Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Like We Said, SAP Taking Over Naming Rights to San Jose’s HP Pavilion

hp_pavilion_arenaWe’re not usually in the habit of reporting on the business of sports here at AllThingsD, but occasionally that world intersects with the interests of some of the world’s biggest technology companies. Today is one of those days.

As we reported in March, HP has withdrawn from the naming rights to the San Jose sports arena currently known as the HP Pavilion, home to the San Jose Sharks of the National Hockey League. The new naming rights will go to the German software giant SAP. Affectionately known by hockey fans as the “Shark Tank,” it will now be the SAP Center at San Jose.

I just received the following statement from SAP:

“Shark Sports & Entertainment and SAP have reached agreement for SAP to become the naming rights holder of HP Pavilion at San Jose. We are pleased to be working together on this significant partnership that will continue to positively impact the venue as well as the city of San Jose and its residents. At this time the deal awaits approval from the City of San Jose.”

The change marks an early end to the naming rights deal that HP inherited in 2002 when it acquired Compaq Computer which was originally scheduled to run through 2016. (It was called the Compaq Center at the time.) The deal cost HP about $47 million over 15 years. NBC Bay Area is reporting that the payment to the Sharks from SAP will be a little less than $1.7 million a year and about $8.4 million to the city. It’s unclear how long the deal will last.

HP CEO Meg Whitman discussed an early out to the deal with Hasso Plattner, SAP’s co-CEO and chairman of its supervisory board, at a routine meeting earlier this year. Plattner is the majority owner of the Sharks and recently bought out two other co-owners, longtime Kleiner Perkins venture capitalist Kevin Compton and former VeriSign CEO Stratton Sclavos. His stake in the team is said to be north of 90 percent.

HP had wanted out of the naming rights agreement as the result of a wider evaluation of its global marketing and branding efforts. The deal was said to cost HP about $3.1 million a year, essentially pocket change to the $120 billion (2012 sales) tech giant, but perhaps less useful in a world where personal computers — Pavilion is also the name of HP’s primary PC brand — are selling at historically low levels.

Whitman and Plattner were said by sources familiar to the situation to have discussed the naming rights situation at a routine meeting earlier this year. (HP is a major SAP customer.) Asked by Plattner whether she intended to keep the naming rights on the arena through 2015, Whitman is said to have responded: “Frankly I’d like to get out of it.”

HP will still have access to the arena and to San Jose Sharks games. Sources say the company intends to hold on to a single luxury box it leases for the purpose of entertaining customers. Oddly enough, the naming rights for the luxury suites belong to another tech company: They’re currently known as Citrix Suites. No word yet on whether or not those naming rights are changing too.

The arena seats 17,562 for hockey games, and more than 19,000 for concerts. It hosts as many as 190 events a year, including the SAP Open, a men’s tennis tournament. It was briefly the home court of the NBA’s Golden State Warriors during a period when the Oakland Coliseum was under reconstruction.


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