Naming Rights Dispute Flares in Buffalo

Naming-Rights Dispute Flares in Buffalo

Acquisition of Marine Midland by HSBC brings lawsuit to compel change

Buffalo, N.Y., August 10, 1999 -- When a company agrees to pay millions of dollars to have its name pasted on the outside of a stadium, it gets the benefit of exposure, literally and figuratively. Think of the new Staples Center in Los Angeles, The Continental Arena in New Jersey and the Safeco Field in Seattle. These naming-rights agreements last for years and build a cross-identity between the firm and the sports franchises which perform in the facility. They also serve as a consistent reminder to the fans who watch the games and read about their teams as the sponsor's name is echoed in every reference to the facility.

All this is basic to the sports business. But in Buffalo, a naming-rights dispute which involves an non-existent business and its now-existing successor. has made its way to the courts.

In New York's second largest city, the major arena opened in 1995 as the "Marine Midland Arena," named after a prominent state bank bank headquartered in the city under a 20 year, $15 million agreement. It houses the Sabres of the NHL and also presents various other events from rock concerts to exhibitions. The question is whether the arena name must be changed if the corporation is acquired by a new business entity.

Earlier this year, Marine Midland was acquired by HSBC Holdings, a London-based bank group with assets of $ 497 billion. It promptly changed the name of Marine Midland Bank, which in effect, no longer exists. The company does business as HSBC bank, but the old name remains on the arena. The Sabres refused attempts to change the arena name. The refusal cost the new entity valuable exposure, because the Sabres had a successful season, going all the way to the Stanley Cup finals. For a foreign business new to the United States and Canada, the exposure during the playoffs would enhance name recognition, and arguably, prestige.

HSBC filed a breach of contract suit in state court against Crossroads Arena, a Sabres subsidiary, arguing that the refusal was improper. The bank seeks a "declaratory judgment" by the court, an expedited legal determination, that the Sabres and Crossroads must change the name to HSBC as the successor company.

Why Not Change?

Why would the defendants not change the name? My guess is to hold out for more money. Based on the present marketplace for naming rights, a reworked naming rights would be more lucrative than the one signed in 1995. Also, according to the Buffalo News, the owners are seeking to sell the team. The sale has not been completed, held up, according to the report by the financial problems of the team. It is in default of a $32 million loan made by a number of banks (including what is now HSBC) during the construction of the facility.

But ultimately, the right to keep or change the name derives from the contract of 1995. The bank argues that the agreement gives it the right to change the arena, citing a specific clause entitled "permissible Marine assignment" in the contract, which appears to address the event of Marine
Midland merging with another bank. The representative of the team claims that the clause does not apply in this situation. A decision is pending.