New Kings arena name announced
The Golden 1 Credit Union wasn’t the obvious choice to plaster its name on the Sacramento Kings’ new arena.
Airlines, automakers or national banks – megacorporations that market to coast-to-coast audiences – usually are the ones that spend millions buying the naming rights to major-league sports arenas. Golden 1’s approximately 800,000 members live almost exclusively in California, half of them in greater Sacramento. The not-for-profit credit union harbors no ambitions to expand beyond the state’s borders.
So why has Golden 1, with its comparatively modest world view, committed a reported $6 million a year to jump into the world of big-time sports sponsorship? Because it believes there’s enough new business to be found just in California to make the naming-rights deal worth the money.
Donna Bland, president and chief executive of the credit union, said the agreement with the Kings is already helping Golden 1 reach new potential customers – namely, the millions of Californians who aren’t familiar with it or mistakenly believe they can’t join because they aren’t state workers.
“There are 38 million people who live in California and we have 800,000,” Bland said in an interview last week at Golden 1 headquarters. “So we see the potential right here in California.”
Days before the $557 million arena opens with a Paul McCartney concert Tuesday night, sports-marketing experts said Golden 1’s deal makes sense – even if the credit union in effect is paying for national exposure it doesn’t really need.
“It makes them look like a bigger player to the local, original market,” said Jed Pearsall of Performance Research Inc., a market-research firm based in Rhode Island. “Now that they’re on a national playing field, it elevates them.” He said Golden 1 is the first credit union to buy the name to a major-league arena or stadium.
Golden 1’s agreement with the Kings runs for 20 years, bringing the total payout to $120 million. Bland refused to confirm the reported financial terms of the deal, but Golden 1 shouldn’t have any problem writing the checks. It’s the nation’s sixth largest credit union. Assets total $10.26 billion, a 30 percent increase in four years.
For all its success, Bland said Golden 1 still needs to improve its name recognition and tell its story to those who aren’t state workers.
“We were not a well-known brand among consumers,” she said. “Many still believe that we only served a select group of individuals.”
Golden 1 started in 1933 as California State Employees’ Credit Union #1. But in the years since, it has expanded well beyond its original base. Aside from state workers and their families, membership under Golden 1’s amended charter is open to anyone living or working in 38 designated California counties – a market territory that takes in 90 percent of the state’s population.
Only about 25 percent of Golden 1’s members are state workers or their relatives, Bland said. “That is no longer a driving factor for growth at Golden 1.”
About 25,000 of Golden 1’s members live out of state. Almost all of them are former state workers or their relatives, Bland said. A few work for employers that have been folded into Golden 1 by way of credit union mergers.
Naming-rights sponsors with local or regional customer bases are typically found in minor-league or college sports stadiums. At the big-league level, local sponsorship is rare but not unprecedented. One prominent example is the Phoenix Suns’ arena, Talking Stick Resort Arena, named for an Arizona luxury hotel.
Another example is the Kings’ old arena. For the last four years of its existence, the building was named for a retailer operating in California only: Sleep Train Mattress Centers.
“It was a good investment,” said Dale Carlsen, Sleep Train’s founder. “It was well worth it, 100 percent.” He wouldn’t say what the retailer paid for the naming rights.
Bland said Golden 1’s deal is already starting to pay dividends. Name recognition has risen since the deal was announced in June 2015, and membership is surging. Golden 1 gained 12,000 new members in August, she said. That’s twice the growth rate it was experiencing a few years ago.
The naming-rights deal also represents a bit of enlightened self-interest. Like many community leaders and city officials, Bland believes the downtown arena will be a boon to Sacramento’s economy, “and we wanted to be part of that,” she said. “We know that when this economy is strong, Golden 1 can be strong.”
Along the same lines, Golden 1 believed securing the arena’s naming rights was a civic duty of sorts. While she doesn’t know the identity of any of the other contenders, she said it would have been disappointing for Sacramento if the building were named for an out-of-town corporation.
“Someone needed to step up and make this happen,” she said. “Did we want it to be an organization that was headquartered out of New York or another community, where this was just a blip on their radar?” Making the deal with the Kings allows Golden 1 to be known “not just as a financial institution but as a community partner and leader,” she said.
Golden 1 dipped its toe in the NBA waters in 2013, when the investor group led by Vivek Ranadive bought the Kings and immediately began renovating aging Sleep Train Arena. Golden 1 purchased the naming rights to one of the arena’s main entrances.
When the Kings began fielding offers for naming the new arena, Bland said Golden 1 officials spent months deliberating on whether to jump in. Besides the increased name recognition, Bland said Golden 1 was attracted by the idea of using the partnership with the Kings to offer special benefits to its members.
Golden 1 members will get presale opportunities to buy tickets to certain arena events, as well as discounts on Kings merchandise. Golden 1 is installing six ATMs inside the building and one outside, in Downtown Commons. As many as 10,000 members were expected to attend an arena open house reserved for Golden 1 members Saturday.
The credit union’s agreement with the Kings hasn’t been universally praised. The California Bankers Association seized on the deal to denounce the status enjoyed by credit unions, which don’t pay federal or state income taxes.
Bland made no apologies for Golden 1’s tax breaks, saying credit unions serve their members with lower rates, special dividends and other benefits not provided by for-profit banks.
The banks “are all welcome to be credit unions if they believe it to be unfair,” she said. “It is very much a philosophical difference between credit unions and banks.”