ICED OUT: Minute Maid Park, shown here on Opening Day of the 2024 season, will be rebranded to Daikin Park for a Japanese company that makes air conditioners and other HVAC equipment. (Getty Images)
Tiered structure should Astros pursue new venue
The Houston Astros’ new naming rights deal for Daikin Park could run as high as $140 million over the 15-year term, structured in five-year tiers to protect the brand should the Astros decide to pursue a new stadium, sources said.
On Monday, the Astros officially announced that Daikin, among the world’s biggest producers of heating, ventilation and air conditioning equipment, will take over naming rights to Minute Maid Park, effective Jan. 1. Financial terms were not disclosed other than the Astros stating it’s 15 years in length.
Matt Brand, the Astros’ senior vice president of corporate sponsorships, reached by text message, would not confirm the financial numbers, which guarantee the Astros $40 million over the first five years of the contract.
The information comes from a former Astros senior executive familiar with the negotiations and who spoke with sports marketing consultant Rob Yowell about the agreement. The person told Yowell the deal includes out clauses after five and 10 years, depending on whether the team sets its sights on building a new ballpark to replace the existing facility, which turns 25 years old next season.
To date, the Astros have not publicly announced their desire for a new ballpark.
Yowell, president and founder of Gemini Sports Group in Phoenix with 35 years of experience, has deep contacts on the Gulf Coast. He had been in talks with Daikin to potentially sponsor the Global Cricket U.S. Masters tournament, postponed from November to next year and tentatively set for Pearland, Texas, a Houston suburb. Yowell also represents the Texas Bowl to find a title sponsor for the New Year’s Eve game at NRG Stadium in Houston.
Daikin, a Japanese-based firm, has 98,000 employees globally and 10,000 in Houston. It operates a 4.2 million square foot factory complex in Waller, Texas, about 45 miles northwest of Houston.
Yowell said the structure of the Daikin agreement is similar to the naming rights deal he helped broker for Oracle Arena in 2006, a building that opened 40 years earlier in Oakland, California. The NBA’s Golden State Warriors played there for 50 years before they moved to Chase Center in San Francisco in 2019. Oracle’s initial 10-year agreement was extended for three years until the Warriors relocated across the bay.
The pre-negotiated terms, which extend to hitting certain thresholds tied to attendance, number of events and television exposure, among other factors, differ slightly than the typical price escalators that kick in over the length of the agreement, Yowell said. Some agreements for existing facilities include the brand partner getting first dibs to acquire naming rights for a team opening a new building in the future, he said.
“Any time you have a a venue that’s headed into the back quarter of its existence, any extensions are conditional on the fact that the team is still there, the venue is still viable and they aren’t building a new one,” Yowell said. “At Oracle Arena, we built in terms to opt in for additional (value), but also, in the event the venue goes away. It’s not so much an escape clause as it is a performance clause at a venue that’s theoretically going into the sunset of its use. We all knew Chase Center was coming.”
Dan Griffis, president of OVG Global Partnerships, said it’s standard to have exit or “reduction in fees to be negotiated” clauses in naming rights agreements if the primary tenant leaves the venue. Those terms are in all OVG deals, but from his experience, it’s “highly doubtful that ever happens,” he said.
For Daikin, it’s strictly business to seek protection for its financial investment to pay $8 million to $9 million annually for a deal that on paper runs through the 2039 season. Considering the value and the age of the stadium, the Daikin deal is a strong one for the Astros, Yowell said.
“Minute Maid Park is an active building,” he said. “We’ve got a situation here in Arizona where Chase Field is not nearly to the level amenity-wise or structure-wise. Minute Maid Park has a longer life cycle ahead of it. In this case, the Astros and Daikin have a tiered structure and the Astros can capture more revenue. They’ve won two World Series in (seven) years, so they can say it’s a little more expensive to be in our building now.”
The history behind branding the Astros’ retractable-roof stadium started off shaky at the turn of the millennium.
The ballpark opened as Enron Field in 2000 only to have the 30-year, $100 million naming rights deal fall apart after the energy company filed for bankruptcy two years later.
Minute Maid, a Coca-Cola subsidiary, became the team’s new naming rights partner in June 2002, signing a 28-year agreement valued at $100 million, Astros owner Jim Crane said at Monday’s announcement at the ballpark. Minute Maid opted to exit its deal early, but will remain an Astros sponsor at a lower level, team officials said.
“It’s one of those things where Coca-Cola as a company doesn’t really need this (exposure) anymore,” Yowell said. “It’s typical of Coke, Pepsi, Miller and Budweiser to (eventually) move off these deep branding plays with new companies stepping in such as Daikin. They’re looking at it as a global branding opportunity. It all trends well for the Astros and those of us selling these deals in markets around the world.”
