Recent uncertainty over whether the Kodak Theatre could keep both its naming rights and the Oscars event may complicate owner CIM Group’s other hopes for the Hollywood & Highland Center – selling naming rights to the complex itself.
CIM is moving to find a sponsor for the center, home of the Kodak, Grauman’s Chinese Theatre, and more than 75 shops and restaurants. It has been a surprising effort that has had several stops and starts, and was disclosed only recently due to a lawsuit.
The initial effort was marred by a dispute with the previous naming-rights consultant, Dean Bonham, a fight that has escalated into litigation. But CIM has continued with a new naming-rights firm, Santa Monica’s Premier Partnerships Inc., sources said.
CIM and Premier Partnerships declined to comment. But in 2010, there were around a half-dozen major corporations that showed interest in putting their name on Hollywood & Highland, Bonham told the Business Journal. CIM continued to reach out to some of them until at least last summer. None of those was based in Los Angeles, though at least one was a California company.
“This is something that could easily be worth millions of dollars a year, more than what they’re getting for Kodak,” said Bonham, an industry veteran based in Villefaranche Sur Mer, France, who has negotiated naming rights deals for the O2 entertainment district in London, San Diego’s Petco Park and Anaheim’s Honda Center.
Now, CIM could be looking at the possibility of selling the rights to the theater and complex as one package, he said. That’s because Eastman Kodak filed for bankruptcy earlier this month, which could mean the end of its 20-year, $75 million sponsorship contract. It’s likely that the company will have the option to drop the contract during bankruptcy.
“Kodak would have to decide (in that case) whether or not it wants to preserve its naming rights in the new world where it’s an insolvent company looking to reduce its costs,” said Ken Russak, a bankruptcy attorney at Mid-Wilshire law firm Frandzel Robins Bloom & Csato LLP.
CIM, meanwhile, may also have a standard opt-out option in the contract, and may not want to be associated with a bankrupt company or decide to try to get a better deal, Bonham said.
Though naming-rights deals for retail complexes are uncommon, Hollywood & Highland is a highly visible tourist hub associated with the entertainment industry, which could make it more attractive to potential sponsors.
“Companies are already spending millions of dollars on billboards and trying to get their name and logo and brand anywhere around entertainment and retail spaces – this is just taking it to the next level,” said Jon Snyder, an Austin, Texas, consultant for Development Planning and Financing Group Inc.
But there are challenges, too. The Academy of Motion Picture Arts and Sciences is threatening to move its Oscars ceremony out of the Kodak. That would drop the naming-rights value of the venue as well as any combined naming-rights deal.
CIM also stumbled out of the gate the first time around, when it hired Bonham for a six-month contract in May 2010.
Because Bonham’s commission would be halved if a deal resulted in a lead generated by CIM, he said the two fought over leads and he was prevented from talking to at least two potential sponsors. The company also had problems with his valuation analysis, and he said he never even got to make a full sales pitch.
The dispute spilled over into arbitration, where Bonham lost, and then into federal court, where the case is pending. At one point, Premier Partnerships was called in by CIM as an expert witness during arbitration proceedings, he said.
Now, that Santa Monica firm, founded in 2003 by former Los Angeles Clippers President Alan Rothenberg and sports marketer Randy Bernstein, has taken the reins.
Consultant Snyder, who is familiar with Premier Partnerships, said the company is innovative. For example, Premier Partnerships sold a package sponsorship to the rights to Pizza Hut Park, home Major League Soccer club FC Dallas. The package included rights to sponsor local youth soccer leagues.
“It’s not just putting your name on there,” he said.
Bonham said he wouldn’t be surprised if a deal was struck soon, despite some of the obstacles. In fact, the uncertainty over the Kodak’s future could be considered an asset rather than a problem in a plan to sell a larger deal.
“The stars are all aligned,” he said. “Now’s the time.”
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