With the American economic crisis, are some arena naming rights deals at risk?

While many middle class Americans have been hard hit in an enormous way during these worsening economic times, we've seen in the past several days major shifts in the financial market. To put it mildly, it has been very ugly.

Regardless of your politicial views in placing the blame on any one person or multiple others, we've seen the New York Stock Exchange's Dow Jones Industrial Average lose over 900 points this week. This is the most commonly known indicator of the health of the United States economy. There was the stock market crash in 1987. Then the September 11, 2001 terrorist attacks that sent Wall Street into a tailspin. But today, it's about greedy investors and simply bad management and decisions on the part of financial institutions and of course the federal government.

I don't want to bore you with that as you wonder what does this have to do with hockey? Well, the health of the American economy does effect the health of the National Hockey League. NHL commissioner Gary Bettman and deputy commissioner William Daly addressed the media yesterday after the NHL Board of Governor's September meeting in Toronto. Bettman was asked about how this week's Wall Street developments might have an impact on the league. You can watch the first 1:27 of the video clip below to hear his comments.

"Well, actually, we did, in terms of the state of the league and looking forward, discuss the state of the economy," Bettman said. "Obviously, nobody can predict how this is going to continue to unfold and when there might be a recovery, but interestingly enough, based on the projections that we're seeing, based on the data that we're getting with respect to things like season ticket sales, we're actually running ahead of last season, which was a record for us. So we haven't been experiencing any material short-term effects, but everybody is, of course, cognizant of what's going on with the economy."


video courtesy: Leafs TV

With the United States government bailing out failing financial institutions like Fannie Mae and Freddie Mac earlier this year, the collapse of Bear Stearns and this week seeing Lehman Brothers and American International Group (AIG) go into bankruptcy, it makes you wonder if there will be a looming dark cloud over teams that have arena and other related naming rights put into risk. Today's latest development as reported by CNN Money's Aaron Smith has two giant banks considering a merger to stave off a collapse of their own. Morgan Stanley and Wachovia are in such talks.

Let us list the indoor arenas around the NHL that have naming rights agreements with banks or brokerage firms. We have the TD Banknorth Garden in Boston, HSBC Arena in Buffalo, the RBC Center in Raleigh, North Carolina, the BankAtlantic Center in Sunrise, Florida, Scotiabank Place in Ottawa, Wachovia Center in Philadelphia, Mellon Arena in Pittsburgh and the Scottrade Center in St. Louis.

Mellon Arena will be replaced in two years, so the Pittsburgh Penguins shouldn't stand to lose substantial money should Bank of New York Mellon Corporation go bankrupt. The new arena being built in Pittsburgh will have a naming rights deal in place, with or without Mellon having its name carry over.

If insurance companies or even struggling airline companies suffer even more serious impacts from the economy to effect their bottom line, don't be surprised if naming rights deals for the United Center in Chicago, the American Airlines Center in Dallas and the Prudential Center in Newark, New Jersey end up in jeopardy.

So why am I bringing this up? Well, for one, the NHL is still in a recovery from the lockout which wiped out the 2004-2005 season. There are still franchises are not yet on solid ground despite the new Collective Bargaining Agreement in place. Teams in those arenas that I mentioned like the Carolina Hurricanes and Florida Panthers have not had the kind of revenues we've seen from the more established Original Six clubs like the Toronto Maple Leafs and New York Rangers, the top two revenue-generating teams in the league.

Teams like the Hurricanes and Panthers need all the revenues they can get. Yes, Carolina won the Stanley Cup in 2006 and the fan base has grown. But Raleigh is a market where the team needs to maintain corporate sponsorship stability. Without the Royal Bank of Canada (which has RBC Bank as its American headquarters), the company that owns the naming rights to the 9-year-old arena on the west side of Raleigh, the Hurricanes would be affected in some way just like other teams would. The Panthers have struggled in recent years with attendance and its on-ice success. The collapse of their arena naming rights agreement could have a bigger impact than it would in comparison to other teams.

Bettman says that the health of the American and global economy should not cause the sounding of an alarm, but this is something to keep an eye on. Naming rights deals are important revenue streams for the member franchises. Until we see these banks or insurance companies who are tied to these deals show signs they're in completely sound shape and until we see a market recovery, the concern factor won't go away.