What ties together the Denver Broncos, Brooklyn Nets and San Francisco Giants, three sports teams in different professional leagues in separate markets? Craig Umbaugh, a Hogan Lovells partner in Denver known as the firm’s man for sports transactions. He chairs the sports and recreational facilities practice group.
Umbaugh has had his hands in some attention-grabbing sports deals involving teams changing hands and venues. In 2019, the firm followed up on a partial sale of the NBA’s Brooklyn Nets to Joe Tsai with the sale of the rest of the team’s stake to him, as well as the Barclays Center in a companion transaction. Hogan Lovells represented now-former Nets owner Mikhail Prokhorov in the transactions.
Although Tsai now owns 100% of the Nets, Umbaugh said it’s rare for one owner to have a 100% stake in a professional sports team, given their high value. According to a February 2018 report from Forbes, each NBA team is now worth at least $1 billion.
“The leagues always want to have one controlling owner,” which denotes operational control and voting power in league decisions but doesn’t require owning 100% of a team. “What you don’t want to have is a diffused ownership group that can’t make decisions,” Umbaugh said.
Another high-profile deal this year hit right at home. Umbaugh has represented Colorado’s Metropolitan Football Stadium District since its formation in 1997. This year, he helped the district close out a deal to rename the Broncos’ stadium Empower Field at Mile High. The venue was previously Sports Authority Field before the company went bankrupt, and for two years afterward went by Broncos Stadium at Mile High.
Umbaugh said Empower Retirement is a good fit for a naming deal because Empower is a large dealer of retirement plans and IRAs, but it doesn’t necessarily have the name recognition to match. Having its name on the Broncos’ stadium can boost the company’s profile.
Naming deals usually involve agreements between private companies. But the law that created the Metropolitan Football Stadium District gave naming power to the district.
The football stadium district will receive $60 million from the 20-year naming deal. Umbaugh said the money the district receives will go back into the stadium for maintenance and improvements. He added Colorado’s unpredictable weather is hard on the venue’s infrastructure.
The deal actually involved two agreements: a negotiation between Empower and the Metropolitan Football Stadium District and one between Empower and the Broncos. The latter involved negotiating rights the Broncos control, such as putting Empower’s name on the backdrop to press conferences.
“We had two deals going on at the same time that had to work together,” Umbaugh said.
The district has a nine-person board: two members appointed by the governor, six come from each of the six counties the district comprises, and the chair of the baseball stadium district. The district includes Arapahoe, Denver, Adams, Boulder, Douglas and Jefferson counties. It financed the football stadium’s construction with bonds, paid for with a 0.1% sales tax.
The football stadium district’s stewardship also means details of naming the stadium go in the public record, which is rare for sports transactions.
“Oftentimes it’s hard to get the information about what went into a naming rights deal, because it’s two private parties … and they’re reluctant to release on either side exactly what the terms of that deal were.”
The deal was approved around Labor Day in early September. Umbaugh said the parties had a goal to finish by the start of the football season. This season had an oppprtunity for extra visibility of the stadium’s new name with the Broncos playing their first regular season game in Oakland during Monday Night Football, where announcers gave some additional publicity by talking about the stadium news.
“I know I got to work all around Labor Day on that deal,” Umbaugh said, laughing. “There was a lot of impetus to get it done before the season started.”
The public’s attachment to a venue name also has to be a consideration. Umbaugh said “at Mile High” has stayed part of the Denver stadium’s name because it’s a part of the stadium’s history. In the same vein, sponsors have an interest in long-term naming deals so people in the area get used to the name and the brand can avoid their sponsorship losing value.
“You lose some of the reward of the name if people are calling it something different than what you’re paying for,” Umbaugh said. “If you’re the Denver Broncos, you want to be able to say ‘Empower Field at Mile High’ and everybody knows exactly what you’re talking about. And it takes a little time for that to creep into the lexicon.”