Developer Sold Naming Rights To Proposed Richmond Arena, But Won’t Say Who Bought It
As Richmond City Council continues to vet the proposed $1.5 billion coliseum redevelopment deal, they won’t be able to learn more about whose name would adorn a new downtown arena.
The developer, NH District Corp. (NHDC), told the independent Navy Hill Development Advisory Commission last week that it has already lined up a buyer for the naming rights to the arena for the next 20 years. NHDC estimated that the naming rights and “founding partner” sponsorships will total around $2.8 million annually, most of which will go toward the cost of construction. But in a written response to a request for details regarding the naming rights, NHDC representatives told the advisory commission that these sponsors will remain anonymous until the city approves the project.
“The arena naming rights and other marketing partnerships will remain confidential until Council approval,” representatives for the developer wrote.
According to the proposed agreement between the city and NHDC, the developer can sell the naming rights while it leases the public arena. The current lease agreement is for 30 years.
Michael Hallmark, who is one of the chief planners with NHDC, said the group had reached a tentative deal on the naming rights and they were no longer shopping it around. He said because NHDC has not yet selected an arena operator that will have final approval for the naming rights, any announcement would be premature.
“We have no concern that those [agreements] will not be consummated, it’s just that there’s no reason for us to put everybody on the spot by announcing a name,” he said. “It’s not helpful.”
NHDC has already received about $4 million from corporate sponsors that they’ve used on pre-construction design plans for the arena, Hallmark said. The names of those sponsors are also confidential at this time.
The lack of transparency around the naming rights is a concern for members of the advisory commission, which was created by Richmond City Council to fully vet the $1.5 billion redevelopment proposal. The proposal includes a new arena as well as more than $900 million in private apartments, office and retail space.
John Gerner, the commission’s vice-chair, said corporate sponsorships are an important revenue source for repaying the $311 million bond the city plans to take out for constructing a new arena. According to projections by the financial consultancy firm MuniCap, NHDC estimates that more than $100 million will be available for bond repayment from arena sponsorships and other “district-wide sponsorships.”
Gerner pointed out that, currently, those projections are based solely on non-binding, tentative agreements and the word of the developer.
“We do not have actual agreements in place to prove that,” Gerner said. “This is one area where, because this is clearly generated from the agreement, it’d be [in our] interest to strongly confirm this and show ‘Yes, this money is coming in.’”
Mark Gordon, an advisory commission member and executive at Bon Secours, echoed Gerner’s concerns at a recent working meeting.
“There’s no transparency,” Gordon said. “It hinges on if we have an agreement. Then we’ll know about the sponsorships.”
According to NHDC, most of the marketing sponsorships on the new arena will be paid for annually, with some sponsors paying a lump sum for a specific part of the construction. Legally binding contracts with arena sponsors are expected to be signed after the deal is approved by Richmond City Council, but before the city tries to finance the arena redevelopment.
While NHDC is refusing to say who plans to buy the naming rights to the new arena, many have speculated that it will be Dominion Energy, the largest corporation headquartered in Richmond.
Tom Farrell, Dominion’s CEO, heads the board of NHDC. And a report from Richmond Bizsense in 2017 said Dominion had purchased the naming rights to DominionEnergyArena.com. As of April 2019, the website domain was registered to Dwight Johnson, the former general manager of SMG Richmond. SMG, a Philadelphia-based company, managed the Richmond Coliseum until it was shut down.