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Still at issue, from what I read, is how to christen the new professional football stadium which metro voters approved last year. Pat Bowlen, the Broncos' owner, said he'd be pleased if the new arena had the same name as the old one: Mile High Stadium.
However, the stadium-construction authorities believe
they can save taxpayers some big money by selling the
naming rights
for as much as $50 million.
In theory, it's money well spent. For a one-time
investment, the Engulf & Devour Corp. puts its name on
a location that will get frequent mention on television for
at least a generation: Here we are at Engulf &
Devour Stadium, where in just minutes, the world-champion
Denver Broncos will take the field against the ...
Thus the company gets exposure at a lower cost than if it had purchased enough advertising to get the same quantity of media mentions.
In practice, though, it might not work so well. For one
thing, the media might return to mere reporting, rather
than shilling, and the sportscasters might just say Here
we are at the home field of the Denver Broncos ...
And
the camera crews might focus on the football players,
rather than the stadium billboards.
That's not likely, but there are other factors that could call the wisdom of this investment into question. For instance, what if Engulf & Devour got acquired by another company, and its corporate name ceased to hold meaning?
This very nearly happened in Colorado this year. Just a
couple of months after State Sen. Ken Chlouber suggested
that the Colorado General Assembly be renamed the US
West Legislature
in honor of its lobbyists and
contributions, US West agreed to be acquired by Qwest
Communications.
Had Chlouber's proposal succeeded, our legislature would have been operating under a corporate name that the new owners were trying to bury, or else Qwest would have had to spend a lot of money on new legislative signs and stationery. Although I'm sure that Qwest doesn't mind spending money at the statehouse, I'm also sure that the company would prefer to spend the money on campaign contributions and donations to the gubernatorial mansion recovery fund.
Another problem with buying a name is that the name
could lose its positive connotation. It might be a good
investment to buy the name of the stadium used by the
respected world champions of football, but suppose the
Broncos revert to their form of 25 years ago, when they
were generally known as the Denver Donkeys
(a slur
on a noble beast, I might add)? Would any image-conscious
modern corporation want to be associated with a perennial
loser?
Even so, companies may want to take that risk because they seem to have money to burn these days as stock prices are at record levels. Many mere citizens also see their net worth climbing because real-estate prices continue to rise.
Some economists have an explanation, called the
Greater Fool
theory.
Under normal circumstances, a potential investor looks at things like cash flow, debt levels and capital assets before putting money into an enterprise.
But those things don't matter much in Greater
Fool
times. The intrinsic value, assuming you can
reckon such a thing, of a given company might be $10 a
share, even though the stock is selling for $100 a share.
And so what? It's still a good buy as long as you can
reasonably believe that, within a reasonable time, a
Greater Fool will come along and pay $200 a share.
The same holds with real-estate -- $120,000 for a dilapidated shotgun house on a tiny lot is a fair price if in a year or two, some Greater Fool will come along and offer you $200,000 for it.
In other words, times are good as long as there's a sufficient supply of Greater Fools.
Back to Denver's new football stadium. Many studies have demonstrated that there is little, if any, real economic value to having a major-league sports franchise. Cities with them don't prosper more than cities without them.
Such factors are often ignored, however, and the owners of big-time teams know this. They tell a city that unless it provides handsome subsidies, they'll move the team to a city more willing to grease the way.
In other words, the sports baron says, in effect, Pay
up, or I'll move the team to where there are Greater Fools,
willing to spend more than you.
And so the stadium-construction board could honor metro taxpayers, and memorialize this peculiar era in American economic history, by ignoring both Pat Bowlen's request and the chance to pick up $50 million in naming rights, by calling the new facility Greater Fool Stadium.
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