Bankruptcy Court Agrees To Let Sports Authority Out Of One Of Its Team Sponsorships

A sporting goods retailer that’s going out of business doesn’t need to plaster its name on billboards at sporting events, and that’s why Sports Authority would prefer to end its sponsorship contracts with various teams and to sell the naming rights to the arena where the Denver Broncos play. Most of those disputes over sponsorship contracts remain unresolved, but the former retailer and the reigning Super Bowl champions have come to an agreement over the sponsorship of the Broncos.

The company, which is based in Denver, had the status of official sporting goods retailer for the team, which meant ads at games and the right to use the Broncos’ name and logo in its own advertising. The sponsorship agreement for over $55 million began in 2011 and ran through 2035, and is similar to the company’s agreement with other teams, notably the Colorado Rockies, which sought to get the company to pay up for sponsorship during the period that it’s in bankruptcy and liquidating.

The sponsorship agreement with the Broncos is entirely separate from paying for the naming rights of the stadium that the team uses: it’s called Sports Authority Field at Mile High Stadium because fans understandably like the name Mile High Stadium. The team doesn’t own the stadium, though, and the company is controversially selling the naming rights contract in its intellectual property auction.

The entity that owns the stadium argues that the naming rights aren’t the retailer’s to turn around and sell to someone else, and will most likely fight the sale if the winner isn’t a company they would have approved of anyway. The bigger issue, though, is that naming rights simply sell for more money now: Sports Authority signed its deal in 2011, in a post-recession period when naming rights periods were depressed. Also, the Broncos hadn’t just won the Super Bowl. If the naming rights went on the open market now, they’d go for a lot more.

Broncos can cancel Sports Authority sponsorship, bankruptcy court says [Denver Post]