How much would a corporation pay to put its name on Rupp Arena?
Brent Rice, chairman of the Arena, Arts and Entertainment Task Force, predicted that would never happen.
But naming rights for the entertainment district that includes Rupp Arena and the Lexington Convention Center could be worth $2 million a year, Rice said at a meeting of the Bluegrass Hospitality Association on Thursday.
Rice identified more than $25 million in potential annual revenue from naming rights and sponsorships associated with the iconic Rupp Arena, where the University of Kentucky men's basketball team plays its home games.
The money would be used to bond the costs of renovating the 35-year-old arena and for developing a downtown arts and entertainment district surrounding Rupp.
"Keep in mind that $1 million in revenue equals $10 million in bonding capacity," Rice told an audience of about 75 people in Sal's Chophouse.
Rice will give a similar presentation to Commerce Lexington members on Friday at a breakfast on the floor of Rupp Arena.
The Arena, Arts and Entertainment Task Force appointed almost a year ago by Mayor Jim Gray presented its final report in January. It recommended renovating Rupp Arena and building a new convention center at a total cost of about $250 million.
Rice said the figures he was quoting came from Legend Marketing, a sports marketing firm in Dallas; other sports marketing companies; and work by the task force's finance committee.
In Louisville, KFC Yum is paying $1.3 million annually for 10 years for naming rights on the arena and entertainment district, Rice said. "Who's got the greater brand? We do. It's not even close," he said.
Rice said he thought a corporation would be willing to pay $2 million a year to have its name on the proposed entertainment district that would include Rupp Arena and the Lexington Convention Center.
"I submit to you we don't have a clue how powerful the name Rupp Arena really is in terms of generating revenue," Rice said. Sports marketing officials have told Rice that Rupp is "the best brand in college sports," he said.
Rice mentioned a few other potential revenue sources from advertising and naming rights:
Scoreboard advertising on a new drop-down center court scoreboard in Rupp could generate $1 million to $2 million annually. Those figures might be conservative, Rice said, because current advertising inside Rupp generates about $1.5 million to $2 million each year.
Companies or individual might pay $100,000 a year, for a total of $2.6 million in annual revenue, for 26 suites in Rupp.
Rupp Arena stock could be sold at perhaps $250 a share, similar to how the Green Bay Packers sold shares for $250 each and raised $67 million to renovate and enlarge their stadium.
To sweeten the deal, Rice said, "What about if we had an annual stockholders meeting in Rupp Arena, and the coach came, and you could bring your kids and have pictures taken?"
If $5 million were spent on a marketing campaign, "I will bet you lunch that we could raise $100 million, especially if that stock certificate could be passed down from generation to generation," Rice said. "Everybody could say, 'I own a piece of Rupp Arena.'"
Sponsorships could be sold for modern, attractive club areas and club suites where fans could socialize before and after games.
On the 47 acres surrounding Rupp that are owned by the city, "there are other revenue source opportunities such as naming rights for the proposed amphitheater, rental revenue from land leased to hotels, retail establishments and restaurants," Rice said. "It's been done at the fairgrounds in Louisville for many years."
Asked about recent news reports that the KFC Yum Center profits are short of projections, Rice said comparing Yum to Rupp Arena was like comparing apples to oranges.
"That was a project specific for an arena. Lexington's project encompasses a lot more than that. It's the creation of an arena, arts and entertainment district. There are multiple revenue sources the task force recommended be looked at, above and beyond the ones in Louisville," he said.
Bringing the proposed arena, arts and entertainment project from the drawing board to reality will take time, Rice said.
"It's a tough economy. But our goal is to be prepared so when the economy turns, we are ready to go," he said.