Toronto is spawning a seemingly endless supply of bad new ideas these days. The most recent is the selling of naming rights to generate a little bit of money for a city that cut taxes and now finds it can’t fund basic programs.
We’re all used to corporate names permeating public space: Rogers Centre, Air Canada Centre. So some ask, what’s the difference if we put a few more brand names on a few more public buildings or public spaces?
Is it just a matter of degree? All but the strongest critics of corporate involvement in the public realm would likely accept a plaque on the wall if a company paid for an entire new subway or LRT line.
But the sums involved in the type of sponsorship we’re talking about don’t even come close to the totals needed for a new line or a subway station renovation. Corporate payment would be in the low millions at best, while station renos cost tens of millions, and subway lines billions.
From 90 to 98 per cent of the cost (depending on the project) would still be carried by the taxpayer. So the debate is really about whether you’d sell naming rights on major public infrastructure for the equivalent of a few hundred thousand dollars a year on a multi-million-dollar, 10- to 30-year deal, because that’s the best of what’s on offer.
Only a few North America transit systems have sold naming rights. (Examples from outside North America aren’t very useful the context is quite different.)
In Cleveland, the transit authority got $6.25 million for a new line in a 25-year naming deal. This works out to $250,000 a year – minus $50,000 to $100,000 in likely lost revenues, since other companies were excluded from advertising as a result of the contract.
Then there’s Chicago, where Apple has offered $3.9 million to renovate one station in exchange for naming rights and exclusive advertising. In New York, the private sector paid $4 million for one station – again, a few hundred thousand annually in a multi-year deal involving loss of existing ad revenue.
It should also be noted that so far, only one station in each city has been sold, despite the fact that both transit agencies have indicated they would accept more. But the market is likely limited because the novelty is limited, and therefore the appetite of the corporate sector.
Closer to home, the Toronto Community Foundation’s station renovation project, which brought us the Museum station revamp, had to put future station renos on hold because of insufficient corporate interest.
These and other examples from agencies around the world suggest that private funding of transit in exchange for naming rights will at best be a limited option.
It’s also important to remember there are already opportunities for corporate involvement in the TTC through ad contracts. Over the last few years, the TTC has received on average around $20 million a year (in some years closer to $25 million) from advertising.
One particular form is like short-term sponsorship: “station domination,” in which a station is “wrapped” with one particular theme or brand for about $40,000 a month. This is also done with transit vehicles for lesser sums.
Again, any calculation of new revenue from these campaigns has to include losses resulting from exclusive deals, which could total hundreds of thousands of dollars. If the average station already pulls in $150,000 to $300,000, what’s the point of selling off naming rights for even $4 million over 20 years? There might even be a loss of revenue.
And finally, there’s an equity issue. Corporate sponsors are likely to be more interested in busier stations or those most used by their target demographics. Businesses will be less attracted to Warden station than to Dundas, for example, as it’s in the downtown core. There will inevitably be a temptation to prioritize improvement projects based on whether private cash is forthcoming. If so, what happens to areas like Scarborough?
Most of the costs, after all, are borne by taxpayers. Shouldn’t money only go where it’s most needed?
Whether or not the TTC decides to sell naming rights, the potential revenues are small and will not solve the its capital shortfall, pegged at $2.5 billion over the next 10 years.
Perhaps our mayor’s time would be better spent working with his colleagues in other big cities to advocate for a national transit strategy.
Adam Giambrone is former chair of the TTC.
news@nowtoronto.com
