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View Full Version : Crain's Chicago Business Naming Rights Aricle


hold2dibber
02-10-2003, 06:06 PM
Today's Crain's has an interesting article about the naming rights deal. I didn't read it very closely, but the gist was this: because the deal nets the Sox the $68 million over a 20 year period, they will need to turn that revenue stream into current funds to finance the planned renovations. Apparently, it is assumed that they will do so by issuing bonds. The Illinois Sports Facility Authority is unlikely to back those bonds (and the Sox say that won't even ask the ISFA to do so). Therefore, the appeal of the bonds will be tied, in large part, to the outlook for U.S. Cellular (since the revenue from U.S. Cellular is the revenue that will be used to re-pay the bond holders). Most analysts agree that the outlook for U.S. Cellular isn't great and that, in addition to the current value of a 20 year revenue stream, means that the Sox will not be able to turn the U.S. Cellular money into anything close to $68 million in the short term. I think the article said that they could expect something like $35 to $40 million instead (not sure on that) and that the $50 million estimate for the planned renovations is a few years old and probably too conservative.

kevingrt
02-10-2003, 06:41 PM
Yeah, that is what I was kind of thinking. I don't think Cellular US will stay up that long like so much of the other Cell Phone Services, they tank so soon. I don't understand what would happen though. Okay, the naming rights would be gone, but what about the rest of the $68 million? Does that go back to US Cellular or what happens to it?

It is a very confusing manner, and I don't plan to know much of the detail. Who cares what the name of the park is? All I care about is if we win!

PaleHoseGeorge
02-10-2003, 07:16 PM
Unless U.S. Cellular goes bankrupt, the Sox will get their payments regardless. Unlike Enron's goofy "energy futures" business, the real value of U.S. Cellular's holdings is their customer base. Plenty of USC's competitors lust mightily for their market share. They'll buy up USC long before they left such a valuable asset in the hands of a bankruptcy judge.

Of course anybody who buys up USC must assume all the legal obligations of USC, including their naming rights deal with the White Sox. Thus, it is far more likely that the Sox would need to change the name of U.S. Cellular Field for the name of the new company than it would be for USC to suddenly stop paying the money they owe the Sox.

MisterB
02-10-2003, 08:02 PM
Originally posted by hold2dibber
Today's Crain's has an interesting article about the naming rights deal. I didn't read it very closely, but the gist was this: because the deal nets the Sox the $68 million over a 20 year period, they will need to turn that revenue stream into current funds to finance the planned renovations. Apparently, it is assumed that they will do so by issuing bonds. The Illinois Sports Facility Authority is unlikely to back those bonds (and the Sox say that won't even ask the ISFA to do so). Therefore, the appeal of the bonds will be tied, in large part, to the outlook for U.S. Cellular (since the revenue from U.S. Cellular is the revenue that will be used to re-pay the bond holders). Most analysts agree that the outlook for U.S. Cellular isn't great and that, in addition to the current value of a 20 year revenue stream, means that the Sox will not be able to turn the U.S. Cellular money into anything close to $68 million in the short term. I think the article said that they could expect something like $35 to $40 million instead (not sure on that) and that the $50 million estimate for the planned renovations is a few years old and probably too conservative.

Is there any date attatched to that article? I thought the terms of the deal was for $50M in the first 2 years and $1M/year for the last 18 years, thus giving the Sox cash up front for renovations.

hold2dibber
02-11-2003, 08:21 AM
Originally posted by MisterB
Is there any date attatched to that article? I thought the terms of the deal was for $50M in the first 2 years and $1M/year for the last 18 years, thus giving the Sox cash up front for renovations.

It was in yesterday's Crains. And it didn't say anything about the deal being front-loaded in the manner you suggest; in fact, that's the first I've heard of that. But the entire premise of the article is that they won't be getting money from U.S. Cellular up front.

Also, my original post didn't make it very clear, but the point of the article is that unless the Sox come up with something very creative, they're unlikely to be able to afford all of the renovations they want (which, according to the article, included reworking the upper deck and the awning hanging over it, adding a right field "home run porch" section, and creating some type of kids area in left field).

FanOf14
02-11-2003, 09:02 AM
Originally posted by kevingrt
Yeah, that is what I was kind of thinking. I don't think Cellular US will stay up that long like so much of the other Cell Phone Services, they tank so soon.

According to their site, they've been around since 1983 so if they tank it'll be for reasons other than being one of a million cell companies...