Fruit of the Loom Ltd., an underwear maker that Warren Buffett's Berkshire Hathaway Inc. agreed last month to buy for $835 million.
Pro Player, a sports-apparel maker, was a Fruit of the Loom unit when it signed a $20 million, 10-year contract in July 1996 to name the Miami Dolphins' home stadium. Huizenga owned both the football team and the stadium, where baseball's Florida Marlins also play.
Fruit of the Loom sold Pro Player's trademarks to Perry Ellis International Inc. in July 2000, about seven months after seeking Chapter 11 protection. Although the naming rights weren't part of the sale, the stadium -- which Huizenga still owns along with the Dolphins -- kept the name.
Billions in Losses
Both the other bankruptcy filings took place this year. The companies making them happened to own naming rights for the home fields of the two most recent Super Bowl champions.
Trans World Airlines Inc., whose name adorned the St. Louis Rams' stadium under an August 1995 agreement, filed first. The St. Louis-based airline requested court protection in January to clear the way for a sale to AMR Corp., the owner of American Airlines.
The $4.2 billion sale was completed in April, and the $26 million, 20-year agreement came to an end. So the Rams, champions of the 1999-2000 season, now play in the Dome at America's Center and not the Trans World Dome.
PSINet Stadium, by contrast, remains the home field of the defending champion Baltimore Ravens even though PSINet Inc., an Internet service provider, filed for bankruptcy in June.
The Ashburn, Virginia-based company signed a 20-year, $105.5 million naming-rights contract with the team in January 1999. Its subsequent collapse followed more than 40 acquisitions, financed largely with debt, and losses that soared 12-fold last year to $4.97 billion.
Losses have also mounted at CMGI, whose units include the AltaVista search service, since it agreed to pay more than $114 million during 15 year to put the name CMGI Field on the Patriots' new home.
Saved by State
CMGI signed the contract in August 2000, about one month after the start of fiscal 2001. The Andover, Massachusetts-based company agreed to pay $7.6 million a year for the first 10 years, and to make inflation-adjusted payments afterward.
For the fiscal year, the company's net loss almost quadrupled to $5.38 billion, or $16.34 a share, as its strategy of acquiring Internet companies and selling shares to investors stalled. Sales totaled $1.13 billion.
Edison International, which signed a 20-year agreement to name the Angels' home field in 1997 and is paying $50 million for the privilege, has recorded four straight quarterly losses. During the streak, the Rosemead, California-based company has accumulated a net loss of $3.57 billion.
Southern California Edison, the Edison unit that's the second- largest California utility, became insolvent after paying $3.3 billion more for power than it could charge customers under state law. Edison and the California Public Utilities Commission reached an agreement in October for the utility to pay its debts and avoid bankruptcy.
Enron didn't receive that kind of relief. Neither did those other companies whose decision to publicize themselves to sports fans preceded their collapse. |
