Another Fumble: CMGI Drops Stadium Naming Rights

CMGI became the latest technology company to have its name removed from a pro sports arena, announcing on Monday that it had relinquished the naming rights to the New England Patriots stadium, terminating the 15-year sponsorship agreement with the NFL team originally entered into in August 2000. Under the terms of the original sponsorship agreement, CMGI was to pay $7.6 million per year for 15 years, in exchange for a comprehensive collection of sponsorship and promotional rights associated with the new stadium, which officially opened this summer with the name "CMGI Field." However, CMGI decided to drop the naming rights to the stadium before the Patriots even played a single game in the new stadium. Gillette, a Boston-based maker of shaving equipment and oral care products, has taken over the naming rights of the Patriots' home.

The Internet incubator, which operates companies such as Alta Vista, uBid and NaviSite, signed a new agreement with the team for more "limited marketing rights" at $1.6 million per year for the duration of the original contract. The move marks a new low for an Internet giant that looked unflappable in the late 1990s. At the start of 2000, CMGI's stock was valued at more than $160. The naming rights deal with the New England Patriots looked to bring CMGI and its properties to the mainstream and make the Internet incubator a household name.

CMGI quickly established close ties to the current Super Bowl Champions. The CMGI logo was etched on more than 2,000 different locations in the stadium. In addition, Jonathan Kraft, son of Patriots owner Bob Kraft and vice chairman of the team, was also elected to CMGI's board of directors last year.

But when the dot com bubble burst and a recession took hold, CMGI's stock dive-bombed and an expensive marketing deal for an NFL stadium for a company that was shifting away from consumer-oriented business seemed expendable. At the time the deal was signed two years ago, CMGI's stock price was hovering around $40 on the Nasdaq. Today, the Internet incubator's value is down to approximately 40 cents.

"CMGI's business, and indeed the business climate for technology companies overall, has seen drastic changes in the two years since we announced our original agreement with the Patriots," George McMillan, CMGI president and CEO, said in a statement. "We believe that these revisions of the sponsorship agreement, which will reduce our ongoing commitment to the Patriots by approximately $86 million, will better position CMGI for future success, and therefore are appropriate at this time."

In response to these changes, the company says it continues to restructure its business and is now focused on paring its network of operating companies to a smaller, core group that can achieve profitability and market leadership. CMGI expects to incur a charge of approximately $21 million in the quarter ended July 31, 2002 related to the future payments under the amended agreement announced Tuesday.

CMGI is the latest IT company to pull out of lucrative naming rights deals with professional sports teams. PSINet dropped the naming rights to the NFL's Baltimore Ravens' home this year and later declared bankruptcy. Adelphia Communications pulled its name from the NFL's Tennessee Titans stadium last month; the telecommunications company has filed for bankruptcy and several executives have recently been arrested and charged with fraud. Other industries have suffered as well in the pro sports game. Major League Baseball team the Houston Astros recently stripped the Enron name from its stadium after the energy company declared bankruptcy and became embroiled in an accounting scandal.