This other recent article provides further color on what has been going on recently:Naming rights at stake for Kent's arena
Doubts over deal
Puget Sound Business Journal (Seattle) - July 13, 2007
by Jeff Meisner Staff Writer
Amiga Inc.'s $10 million offer to buy the naming rights to the city of Kent's proposed multipurpose arena may be in jeopardy because of concerns over money and terms, city officials say.
Past financial problems at New York-based software maker Amiga have Kent officials and the Seattle Thunderbirds minor-league hockey team worried that the company won't be able to deliver on the proposed, 20-year deal. Kent now wants the company to make a substantial payment before groundbreaking.
Also, Amiga wants the power to approve advertising by technology companies in or around the 6,025-seat arena, a demand that city officials and the Thunderbirds say is unreasonable.
And the clock is ticking, with the Kent City Council expected to vote July 26 on whether to build the arena. If Amiga, the city and the team don't come to terms soon, the deal could fall through, leaving the arena without a naming rights sponsor.
To be sure, negotiators could reach an agreement in time, giving Amiga the right to put its name on the proposed $67 million arena. And even if the Amiga deal falls apart, Kent and Thunderbirds officials say they are prepared to proceed with a new naming rights sponsor.
Amiga Managing Director Bill McEwan did not return several phone calls seeking comment.
Doubts about Amiga's ability to pay $10 million for the arena's naming rights began in mid-May, with media reports about past financial problems at Amiga.
Now, Kent and the Thunderbirds want Amiga to deposit $2.5 million into an escrow account before the July 30 groundbreaking to show Amiga can meet its financial commitments.
"In light of some of the bad media coverage, we want to make sure the money is there earlier," said John Hodgson, Kent's chief administrative officer.
Colin Campbell, vice president and assistant general manager of the Thunderbirds, which will be the new arena's primary tenant, also wants to see the money before construction starts.
"The bad press that came out about Amiga has caused us to want to move quicker to understand where the money is coming from and when it will be paid," Campbell said.
The Kent City Council also has concerns about Amiga's ability to pay.
"The council is not pleased with the way things have evolved with Amiga," said Council President Deborah Ranniger. "The city has said that if the ($2.5 million) isn't in an escrow account by the day of the groundbreaking, the deal is off."
Ranniger said Amiga could improve its standing with the council if it deposits the $2.5 million in escrow prior to the July 26 council vote.
"Show us the money," she said. "If they want to name it, then they have to pay for it."
Kent, Amiga and the Thunderbirds are also wrestling with the issue of who controls the arena's advertising.
Amiga wants to control which technology companies can advertise inside the arena and just outside the facility, Hodgson and Campbell said. Kent and Thunderbirds representatives say Amiga's definition of what constitutes the technology category is too broad.
Don Hinchey, a researcher with the Englewood, Colo.-based Bonham Group, a consulting company that specializes in brokering naming rights agreements, said such debates are common.
"It's typical that the naming rights sponsor will expect and demand in some cases that it will have category exclusivity," Hinchey said. "In other words, in exchange for the naming rights, the facility promises it won't allow competitors to advertise in the facility.
A fair amount of haggling over what is and isn't part of a category like technology is common, and usually gets resolved, he added.
Kent and the Thunderbirds are resisting restrictions on which companies can advertise in the arena, because advertising is a significant source of income for the city and the team.
"They (Amiga) want to be able to veto any name product that relates to technology," Hodgson said. "That's huge. Depending on what kind of communications and sound systems we install, it could have a big impact."
Ranniger, the City Council president, was also displeased that the council found out about Amiga's demand to control all of the arena's technology advertising from a Puget Sound Business Journal reporter.
"We're not as informed as we'd like to be," she said. "I don't know the reason why not, but I find it very disturbing."
Also at stake is an opportunity for Kent to establish itself as a regional technology player.
Amiga plans to move its headquarters from New York City to Kent and open a new technology incubator in the city, bringing nearly 240 jobs to Kent.
Hodgson, the city's chief administrative officer, said all is not lost if Amiga fails to deliver the $2.5 million by groundbreaking. The arena project will still move ahead and the city is prepared to find a new naming rights partner.
"If we get to an absolute standstill with Amiga, we're prepared to move on," he said. "But we don't want to do that. The naming rights deal has been the first hiccup in this process, and it's been frustrating."
Contact: jmeisner@bizjournals.com • 206-447-8505x103
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