The news that Phones 4u has entered administration raises, amongst other important questions, thoughts for many Mancunians and concertgoers in relation to the Phones 4u Arena in Manchester.
The arena’s spokesperson has stated that it’s business as usual for the arena. The reason for this is that the arena is not operated by Phones 4u but is owned and operated by SMG Europe and has been for 20 years, and SMG continue to operate normally. Phones 4u’s relationship with the arena is governed by a naming rights agreement, which is essentially a sponsorship agreement under which it can brand the venue and use it to promote its business. Phones 4u’s administration does not directly affect SMG Europe’s operation of the arena.
So what happens next?
Well, it is likely that the naming rights agreement between Phones 4u and the arena’s operators, SMG Europe, will have had a clause in it under which if Phones 4u enters administration, then SMG would have the option to terminate the agreement. SMG will not want to be tied into an agreement whereby it looks unlikely that they will receive the monies that are due to them. That said, SMG have commented that they expect the name of the venue to remain the Phones 4u Arena for the foreseeable future, and therefore it is likely that they waiting to see what happens to the Phones 4u business going forward.
The appointed administrators will be looking to see if there is any way in which the Phones 4u business (or a part of it) can be saved, and it may be that SMG are willing to let the dust settle before making any firm decision and see whether Phones 4u will continue to trade in any way.
Naming rights are still a relatively new phenomenon, but one trend that has emerged is that it is difficult for a new name to catch on – many people in Manchester still refer to the arena as the MEN Arena or even the NYNEX. From my own personal experience, it is only very recently that the Phones 4u tag had started to be used by people when talking about the arena. Does this affect the operator of the venue though – after all, isn’t that the problem of the person who has bought the naming rights? Well, yes and no. Yes, in that it is their investment, but no in that a potential sponsor will more than likely factor the speed at which their name is going to be linked with the venue into the price that they’re willing to pay for the rights – and as venues have more and more previous sponsors, the “stickiness” of the name can be harder to achieve, so a venue operator will not want to change the venue’s name unavoidably and potentially reduce the amount that they can demand for naming rights. A further point that sponsors will look at is the fit between their brand and the venue – Phones 4u had obviously seen a good connection between the Manchester Arena and its “Good Times” strapline – however, potential sponsors may look at the association of the venue and a brand that has had a public fall from grace and may think twice about whether to go for the naming rights or alternatively the price that they’re willing to pay for the privilege.
