- The Washington Times - Tuesday, July 23, 2002

MCI Center officials say the $44million naming rights pact for the downtown Washington arena will remain intact despite the massive bankruptcy filing of WorldCom Inc., MCI's parent company. History, however, strongly indicates otherwise.
Neither Washington Sports & Entertainment (WSE), lead owners of MCI Center, nor WorldCom yesterday made any moves to amend the 10-year contract, struck in June 1995. But executives for PSINet Inc., Enron Corp. and TWA Inc. all said the same thing immediately after making their bankruptcy filings. And within months of each filing, their names were taken off the stadiums their dollars helped build.
Unlike many other bankruptcies, WorldCom intends to retain its MCI long-distance phone service unit, the largest and most widely known part of the Mississippi-based company, rather than begin a complete fire sale of company assets.
"As of right now, WorldCom is current on its payments, and the name of the building is MCI Center," said Nicole Hawkins, spokeswoman for Washington Sports & Entertainment. The next payment for the naming rights is due this fall. "If something else happens and they default on the contract, we would have the option to seek to exit out. But they are now current."
WorldCom officials declined to comment yesterday on MCI Center.
Prior to WorldCom's record bankruptcy filing, which listed more than $65billion in liabilities, the most spectacular fallout from a company with stadium naming rights was, of course, Enron. The naming sponsor for the Houston Astros' new stadium, team officials steadfastly stood by embattled Enron last fall in the early days after the company's financial malfeasance became public. But over time and as Enron and the Astros became further intertwined in negative public perception, Astros officials filed a court motion asking whether the deal should continue.
A negotiated $2.1million payment from the Astros to Enron terminated the deal, and the club quickly signed a new naming rights deal with Minute Maid for a slightly better annual rate than its deal with Enron.
The Baltimore Ravens in February similarly paid PSINet Inc., the Ashburn-based Internet service company now in bankruptcy protection, $5.9million to exit its 20-year naming rights contract. The Ravens are now searching for a new naming rights sponsor. The Tennessee Titans are also parting ways with troubled communications outfit Adelphia Communications, which was the naming sponsor for its stadium in Nashville, Tenn.
"This is all a relatively new phenomenon, companies with naming rights going into bankruptcy, but any time you have filing like that, it puts all your sponsorships in limbo," said Kevin Lovitt, senior vice president of International Marketing Group, which often brokers naming rights deals. "The stigma of a bankruptcy is very difficult for a marketing endeavor, and in these situations, you usually see the facility owners ultimately lining up with the rest of the creditors."
The Heritage Classic in Hilton Head, S.C., an annual PGA Tour stop, announced yesterday it terminated its tournament naming sponsorship with WorldCom and will seek a new corporate sponsor. MCI, and then WorldCom, had sponsored the event since 1987.
The only major company that filed for bankruptcy and kept its stadium or arena naming rights was Pro Player Inc., whose parent, Fruit of the Loom, filed for Chapter11 protection in 1999. The Pro Player name still adorns the home of the Miami Dolphins, as the Dolphins are seeking to have a new sponsor in place before removing the Pro Player name.
WSE signed its naming rights deal with MCI Communications Corp. just as corporate names for sports facilities were building up in prominence and cost to a late 1990s heyday. The pact continued after WorldCom purchased MCI in 1998, at the time the largest corporate merger in history. The naming rights deal as it currently stands is for 10 years from when the building opened, which was December 1997. As an additional part of the agreement, MCI lent WSE chairman Abe Pollin another $40million to help him build the arena. The current status of that loan is not known.
Should Pollin seek another naming rights sponsor for the arena, he will be doing so in a decidedly down market for nearly all sports sponsorship. Several major stadiums available for naming, including Pro Player Stadium and the Louisiana Superdome, have remained so for extended periods of time. But 2002's down market still is more lucrative than the 1995 up market in which the original deal was cut.
"There's an opportunity here for Abe Pollin to make lemonade out of lemons," said Dean Bonham, a Denver-based sports industry consultant. "This could very well take eight to 10 months to sort out, but he should have little trouble convincing a bankruptcy judge he should be able to resell the asset and he stands to end up better in the long run."


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