The rebranded SAP Center in San Jose, Calif.
The new naming rights deal between the National Hockey League's San Jose (Calif.) Sharks and SAP Software came to pass because of a joke.
Sharks' majority owner and SAP co-founder Hasso Plattner had kidded Hewlett-Packard President and CEO Meg Whitman about giving up naming rights to San Jose's arena. Eventually she took him up on the offer and the change from HP Pavillion to SAP Center at San Jose was born.
The Sharks, the city of San Jose and SAP announced earlier this month that SAP would buy out the final two years of HP's deal and extend the contract for an additional three years.
Payments will be split between the city of San Jose, which owns the building, and the San Jose Sharks hockey team. The annual payment will be $1.675 million with total revenue of $8.375 million over five years.
“It makes a lot of common sense to have SAP on the building,” said John Tortora, who was recently named the Sharks' CEO. “By the same token, SAP as a company had to make the right decision for themselves. They had to evaluate the branding opportunity the arena presented to them and do it for the right reasons.”
The reasons, in large part, are because of SAP's recent deluge of opportunities to bring their analytic software capabilities into the sporting realm.
The company, which was founded in 1972, worked with the National Basketball Association to bring historical and advanced statistics to its website NBA.com. They are also working with them to bring analytical data to the San Francisco 49ers as a part of a naming rights deal for the 49ers' practice facility.
In fact, 49ers' CEO Jed York credited SAP's analytical work for their drafting of star quarterback Colin Kaepernick, who led San Francisco to the Super Bowl last season.
SAP is now looking to bring similar technological advances to the Sharks as part of the deal.
“We are going to be working with them to get better analytics to their fans,” SAP Chief Marketing Officer Jonathan Becher said. “We're going to be working with them to do things like scouting and working with them to improve their stadium operations. And because we're the title sponsor, we can kind of use it as an incubation engine to try out all the new things we want to do for the fan experience.”
The German-headquartered software company has targeted the 49ers and Sharks because the San Francisco Bay area serves as one of its largest outposts. SAP has approximately 3,500 employees in the region.
But while location played a role in SAP putting its name atop the arena, which has reported 100- percent attendance for Sharks games every year since 2008, the naming rights sponsorship also gives them a chance to use the team as an example of how their business works.
“We don't stick our name any place just for eyeballs,” Becher said. “We're not an impulse buy. People don't see our logo and go buy $5 worth of software. What we're doing is trying to find ways to tell an authentic experience about how a company or venue or organization that we partner with is running better.”
The SAP Center was built in 1993 and designed by Sink Combs Dethlefs. The arena has a wireless network for fans already, but Tortora said the Sharks hope their relationship with SAP will work to further improve the building's technology.
“We are going to evaluate their needs, our needs and the needs of the fans as well,” he said. “Fans' input into this process will be critical. Over time, you'll see some initiatives rolled out to enhance the fan experience, to enhance the partnership and to make the building more tech savvy.”
The arena was known originally as “The Shark Tank.” It wasn't until 2001 when naming rights were first sold. In 2002, Hewlett-Packard bought the rights.
Still “The Tank” has been a nickname hard to shake.
“It is catchy and cool,” said Tortora, who worked in the NHL office in New York City for 15 years. “So we recognize the popularity of 'The Shark Tank' name and embrace it to some extent, but we obviously would prefer to get people saying the SAP name.”
Tortora said part of rebranding the new name will come from major concert acts stopping in San Jose throughout the summer such as Bruno Mars, One Direction, Pink and Josh Groban.
As for where the sponsorship might take SAP, Becher said they hope to work with the NHL on improving statistics and arena management around the league. Maybe that will start with a little quip, too.
Interviewed for this story: Jonathan Becher, (415) 694-8554; John Tortora, (408) 287-7070