Santa Ana’s Banc of California is dialing back its most prominent partnership, the sponsorship of a popular soccer stadium in Los Angeles.
The $540 million-valued bank (NYSE: BANC), the second largest by assets based in OC, in 2016 won the naming rights for the home of Major League Soccer’s Los Angeles Football Club, also known as LAFC.
The facility, holding some 22,000 seats and next to the LA Memorial Coliseum and 110 Freeway, opened in 2018 at a reported cost of $350 million. The facility regularly sells out for LAFC matches and has been informally known as the “The Banc” among fans of the team.
It was scheduled to hold the MLS all-star game this July; the match was canceled amid the pandemic that’s kept the league’s season on hold for now.
The bank’s original deal committed it to paying $100 million over 15 years for exclusive naming rights to Banc of California Stadium, as well as the right to be the official bank of the LAFC.
Roughly $15 million of this had been paid from January 2018 through March 2020, according to regulatory filings.
Banc of California said late last month it would pay $20.1 million to end the naming partnership early. The stadium will retain its name for the immediate future.
It anticipates recording a roughly $26 million charge related to the deal in the second quarter, including the early termination fee and the write-off of a prepaid advertising asset, according to Securities and Exchange filings.
The bank said in the filing that ending the deal should save it about $87 million over the next 12.5 years.
Wolff Moves
The bank and LAFC said the partnership ended on good terms and that they would continue to work together in other areas.
Jared Wolff, president and chief executive of Banc of California, in an email described the changes as “win-win for Banc of California and LAFC.” He added that the new relationship would involve an ongoing partnership on other community initiatives and give the team the opportunity to expand its sponsor roster.
Banc of California had originally held exclusive rights to most official financial services partnerships with the club.
LAFC co-owner and President Tom Penn said his organization would now be looking for a range of new financial services partners, from a new official banking partner to a mortgage partner and a wealth management partner.
“One of those might (also) be the naming rights partner,” he added. “Or that might be someone in an entirely different industry.”
Prior Administration
An end to the existing partnership wasn’t unexpected.
“We’ve spent a good part of the year becoming more efficient,” Wolff told the OC Business Journal last November, seven months after joining the bank.
“There were a lot of expenses we didn’t need,” he said at the time.
The initial deal brought criticism from activist investors who noted the bank promised to spend $100 million on a stadium that cost $350 million to build.
Investors also complained of cronyism because Jason Sugarman, a minority investor in the team, is the brother of then-CEO Steve Sugarman. He left the bank in January 2017.
The naming rights deal isn’t large by LA stadium standards. Online personal money management firm Social Finance Inc. is paying a reported $400 million for exclusive naming rights for the next 20 years at the city’s new NFL stadium in Inglewood, which is still under construction.
Analysts were generally upbeat on the Banc of California news, viewing the cost savings as a boost to the bank in its shift away from broad consumer banking and toward business banking.
“The annual cost of the stadium naming rights was onerous and hamstrung the company’s ability to spend on other marketing initiatives,” said Gary Tenner, an analyst with D.A. Davidson & Co.
Cutchin is a staff reporter with sister publication Los Angeles Business Journal
