Jensen, Ric. (2007). What Sports Franchises Can Do When Their Corporate Naming-Rights Partner Gets in Trouble: How the Houston Astros Got “Enroned” and Lived to Tell About It. Journal of Sports Media, 2:105-110.

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Jensen, Ric. (2007). What Sports Franchises Can Do When Their Corporate Naming-Rights Partner Gets in Trouble: How the Houston Astros Got “Enroned” and Lived to Tell About It. Journal of Sports Media, 2:105-110.

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  23  OCTOBER 2007   International Journal of Sports Marketing & Sponsorship  C   A    S   E    S   T    U   D   Y    Is sport becoming too commercialised? The Houston Astros’ public relations crisis Keywords commercialisationHouston Astrosnaming rightspublic relationsEnron Executive summary The practice of selling the naming rights of sportsstadia to corporations is widespread in the UnitedStates. Crompton & Howard (2003) suggest that thesales of stadium naming rights will become morewidespread and more financially lucrative as sportsorganisations seek additional revenue to offset highersalaries paid to players. Although the sales of stadiumnaming rights are thought to be a financial windfall,Chen & Stone (2002) describe many situations inwhich corporate naming rights partners haveencountered financial and ethical challenges which inturn pose challenges for sports organisations. Thispaper focuses attention on the extraordinarycircumstances facing the Houston Astros Major LeagueBaseball team when their stadium naming rightspartner, Enron, collapsed in 2001. The Enron case is unique in several respects. Beforeits fall, Enron claimed revenues of more than $100billion and was named ‘America's Most InnovativeCompany’ by Fortune magazine. After its collapse, Abstract Throughout sport, the incidence of commercialsponsorship is increasing and shows no signs of slowing. This case study examines the negativeconsequences that can arise when a corporatestadium naming rights partner (Enron) becomesembroiled in financial and ethical controversies andhow its collapse affected the team that uses thestadium for its home games (Major League Baseball’sHouston Astros). It examines public relations strategiesand tactics the Astros used to disassociate themselvesfrom Enron and to recapture public support. Ric Jensen Instructor,Sports Management Program, Texas A&M UniversityCollege Station,Texas 77843, USTel: +1 979 845 8571Email: rwjensen@ag.tamu.edu Bryan Butler Doctoral Student, Texas A&M University Peer reviewed  24 International Journal of Sports Marketing & Sponsorship   OCTOBER 2007           C        A        S        E        S        T        U        D        Y The Houston Astros’ public relations crisis Enron was associated with the dubious honour of having filed the largest bankruptcy in Americanhistory. To make matters worse, Enron was not just afinancial disaster: to many experts it presented a moraltale of greed and callous disregard for the public good.Some of the words used to describe Enron include“notorious,” “scandal-tainted” and “a black eye” (Chen&Stone, 2002). Darren Rovell of ESPN commented:“Although many stadia still bear the names of sponsors that recently went bankrupt, the Astros’situation might be the worst. Being associated with abankrupt company is much different than beingassociated with a bankrupt company that has beencharged with record shredding, insider trading andblatant accounting abuses.” This article describes the process that the Astroswent through to disassociate themselves from Enron,how they tried to incorporate ‘good citizen’requirements into the criteria of choosing a newstadium naming rights partner,and communityoutreach efforts the team undertook to restore theconfidence of fans. The paper suggests thatcomprehensive use of public relations strategies thatstress the importance of building relationshipsbetween sports organisations and valued publics canbe effectively used to cope with crises such as this. Introduction Today it has become increasingly difficult to watch asporting event without being inundated bymanifestations of corporate influence (Boyd, 2000;Chen & Stone, 2002). In Major League Soccer, theNew York franchise is named for an energy drink andthe team uniforms prominently feature the Red Bulllogo (Freedman, 2006). As players run from one endof a National Basketball Association floor to the other,advertising signs can be seen from basket to basket,enticing fans to buy products and services (Clark et al,2002). Perhaps the most egregious examples can befound in NASCAR, where stock car racers and theircars are covered head-to-toe and bumper-to-bumperwith advertisements and promotions (Pruitt et al,2004).It wasn’t always this way. In the minds of manyfans, the