June 10th, 2003
Cities in Need Selling Themselves
By Larry Copeland
For sale: your city.
Cities across the nation are striking deals with corporate sponsors, in effect selling their names and prestige to the highest bidder as they try to ease financial problems without raising taxes.
The deals range from million-dollar contracts that make one soft drink a city’s “official beverage” to smaller deals that put company logos on tennis courts and locker rooms.
“I’m probably getting two to three calls a week from cities all over the country asking about our program, especially lately,” says Mary Braunwarth, who runs a city-corporate sponsorship program for San Diego.
The city has the nation’s most comprehensive such effort. It has rung up more than $ 5 million in 31/2 years from lucrative deals that include contracts with Verizon for wireless services, Chevrolet for beach patrol cars and Pepsi as the exclusive vendor for 475 soda machines on city property. The money might seem a pittance in the city’s $ 740 million annual operating budget. But San Diego’s program costs only $ 145,000 a year.
The trend is being driven by city officials trying to balance budgets, says Douglas Peterson, who studies the issue for the National League of Cities. “Citizens expect more efficiency from government,” he says. “They don’t want property taxes to increase, and they don’t want sales taxes to increase.”
Like states, cities have been hit by the recession, which has limited the revenue they receive from sales and business taxes. Among the sponsorships that help fill the gap:
* Portland, Ore., had 92 basketball courts resurfaced by Nike. In exchange, the company was allowed to put its famous swoosh logo on the courts.
* In Asheville, N.C., the Buncombe County Parks and Recreation Department is offering naming rights to tennis courts, swimming pools and hiking trails. “Our objective is to keep costs as low as possible for our taxpayers,” administrative officer Rhett Langston says.
* Phoenix is considering a program that could generate up to $ 1 million annually. Philadelphia hopes for $ 3 million.
* Palos Heights, a suburb of Chicago, is trying to sell naming rights to Lake Katherine, a 158-acre nature preserve.
* New York Mayor Michael Bloomberg hired a consultant to consider selling sponsorships for parks in the city.
Corporate sponsors pay for jazz concerts, opera houses and other events that many cities host. And some cities have reaped millions of dollars by selling naming rights for stadiums and arenas to corporations. Dozens of sporting events—from college football bowl games to golf and tennis tournaments and stock car races—use a corporate sponsor’s name in their titles.
Opponents decry the growing popularity of such deals.
“I think Americans are sick and tired of commercialism intruding in their life and culture,” says Gary Ruskin, head of Commercial Alert, a non-profit group based in Oregon that opposes commercialism in government.
Braunwarth says San Diego didn’t launch its corporate partnerships “because of budget considerations.” In 1999, she says, Coca-Cola approached the city with a beverage deal. She cut a better one with Pepsi: The 12-year agreement will be worth up to $ 10 million, depending on sales.
Braunwarth says there was considerable resistance at first from San Diegans to the corporate sponsorships.
“We got a sense of fear (from the community), of the sense that this could be a slippery slope” toward commercialism, she says. “We worked really, really hard to assure the naysayers that that wasn’t what we were looking to do.”
Ruskin says he sees a backlash against cities selling themselves. He notes that Boston, San Francisco and Los Angeles have rejected sponsorships for subway stations, a football stadium and other facilities.