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The naming-rights agreement that christened Louisville, Kentucky's new downtown arena as the KFC Yum Center was not a deal that came together quickly.

Quite the contrary.

Instead, the 10-year, $13.5 million contract that Yum Brands Inc. signed to put its name on the multiuse building was the product of more than five years of on-again, off-again conversations and negotiations among the fast-food giant, officials with the Louisville Arena Authority Inc. and the authority’s naming-rights agency, Team Services LLC.

What began with an introductory meeting more than five years ago between authority chairman Jim Host and Yum senior vice president Jonathan Blum culminated last week with a signed—but secret—contract. Few people knew of its existence until the announcement was made.

In exchange for its naming-rights investment, Yum, the parent company of KFC, Taco Bell, Pizza Hut, Long John Silver’s, and A&W Restaurants, will have prominent exterior signage on each side of the 22,000-seat arena—the future home of the University of Louisville’s men’s and women’s basketball programs—and on the arena roof.

Seven restaurant concession areas within the arena will serve KFC, Taco Bell, and Pizza Hut products when the new venue makes its scheduled debut in November. Yum also will have other perks, such as a double, center-court suite, digital messaging rights, an interior signage package, and premium hospitality options.

Representatives of the restaurant company, the arena authority, and the city hailed the deal as a win for all involved during an arena authority meeting. David Novak, Yum chairman and CEO, called the signing of the naming-rights contract “a very exciting day for Louisville” and “a very exciting day for our company.”

“We believe in being a company with a huge heart,” he said.

Early on in the naming-rights search, it was not the size of the restaurant company’s heart that was in question. It was the size of its pocketbook—or at least its willingness to dig into that pocketbook.

At their initial meeting, Blum told Host that Yum was interested in playing a sponsorship role with the new arena—if the price was right. The company is a big supporter of University of Louisville athletics, and in 2006 donated $5 million to secure the naming rights for the Cardinals’ basketball practice facility.

“We were excited by the (arena) opportunity,” Blum recalled. “We definitely shared the vision.” But when Host returned in 2007 to make a formal presentation with the authority’s newly hired sponsorship broker, Team Services, a deal could not be reached.

Publicly, Host and Team Services were pitching a $40 million, 20-year naming-rights package. Blum said the first deal offered to Yum called for $54 million over 20 years. Yum had offered in 2000 to pay $100 million for arena and team naming rights should Louisville lure an NBA franchise to the city, but no deal ever materialized.

Blum said he did “extensive” research into naming-rights deals at collegiate and professional venues across the country as part of that effort and determined that the price tag attached to the arena for University of Louisville was “unreasonable.”

So Yum said no.

“We wished them well,” Blum said. “It seemed like we were way too far apart.”

Blum later would send a letter to Louisville Metro Mayor Jerry Abramson, who was being kept apprised of naming-rights discussions, to tell him that Yum was not interested in a sponsorship at the initial asking price. Abramson said he never pressured or prodded either the company or the arena authority in their conversations about naming rights. “I never played that role,” he explained. “We just doubled our efforts looking elsewhere.”

Host characterized early talks with Blum as “very nice and cordial.” But with an agreement seemingly out of reach, he encouraged Team Services, led by its principal E.J. Narcise, to aggressively market arena naming rights to other parties.

Narcise pursued companies “literally all over the country” for nearly two years, Host said, but the economic downturn caused the market for corporate sponsorships to dry up. Finally, in late 2008 and early 2009, Team Services made contact with a “top-flight prospect,” according to Host, although he declined to identify the company.

He, Narcise, and Abramson flew out of Louisville to meet with officials and were convinced after making a presentation that the deal would come to fruition. But no deal materialized. “It just didn’t work out,” Host recalled. The problem “was on their part, not on ours.”

Prior to landing the deal with Yum, Host said, the authority and Team Services had serious discussions with four out-of-town companies about naming rights, but none proved to be the right fit. He declined to identify the companies. Meanwhile, Narcise and Team Services continued to provide updates on naming rights and sponsorship efforts to Blum, and arena authority members maintained a casual courtship of Yum’s top officials.

Host said he became a regular at events tied to Yum’s World Hunger Relief effort and occasionally would broach the subject of the arena with Novak, who always mentioned his desire to get involved.

The authority chairman said he has known Novak since the mid-1980s when Host—then running sports-marketing firm Host Communications Inc.—worked with the restaurant magnate on a mini-basketball promotion tied to the NCAA’s Final Four. “I have great respect” for Novak, Host said, citing specifically the Yum chairman’s humanitarian efforts.

Also reaching out to Novak was retired banker Dan Ulmer, an arena authority member and partner in the Louisville Bats baseball team. Ulmer has a house in Florida near Novak’s vacation home, Host explained, and the two often run into each other on the golf course. The arena was a frequent topic of conversation, according to Host.

Despite the frequent contact, Yum officials didn’t feel badgered, according to Blum. “It wasn’t a matter of persistence,” he said. “It wasn’t like they were chasing after us. We were a very willing and interested participant…at the right price.”

Price continued to be a sticking point in informal talks between Yum, Team Services, and the arena authority, but a breakthrough occurred around the first of this year when Blum agreed to meet with Narcise in Washington.

Blum said he asked about the status of the search and again expressed interest in the project—if the parties could agree on a new price.

The $13.5 million, 10-year deal was hammered out over about a two-month period this spring, according to Host and Blum. A memorandum of understanding finally was signed April 16. “We think where we ended up was a win-win,” Blum said. Host said negotiations were never contentious and always were respectful.

He called the final contract a win for everyone and said he is “tickled to death” with how the process worked out—even though the deal is for less money and a shorter term than initially projected. That’s not a big problem, Host said, because the sales of other advertising and sponsorships have been stronger than expected.

Team Services and Louisville Arena Sports and Entertainment Properties, the local entity overseeing such sales, have generated about $24 million in sponsorships outside of the naming-rights deal. That includes $10 million from Norton Healthcare Inc., which will open an immediate-care center at the arena.

The announcement of Yum choosing to buy arena-naming rights was a surprise to most in the community, and those close to the deal marveled at how they were able to keep it quiet as talks intensified in the past few weeks.

Blum said only “a very small circle” of Yum executives knew anything of the agreement, and Host noted that just a handful of authority board members had been kept in the loop. Abramson said his wife, Madeline, didn’t even know about Yum’s plans until the day of the authority meeting.

“I didn’t say anything to my family,” the mayor said. “I told them as I left the house at 8 o’clock that morning.”

Yum and the authority “wanted to keep it quiet,” he added. “We can keep a secret.”

(04-28-2010 09:48 AM)UofL07 Wrote:  In exchange for its naming-rights investment, Yum, the parent company of KFC, Taco Bell, Pizza Hut, Long John Silver’s, and A&W Restaurants, will have prominent exterior signage on each side of the 22,000-seat arena—the future home of the University of Louisville’s men’s and women’s basketball programs—and on the arena roof.

That seems to be the most controversial part according to some UL fans...as unlike some Arenas with a simple sign, Louisville's new arena will be plastered with different signs all around it and on top.