HP out in San Jose, SAP in?

All Things D’s Arik Hesseldahl reports today that Valley tech giant HP is in talks to end its naming rights deal at the San Jose Arena. The current deal runs through 2017, with HP pushing to end it as early as this summer. CEO Meg Whitman, who previously helmed another San Jose tech firm, eBay, is apparently reevaluating HP’s marketing efforts, and that means curtains for sports naming rights. It’s too bad that HP is pulling out, though given the company’s struggles the past few years, some restructuring is certainly in order.

hp_pavilion-ncaatourney

HP Pavilion main entry during last weekend’s NCAA tournament

HP didn’t originally negotiate the current naming rights deal. It was inherited when HP merged with then-rival Compaq of Houston. At the time Compaq already had naming rights to the old Summit arena in Houston, which created the need to distinguish the two venues by locale. Shortly after the merger, the arena took on the seemingly synergistic HP Pavilion name (“Pavilion” is a longstanding name of HP’s consumer desktop PC line), though it’s unclear whether the name association actually helped sales.

SAP may be stepping into the void created by HP’s departure. The enterprise software company already has had its name on the annual ATP tennis tournament held annually at the arena (which is moving to Rio de Janeiro starting next year), and SAP chairman Hasso Plattner just finished acquiring up to 90% of the San Jose Sharks. Plattner may have carte blanche to make the deal as he pleases, but shareholders may be wary of a move considering that SAP lost nearly $4 billion last year. SAP may push for a lower cost naming rights deal since they could be considered San Jose’s “preferred partner”.

I imagine that if the naming rights deal transfers from HP to SAP, the arena will simply be called SAP Arena or SAP Arena at San Jose. Of course, the arena already has its own nicknames, “The Tank” and “Shark Tank”, that locals and hockey fans will continue to use until the arena is eventually replaced.

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P.S. One of SAP’s biggest competitors is Oracle, who has naming rights at the Arena in Oakland. A copyright trial between the two companies is ongoing, as a judge considered a $1.3 billion damages award to victorious Oracle excessive. I doubt that this will make Larry Ellison more or less likely to extend the Oracle Arena naming rights deal – especially if the Warriors leave for San Francisco – but it’ll probably chap Ellison’s hide to know that every time he flies one of his private jets into SJC, he’ll see the SAP logo on the large arena rooftop below. It wasn’t that long ago that rumors had Ellison bringing a NBA franchise such as the Kings or Grizzlies to San Jose. There’s absolutely no chance of an Ellison-helmed NBA team coming to San Jose as long as SAP wields the power at the arena.

P.P.S. – Given Ray Ratto’s repeated butchering of the name “San Jose” to “San Azzay”, I suppose that for Ratto SAP could mean “San Azzay Pavilion”.

24 thoughts on “HP out in San Jose, SAP in?

  1. Meg is trying to save a leaking ship but is widening the hole in the hull.

  2. re: The enterprise software company already has its name on the annual ATP tennis tournament held annually at the arena,

    …the tennis tournament is down for the count in San Jose, I think. No more. This was the last year.

  3. As an aside, SAP is considered one of the main rivals of Oracle Corp. I find it funny that their satellite office buildings in Dublin stare across the freeway at each other. Sometimes I think there is extra non-product competition between large corporations, CEOs and their egos and it’s fun to think that SAP is trying to match or outdo Oracle.

  4. There is already an “SAP Arena” in Germany: http://en.wikipedia.org/wiki/SAP_Arena. But SAP Pavilion rolls off the tongue just fine.

    I was wondering what was up when they replaced/added dozens of video monitors/digital signage at the Tank over the past couple of years–almost none of it HP branded. You know if Apple had a naming deal the place would be wall-to-wall Apple product.

  5. They won’t use the name Pavilion. It’ll be something like SAP Solutions Arena or just simply SAP Arena at San Jose, as ML said.

  6. Mostly off topic, but I always thought its be cool to see the quakes stadium called “iPitch by Apple.”
    .
    By “cool” I mean ridiculous, but even a “good” corporate naming rights deal is more tolerable than good.