ideal is to separate corporate advertising andpromotion to create a sacred place, a cathedral of sorts, that is pure and untouched by the world of business (Boyd, 2000; Aden,1993). A former MajorLeague Baseball commissioner, A. Bartlett Giamatti,wrote that baseball is played so fans can remember apast that is graceful, energetic and free of the urban,commercial environment (Giamatti, 1998). Perhapsit’s not too surprising that some of the names given topublic sports venues include gardens, parks and fields(Giamatti, 1989; Aden & Reynolds, 1993). In themovie Field of Dreams, a cornfield converted to abaseball diamond provided spiritual health and waseven likened to heaven,in partbecause the site wasrural, isolated and free from the trappings of consumerism (Aden, 1993).For many years, sports stadia were named after alocal trait of the community or one of the area’slandmarks or heroes (Chacar & Hesterly, 2004; Boyd,2000). Today,the sports landscape has changedconsiderably as collegiate, amateur and professionalsports teams are becoming totally immersed incorporate sponsorship, advertising and promotion(Crompton & Howard, 2003; Ashley & O’Hara, 2004).Almost everycollegiate football bowl game has sold itsnaming rights to corporations – even the venerableRose Bowl is presented by a corporate sponsor. The bottom line is that many sports organisationsthroughout the United States have entered intobusiness deals with corporate sponsors for the namingof stadia, in-stadium promotions, advertisements andpromotions (Covell, 2001; McCarthy & Irwin, 1998).The reason such agreements are increasing infrequency and scope is obvious. As the cost of runningmajor sports programmes escalates, administrators of sports franchises are faced with a series of unpleasantchoices: they can raise the price of tickets, parkingand concessions, drawing the ire of fans; professionalteams can spend less on player salaries and risk alosing season; or they can enter into sponsorship  25  OCTOBER 2007   International Journal of Sports Marketing & Sponsorship  C   A    S   E    S   T    U   D   Y    The Houston Astros’ public relations crisis arrangements with the corporate sector. When thesefactors are considered, corporate sponsorship may beviewed by some fans as acceptable compromise(Shelton, 2006; Walberg, 2004).This paper aims to provide an overview of some of the issues associated with the commercialisation of sport. Specifically, the paper examines public relationsissues that may occur when corporate sponsors of sports stadia become embroiled in controversialissues. The association of the Houston Astros’ baseballteam with Enron Corporation is examined in depth. Concerns about the increasedcommercialisation of sport What are the societal implications related to theheightened presence of corporate involvement insports? Chacar & Hesterly (2004) provide a historicalperspective about the naming of Major LeagueBaseball stadia. They describe how sports stadia inthe United States were traditionally named after ageographic area, a local landmark, the name of theteam or a prominent individual in the community.Oneof the first instances in which a stadium was namedafter a corporation occurred in 1926, when theChicago Cubs’ stadium was renamed Wrigley Field.August Busch Jr,the owner of the St. Louis Cardinalsbaseball team, bought the franchise and renamedSportsman’s Park Busch Stadium in 1953. In 1972Rich Foods paid the National Football League’s BuffaloBills to have their ballpark titled Rich Stadium (Ashley&O’Hara, 2001). Shelton (2006) sees corporatestadium naming rights as the logical outgrowth of atrend towards increased commercial sponsorship of sports teams that started when tobacco companiesprinted and distributed baseball cards in the 1870s.At the 1936 Berlin Olympics, the Adidas sportswearcompany provided free shoes to Jesse Owens andother athletes to generate free publicity and to buildthe reputation of their shoes. Boyd (2000) suggests that stadium names in theUnited States historically made a statement about acommunity to create a sense of place. When acorporation places its name on a stadium, however,the only message that is sent is that the firm paid a lotof money for this privilege. Boyd writes that stadiumnames are “critically important, anchoring the buildingas a memoryplace and making an identity statementabout the city and its fans”. Boyd suggests thatnaming a stadium is essentially a commemorativeevent that communicates messages about the pastand present relationships between teams, fans andcities. When corporate sponsors replacecommemorative names, these tenuous relationshipsare threatened. Boyd further asserts that “corporatenames communicate two critical identity statements:as an event this ‘game’ is actually a business thatrewards the