NEW YORK (Reuters) - Target Corp said on Monday that it agreed to a 25-year partnership with the Minnesota Twins that includes naming rights for the baseball team’s new stadium, Target Field.
Both Target and the Twins declined to release financial terms.
Other recent naming deals include Citigroup and Barclays Plc agreeing to each pay a reported $20 million a year for naming rights to the new stadiums of the New York Mets baseball and New Jersey Nets basketball teams, respectively.
Last week, Bank of America was reported to be close to finalizing a deal worth as much as $20 million a year to sponsor the new Yankee Stadium, which would include ad space in and around the stadium but not naming rights.
The Twins agreement gives Target a chance to support its
local community and reinforce its brand, said Target spokeswoman Susan Kahn.
But paying millions of dollars for naming rights might be hard to justify to Target’s shareholders, with the U.S economy reeling from a housing slump and a crisis in the banking sector, some experts said.
“Naming rights don’t make a great deal of sense for the buyer. I’m not sure how Target leverages the sales opportunity,” said Robert Boland, a professor of sports management at New York University.
Since Minnesota is Target’s hometown, naming rights for the new stadium, slated to open in 2010, give Target advertising exposure and access to premium box seats to entertain clients, but at a steep cost, Boland said.
“This is defensible, but not totally a business decision,” he said.
Target Field will seat 40,000 fans and is expected to be completed at a cost of $412 million.
Target, the No 2 U.S. discount retailer behind Wal-Mart Stores Inc, also said it will work with the Twins to design Target Plaza — a pedestrian bridge and public gathering space connecting Target Field to downtown Minneapolis.
Partnering with a retailer is a good move for the Twins since the consumer sector is seen by some investors as a relatively safe haven, said attorney Steven Korenblat, who represented Citigroup in a naming rights deal with the Mets.
Shareholders might view the deal as a small part of Target’s overall advertising budget, which was $1.2 billion in 2007, Korenblat said.
“This may not be all that significant when you look at the total picture,” Korenblat said.
Minneapolis-based Target also has a relationship with the Minnesota Timberwolves, and the building where the basketball team plays is called the Target Center.
Shares of Target were down $1.40, or 2.4 percent, Monday afternoon at $55.86 on the New York Stock Exchange.
Additional reporting by Nicole Maestri; Editing by Steve Orlofsky and Brad Dorfman