  7. Meh…it’s still the Shark tank.

  8. @ ML – My suggestions for Corporate sponsorship would be : 1) Fry’s (already a major sponsor), 2) Sun Power, 3) Adobe, 4) Ebay

    @ Jeffrey – I would of suggested Maxi-Pad, but I’m afraid Apple might sue the douches… :X

  9. How about the Apple iTank? Seriously though: how much do you think we’re looking at RM in terms of naming rights value? Whoever it is? I’m thinking at least $100 million, which could go a long way towards arena improvement. BTW, you implied the possibility of a new arena in the future; know something we don’t? (Of course you do…).

  10. @Tony D – The name’s changed twice and now you think San Jose will be able to get more for the deal? Dream on. There is less than zero chance Apple will put their name on any sports venue. It’s not their thing.

  11. Too bad, because if they would sponsor some tourney, the award could be called the iCup, aka ICUP. Har, har (that would have my 9-year-old rolling).

  12. Apple throwing money at a sports venue naming rights would be like me investing in a Snickers bar at a vending machine; they could WAY afford it! How about Google or Facebook?

  13. Apple is extremely focused in its use of marketing dollars. This doesn’t fit their profile. Facebook? There are bunch of ex-Facebook people associated with the 49ers. Maybe that’s the place. Google? Not locally oriented enough.

  14. Well, Google is locally oriented enough to be making a serious aviation investment at SJC. Naming rights for a San Jose sports venue? Not out of the realm of possibilities, but perhaps not likely. Cisco is already accounted for, but there’s always Adobe, eBay, Brocade, Samsung, I could go on and on…
    In your opinion RM, how much are we looking at for new arena naming rights? $$?

  15. @Tony D – If San Jose gets the same $3.1 million/year deal it’ll be lucky. Now that naming rights has reached a certain level of maturity and sample size, it can be reasonably argued that they generally aren’t very cost-efficient.

    The airport deal is simple. Larry and Sergey need a place to park their planes. They don’t need Google’s name on an arena.

  16. It seems like it’s becoming more apparent that these naming rights deals just don’t add much, if anything, to the bottom line. How many people buy HP printer cartridges because the HP name is on the arena? Probably nobody. We’ve had no takers for the Cowboys stadium naming rights as well as for the 49ers new stadium – both teams are probably asking too much.

  17. @pjk,
    True, but on the flip side, Farmers Insurance has committed $800 million to a NFL football stadium that may or may not get built. Cisco has committed $120 million to a ballpark that MLB is dragging its ass on approving. Perhaps naming rights make sense for some venues but not all (heck, even the decrepit coliseum landed O.co). I’m sure The Tank will land a new name no problem.

  18. FWIW, anybody who thinks Apple or Google would be a good arena sponsor must ask how much money these companies have spent on sports sponsorships so far (I believe the figure would be about $0.00) and how they’ve suffered as a result (as in not at all).

  19. @pjk,
    I see naming rights as a hood ornament or form of advertising (much like good old fashion TV commercials) for these large companies. Yes, won’t make or break a company to have their name on a sports venue, but won’t hurt either.

  20. I don’t think most companies see it that way. This type of sponsorship is done purely for awareness. There’s no reason for a clear market leader to buy naming rights. Everyone already knows them. The likely candidates will be lesser-known, #2 or #3 companies in highly competitive markets who want to build brand recognition. Alternatively, it could be a company that is trying to enter a new market, either by geography or audience (ie: a company that has traditionally sold to business that wants to sell to consumers).

  21. The chronicle reported last week that Levis Co had registered domain names such as Levisfield.com, LevisStadium.com etc…

    They maybe in the lead in the 49ers stadium naming rights… not many companies willing to pony up that kind of cash that is being asked for.

    Or maybe the coliseum?

  22. @pjk

    JJ is in no rush to add a sponsor to the outside of the stadium. The Cowboys generated 1/2 billion dollars in stadium revenue in 2011 alone. After taxes they had a net income of over 200 million. With money the Cowboys generate in their stadium they could field an NBA or NHL team and still have money left over after taxes. Some fool is going to have to pay dearly to get their name on the outside of Cowboy Stadium when JJ does decide to sell the stadium rights.

    So just to throw some figures at you guys the Cowboys/Rangers on average generate over 700 million dollars a year compared to A’s/Raiders last year generating just 399 million.

    The source of my info was Forbes.com

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