Reports that the Denver Broncos finally, finally sold the naming rights to their home stadium after three years of trying have focused on the little-known second party in the deal, metro-based Empower Retirement, and leaked details of the 21-year pact, which is said to have cost the firm between $125 and $130 million.
That sounds like an enormous haul. But Darrin Duber-Smith, a marketing professor and senior lecturer at Metropolitan State University of Denver, as well as the state's acknowledged expert on sports sponsorships, points out that what amounts to approximately $6 million per annum is just over half the $10 million-or-more fee the team originally targeted. That's only one of several indicators that Empower is the deal's big winner and the Broncos took the "L."
"On the Broncos side, it looks funky," Duber-Smith says of the agreement to call the edifice Empower Field at Mile High. "You spent three years looking. You had the name of a dead company [Sports Authority, which went belly up in 2016] on the stadium for two years, and you refused to take it down. Then you finally took it down, but you didn't replace it with another venue-naming sponsor, so people got used to the Mile High Stadium name again. Then you announced, really without any warning, that an unknown company had bought the rights — and you announced it, without disclosing very much about it, to a very cynical fan base that's faced with one of the worst Broncos teams we've had since the 1960s."
The news isn't all bad for the Broncos. Empower, a division of the massive insurance behemoth Great West-Lifeco and the second-largest retirement planner in the U.S., is in much better financial shape than Sports Authority, which Duber-Smith had predicted early on would be bankrupted by paying to name Mile High — and while there were plenty of other factors that contributed to the retailer's fate, the stadium outlay certainly didn't help. Moreover, the team has a significant comfort level with Empower, which has been a Broncos partner since 2015.
Then again, in all likelihood the partnership was largely a trade: Empower has been handling the franchise's retirement accounts. According to Duber-Smith, that probably means the Broncos' half of the estimated $6 million annual allotment (the team splits the total with the Metropolitan Football Stadium District) won't all be in cash — another reason the Broncos appear interested in keeping details of the Empower covenant under wraps.
"They should be as transparent as possible," Duber-Smith notes. "They're saying, 'This is private. Don't worry about it.' But people don't like that answer."
He suggests that Empower's decision to buy the naming rights only makes sense if it's part of a larger plan to become a major commercial brand along the lines of Geico, a once-obscure company that went mainstream by way of an enormous advertising campaign built around an adorable talking gecko. Should Empower be moving in that direction, Duber-Smith thinks the increased exposure it will get in the region and nationally through Broncos games carried by major networks will instantly pay dividends. "I would give their marketing director a huge raise," he allows.
From the Broncos' perspective, though, the overall dollar amount "is really low." In Duber-Smith's view, Empower is paying 2001 prices for the naming rights, since the contract investment firm Invesco signed that year — the compact Sports Authority took over in 2011 — was $120 million for twenty years. "I have a long memory, and I remember the Broncos saying it costs them $10 million a year to keep up the stadium, which is why they wanted $10 to $11 million," he explains. "So if you were listening to the Broncos from three years ago, $6 million is not nearly enough. Hopefully, they're profitable enough that they can cover the rest."
Granted, older stadiums haven't been generating huge windfalls in recent naming negotiations, as witnessed by the $4.66 million a year that United Airlines is paying to have its logo on the Los Angeles Coliseum. And Duber-Smith thinks that the Broncos' muddled ownership picture — kin of late owner Pat Bowlen are battling for control of the team, which is currently being run by team president Joe Ellis and two other trustees — likely dissuaded some higher-profile suitors from getting involved.
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"Nobody wants to get in the middle of a family business fight," he says. "What was the barrier to a sale? Because they suck? No: It's because ownership is screwed up. Any businessperson knows that shit flows downhill and everything starts at the top. And do you want to get into a marriage where your mother-in-law is going to attack you every day? The perception is that it's not a healthy franchise right now, which is why the sale has the smell of desperation, my friend."
Ellis may have unwittingly reinforced this impression with a statement after the sale: He told the Associated Press that when Empower expressed interest in the naming rights a few months ago, "we went into the hurry-up offense." In response to this line, Duber-Smith asks, "Hurry-up offense? You've been doing this for three years. Why do you need a hurry-up offense? That raises the issue of, did they rush into the agreement just because they were tired of leaving it open?"
Having Empower's name on the stadium will no doubt thrill snarksters on Twitter, who can now portray the Broncos as playing in an old-folks' home. But more important to Duber-Smith is that "from a consumer perspective, it doesn't feel like a fit. This isn't Florida. This isn't Arizona. This is a young, vibrant city, and you're putting the name of a retirement plan on the stadium. It doesn't make much sense."
He concedes that the fan base will get used to the moniker over time, especially if it stays there for the full two decades. Although that wasn't the case with Invesco and Sports Authority, Duber-Smith thinks there's a good chance the third time will be the charm. "Empower has done everything right, and if they have the right strategy, they have a really good chance to achieve their objectives," he says. "But you have to question what the Broncos were thinking."