Famer’s Insurance Company recently signed a 30-year, $700 million naming rights deal for a nonexistent stadium in Los Angeles for a nonexistent NFL team.
On the surface it would seem Farmer’s is making an incredibly poor business decision, but the company’s CFO Kevin Kelso says that there’s sound reasoning in signing the deal.
Farmer’s was founded in Los Angeles and is headquartered six miles from a proposed stadium site being led by billionaire Phil Anschutz.
They’re also the largest auto insurer in the state of California, and any deal that can be struck to bring an NFL team to the city would position them to expand their national brand.
Anschutz’s company AEG is attempting to lure an existing NFL franchise to Los Angeles, namely the Minnesota Vikings and San Diego Chargers, two teams that play in aging stadiums that are preventing them from producing revenue.
Los Angeles is the nation’s second largest television market and Kelso points out that 18 of the 20 most watched TV programs this past year were NFL broadcasts.
Kelso feels Farmer’s has made a deal that makes them a contributor in bringing a team to Los Angeles, and even better is the fact that if a stadium isn’t built, the company keeps the $700 million.
It still seems like a huge amount of money to put towards a venture that may never come to fruition, but Kelso says it’s an investment worth making.
“One of our competitors spends more than that on its annual marketing budget,” said Kelso.
Los Angeles hasn’t had a team since the Rams bolted for St. Louis in 1994, and since then several plans put forth by former Governor Arnold Schwarzenegger were shot down.
Some of those plans involved renovations to the Los Angeles Coliseum, but the NFL made it clear they wanted a new stadium built before they entertained any thoughts of returning to the city.
Other plans called for taxpayer funding to build a new stadium, an idea that was highly criticized due to California’s soaring debt.