highest bidder and, as fans, team’ssupporters are nothing more than paying customers.”Several authors explore how increased corporateinvolvement with sports may affect the attitude of fans. Covell (2001) discusses how a few universitysports programmes believe corporate sponsorship mayadversely affect the reputation of the college anddescribes how the University of Oregon had to weathercriticism after their corporate sponsor,Nike, wasaccused of underpaying workers in Third Worldcountries. Reebok included a clause in its agreementwith the Athletics Department of the University of Wisconsin that prohibited any university employeefrom criticising the company. Covell notes how formerHarvard University AD Bill Cleary said that placing theNike swoosh logo on sports uniforms indicated thatthat company owned those college sportsprogrammes. Recently the presidents of the Universityof Michigan and Ohio State University refusedcorporate sponsorship of their football rivalry (Cowan,2005), while Stanford University removed allcorporate advertising from its football and basketballstadia. Similarly, the National Football League’sCincinnati Bengals chose not to sell their stadiumrights but instead to name their new ballpark after theteam’s founder and coach Paul Brown, even thoughthis decision cost the team more than $16 million(Pulfer, 1998).  26 International Journal of Sports Marketing & Sponsorship   OCTOBER 2007           C        A        S        E        S        T        U        D        Y The Houston Astros’ public relations crisis Public relations issues associated withsports naming rights Corporate involvement in naming stadia runs along acontinuum ranging from ‘have firms help pay to haveastadium built’ to ‘purchasing naming rights andancillarydeals’ (i.e. the rights to provide stadium foodand drink) to ‘merely presenting the corporate nameand logo prominently throughout the park’. Pepsihelped fund the new arena in Denver shared by theNational Hockey League’s Colorado Avalanche and theNational Basketball Association’s Denver Nuggets. Asaresult, Pepsi is credited with playing a lead role inbringing the Avalanche to Denver and preventing theNuggets from moving to another city (McCarthy &Irwin, 1998). Crompton & Howard (2003) suggestthat the practice of selling naming rights to sportsfacilities will become more widespread and that someleagues might sell advertising on players’ kit. Whenconsidering whether corporations should pursuepurchasing naming rights, companies should identifywhether the promotion may build the company’sreputation,expose the brand to more people andincrease sales of the product or service (Ashley &O’Hara, 2001; McCarthy & Irwin, 1998). Walberg(2004) suggests that corporations should consider thesuccess of the club on the field, the aesthetic appealof the ballpark and their profile in the marketplace.Clark et al (2002) suggest that corporations that enterinto naming rights agreements often see an increasein stock prices. When Chicago-based Bank OneCorporation wanted to reposition itself as a nationalbank, the company paid $66 million over 30 years forthe naming rights to the Arizona Diamondbacks’ newMajor League Baseball stadium. Alvarado (2006)suggests that corporations that sponsor collegiateathletic programmes can often expect to createpositive associations with local fans.Chen & Stone (2002) describe professional sportsteams that struck naming rights deals with 27corporate sponsors from 1998 to 2000 and presentmany of the challenges these franchises encountered.Firms that purchased naming rights for the stadia of the Baltimore Ravens (PSI Net), the St. Louis Rams(Trans-World Airlines), the St. Louis Blues (Savvis) andthe Carolina Panthers (National Car Rental) wentbankrupt or became defunct. Radin (2001) describedthe situation this way in The Pittsburgh Post-Gazette: “So the Baltimore Ravens, the New EnglandPatriots and St. Louis Blues are all in jeopardy of not getting paid for the naming rights on their homes. Atbest, they’re risking major embarrassments because they may have torestructure their deals or even change the nameson their stadiums. Atworst, they lose out on a substantial sum of money if the companies whosenames adorn their facilities default on their agreements.”  