Just over two years into its 15-year stadium naming deal with Los Angeles Football Club, Banc of California has announced it is dialing back the partnership.
The company paid $20.1 million to end the naming partnership early, according to a regulatory filing.
The bank’s original deal committed it to paying $100 million over 15 years for exclusive naming rights to Banc of California Stadium, as well as the right to be the official bank of the LAFC. Roughly $15 million of this had been paid from January 2018 through March 2020, according to the regulatory filing.
Both the bank and LAFC said the partnership ended on good terms and that they would continue to work together in other areas.
Jared Wolff, president and chief executive of Banc of California, in an email described the changes as “win-win for Banc of California and LAFC.” He added that the new relationship would involve an ongoing partnership on other community initiatives and give the LAFC the opportunity to expand its sponsor roster.
Banc of California had originally held exclusive rights to most official financial services partnerships with the club.
LAFC President and co-owner Tom Penn said his organization would now be looking for a range of new financial services partners, from a new official banking partner to a mortgage partner and a wealth management partner.
“One of those might (also) be the naming rights partner,” he added. “Or that might be someone in an entirely different industry.”
Penn said it’s likely Covid-19 will cause significant shifts in the club’s sponsorship lineup as businesses that have been deeply affected by the downturn step back, and less-impacted businesses step up.
“I see a complete new normal as we embark on this,” Penn said.
Banc of California anticipates recording a roughly $26 million charge related to the deal in the second quarter, according to the regulatory filing, including the early termination fee and the write-off of a prepaid advertising asset. The bank said in the filing that ending the deal should save it roughly $87 million over the next 12.5 years.
Analysts were generally upbeat on the news, viewing the cost savings as a boost to the bank in its shift away from broad consumer banking and toward business banking.
“The annual cost of the stadium naming rights was onerous and hamstrung the company’s ability to spend on other marketing initiatives,” said Gary Tenner, an analyst with D.A. Davidson & Co.
