List of Figures
List of Tables
Agencies may consider naming rights for transit stations, rest stations, and agency-owned fleets as a relatively straightforward way to raise funds.
Naming rights can raise moderate sums of money for transportation projects, but these cash flows have to be weighed against the reputational risks of naming rights projects, as constitutional free speech and equal protection clauses prevent agencies from limiting the types of organizations that can purchase naming rights from them.
Definition: In a naming rights transaction, an agency sells the rights to name infrastructure to a private company. This type of value capture does not have to involve a traditional real estate developer, it can involve any private company that is looking to advertise.
Alternative Terms: N/A
Highways and Roads: The most significant roadway naming rights agreements are for rest areas and welcome centers, where advertising is permissible if it cannot be seen by highway mainline traffic. 238 Many State DOT vehicle fleets are also part of naming rights agreements, typically emergency and repair vehicles, including the Ohio DOT's (see Example 18 in Section 9.8).
Transit: Transit stations have also been able to secure significant naming rights agreements. One of the earliest transit naming rights agreements in the country is for the former Pattison Avenue station in Philadelphia, now known as NRG station.
Other Sectors: Publicly owned stadiums are the most common public infrastructure naming rights examples.
Structure and Timing of Funds: Naming rights payments are typically made on an annual basis over the course of several years until a naming rights contract expires.
Source and Use of Funds: In naming rights agreements, a firm pays for naming rights over several years. These monies can be used to fund either capital or operating expenditures, although more often for the latter. They are not typically used to repay bonds.
Management of Funds: Naming rights funds typically go toward a transit or transportation agency's operating budget.
Ease of Implementation: Naming rights agreements are not usually complex, as they involve a standard procurement process. However, they should involve a financial feasibility study before implementation so that their potential revenues are accurately gauged.
Enabling Legislation and Legal Basis: There are several regulations that restrict naming rights application, most notably the Highway Beautification Act of 1965, which restricts advertising in the ROW of certain roads, as this affects safety and aesthetics. 239
Naming rights agreements appear simple on the surface, but implementation of naming rights is potentially difficult. First Amendment principles disallow "viewpoint discrimination," meaning that a company cannot be excluded from a naming rights transaction because of its image or business practices or whether it is a match with an agency's desired image. 240 Additionally, the Fourteenth Amendment of the U.S. Constitution, or the Equal Protection Clause, prevents an agency from rejecting a bidder based on the agency's politics. 241 Therefore, if an agency rejects a naming rights sponsorship, it could potentially be exposed to legal challenges. 242 As with all value capture techniques, practitioners are advised to consult with legal counsel familiar with the case law in their State.
Portland, ME's bus service faced controversy over ads promoting a marijuana ballot initiative on its buses. 243 244 Because of the risk of legal exposure, the Los Angeles Metro canceled its plan to sell station and other naming rights. The Los Angeles Metro found that its policies against companies with "fraudulent, unethical, or prejudicial behavior" would be highly vulnerable on constitutional grounds, and it would be required to approve of nearly any naming rights agreement that satisfied its financial targets. 245
Challenges: It is important that policymakers temper expectations in relation to how much naming rights agreements can generate and balance this against the risk of legal exposure related to First or Fourteenth Amendment issues. Two of the largest naming rights agreements in transit, the naming rights for a station in downtown Philadelphia and the naming rights for a stadium-adjacent subway station in Brooklyn, generated only about $1 million per year and $200,000 per year, respectively. More relevant to roadways, in 2012, Virginia sold the rights to name all 43 of its rest areas for $2 million per year. 246 Iowa passed naming rights legislation with the expectation of raising significant amounts of funding, but found that the private sector was disinterested. 247 A few jurisdictions have also considered naming rights for prominent bridges, but these have not yet materialized. 248 249
Opportunities: For companies, the value of naming rights is affected by frequency of use of transportation infrastructure. Naming rights agreements are relatively low risk for a large company since the contracts tend to be small and therefore companies can experiment with them and use them to test new ways to reach a large number of people.
Challenges: Several States have passed naming rights legislation and others are discussing it. Opposition to this legislation has been due to concerns over losing the historic significance of some landmarks, as well as less tangible concerns related to the increased infiltration of commerce into the public space. 250 Additionally, if naming rights agreements result in name changes for transportation infrastructure, a transportation network can become more difficult to navigate. 251 The type of organization that wins a naming rights deal and its behavior may also create political challenges, since controversial organizations cannot necessarily be denied. As such, a public asset sponsored by a company with a controversial reputation could damage an agency's public image. 252
Opportunities: The political opportunity for naming rights is linked to the economic benefits that these transactions create.
Challenges: The risk of legal challenges and reputational risk has to be considered in any calculation of the economic benefits from a naming rights transaction.
Opportunities: Naming rights can be an alternative source of revenue that requires relatively little investment required from a public agency. An example of how funds from naming rights are spent is shown in Example 18.
Example 18: Ohio Department of Transportation Naming Rights 253
The Ohio DOT has explored strategies to raise money through a wide range of naming rights initiatives. In 2014, Ohio DOT entered into a 10-year, $8.65 million agreement to advertise on its safety patrol vans, which provide assistance to motorists at crash sites. The fleet includes 22 trucks that provide assistance to more than 30,000 drivers each year. Through this sponsorship, Ohio DOT can run its safety patrol program without increasing taxes. In addition to Ohio, several other State DOTs sell naming rights for their safety patrol vehicle fleets.
238 Daniel Howes, "Highway Beautification Act Limits Cobo's Advertising Options," Interview by Michigan Radio, December 17, 2015, www.michiganradio.org/post/highway-beautification-act-limits-cobos-advertising-options.
239 Control of Outdoor Advertising, 23 U.S.C. 131 (2012).
240 Mark Bartholomew, "There's a Cost to Metro Naming Rights," The Washington Post, July 17, 2017, www.washingtonpost.com/blogs/all-opinions-are-local/wp/2017/07/17/theres-a-cost-to-metro-naming-rights/.
241 Laura Nelson, "Transit Officials Backtrack on Controversial Policy to Sell Naming Rights for Metro Stations," The Los Angeles Times, February 27, 2017, www.latimes.com/local/lanow/la-me-ln-metro-naming-rights-20170227-story.html.
242 Bartholomew, "There's a Cost to Metro Naming Rights."
243 Randy Billings, "Portland Buses to Display Marijuana Ads Despite Objections," Portland Press Herald, October 2, 2013, www.pressherald.com/2013/10/02/marijuana_legalization_backers_unveil_bus_ads_/.
244 Bartholomew, "There's a Cost to Metro Naming Rights."
245 Nelson, "Transit Officials Backtrack."
246 Jonathan Kaminsky, "Washington State: Sell Naming Rights to Public Facilities?" USA Today, January 27, 2013.
247 Dave Westburg, "Highway Rights of Way for Sale?" Billboard Insider™, May 1, 2018, billboardinsider.com/highway-rights-of-way-for-sale/.
248 Kaminsky, "Washington State."
249 Westburg, "Highway Rights of Way for Sale?"
250 Kaminsky, "Washington State."
251 Nelson, "Transit Officials Backtrack."
252 Kaminsky, "Washington State."
253 Ohio Department of Transportation, "ODOT to Launch New State Farm Safety Patrol Fleet," October 30, 2014, www.dot.state.oh.us/news/Pages/2014/ODOT-to-launch-new-State-Farm%C2%AE-Safety-Patrol-fleet.aspx.