Several other cases provide instances in which astadium naming rights agreement created a publicrelations liability (Crompton & Howard, 2003; Siebert&Brovsky,2001; Leone, 2002; and Kass, 2000). InSan Francisco, fans protested after the name of historic Candlestick Park was sold to 3Com. Siebert&Brovsky (2001) describe how Denver residentsrefused to acknowledge Invesco Field, the corporatename of the new stadium built for the NationalFootball League’s Denver Broncos. Denver mayorWellington Webb opposed giving the stadium acorporate name that would take away from thetradition of referring to Denver as ‘The Mile High City’.He said: “The Mile High tag marking the Denverstadium’s perch 5,280 feet above sea level is apriceless local icon that shouldn’t be traded away”(Kass, 2000). The stadium is now officially titledInvesco Field at Mile High, even though most fanskeep on calling the structure Mile High Stadium(Alvarado,2006). Ray Schaetzle of the National BasketballAssociation’s New Jersey Nets cautions that thepotential brand damage from having a disgracedcompany’s logo on your ballpark is hard to estimate.He said (quoted in Leone, 2002): “At the minimum,chief financial officers have to do credit checks on  sponsors to make sure they are worthy from a publicrelations perspective and financially sound.” TimHofferth of Nelligant Sports Marketing suggests thevalue of stadium naming rights may decrease whenthe name has to be changed. He said (quoted inLeone, 2002): “What’s the value of naming rightswhen a stadium has to be rebranded more than once?Rebranding causes confusion and that’s the very thingmarketers want to avoid.”As a potential remedy,Minnesota Twins presidentDave St. Peter suggests that franchises must considerpublic relations concerns when selecting a corporatenaming rights partner.“From an organisationalperspective, we’ll be looking for [stadium naming]partners who mirror the same values of affordableentertainment, who are good stewards in thecommunity and who are really committed to creating apositive experience for fans” (quoted in Vohmhof,2006). Moorman (2002) suggests that franchisesmay want to restrict the ability of a corporation totransfer or sell stadium naming rights if a financial orethical disaster occurs. Moorman wrote: “The recent bankruptcy of Enron and the resulting Justice Department investigation created a…complex bundle of concerns for the Houston Astros.It is one thing to have a corporate partner that isencountering financial difficulties that may affect itsability to fulfill its naming rights agreement andcreate some legal and financial challenges for the stadium owner [or] sportorganisation; however,it isquite another to have a corporate partner whosefinancial troubles include criminal fraud allegationsand alleged violations of state and federal laws, aswell as the public trust. In recent years, we have seen an increased presence of ‘morals clauses’ and‘good behaviour clauses’ in professional player contracts… Stadium owners [and] sport organisations need to consider whether provisionsneed to be included that will allow them to cancelthe agreement if conduct such as that alleged inEnron’s situation occurs.”  Brief overview of the rise and fall of Enron Prior to its bankruptcy in 2001, Enron employed morethan 21,000 people and was one of the world’sleading energy providers. The company claimedrevenues of more than $101 billion in 2000 and wasnamed ‘America’s Most Innovative Company’ byFortune magazine for six years in a row. However, thecompany collapsed in 2001 and filed the largestbankruptcy in American historyon 2 December 2001(Schwartz & Watkins, 2003).One of the worst allegations against Enron was thatCEO Ken Lay and other executives may have hadinsider information about the pending collapse andsold Enron stock at a profit while employees werebeing forced to hang onto Enron shares that wouldsoon be worthless. Even worse, the life savings,pension funds and children’s college funds of manyEnron employees were almost exclusively tied up incompany stock (Lehrer,2002). Columbia Universitylaw professor John Coffee, interviewed on the PublicBroadcasting System Lehrer NewsHour describedpublic attitudes about Enron’s collapse and howcompany employees lost their life savings whilecompany leaders may have profited from the downfall: “The public is intensely angry because this is a casethat looks likethe captain of The Titanic jumping intothe lifeboat while he locks up all the crew down in steerage… That’s something the public doesunderstand and it’s created a firestorm.”  Following the bankruptcy petition, a number of Enronofficers, including Lay,were indicted for a wide rangeof financial crimes including bank fraud, making falsestatements to banks and auditors, securities fraud,wire fraud, money laundering and insider trading. The scandal has become so ingrained in Americanculture that the word Enron has now evolved intocommonly used terms to describe corporatewrongdoing. For example, to be ‘enroned’ is to bevictimised by the company you work for (Beatty,2002). An ‘enronian’ is an Enron employee or investor 27  OCTOBER 2007   International Journal of Sports Marketing & Sponsorship  C   A    S   E    S   T    U   D   Y    The Houston Astros’ public relations crisis
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