Sacramento Kings announce arena naming rights deal with Power Balance

The oil company is giving way to a wristband.

In other words: Goodbye, Arco. Hello, Power Balance.
 
The Kings' arena will be renamed Power Balance Pavilion after the company that makes the trendy but controversial Power Balance sports wristbands, team officials said Tuesday.
 
Power Balance LLC of Laguna Niguel has agreed to a five-year deal with the Maloof family, which owns the Kings and the arena. The name change will occur March 1, the Kings and Power Balance said in a joint statement.
 
The Maloofs had been searching for months for someone to replace Arco, which is ending its 25-year relationship with the organization.
 
Kings officials wouldn't discuss details of the deal with Power Balance, but team co-owner Joe Maloof called it "a big win for the franchise, a positive development all around. Everybody was telling us we could never get it done."
 
Team officials described the relationship with Power Balance as a strategic marketing partnership that includes the arena name rights, retail incentive programs and programs involving other Maloof properties and events, including in Las Vegas where the Maloofs own the Palms Casino Resort.
 
Troy Rodarmel, CEO and co-founder of Power Balance described his company as a "young and hungry brand," and called the deal with the Kings "a true strategic partnership that includes a revenue-share component based on the success of the program."
 
Arco has been paying about $750,000 a year for the building's naming rights, and experts have questioned whether the Maloofs could duplicate that sum given the weak economy and the rundown state of the arena.
 
The deal could carry some public-relations risk for the Kings. Small but fast growing, favored by NBA players and other athletes, Power Balance has been forced to defend its claims that its $29.95 silicone wristbands "work with your body's natural energy field" to enhance strength and athletic ability.
 
Last month the company, responding to complaints from Australian authorities, posted a statement on its Australian website offering refunds and acknowledging there's no "credible scientific evidence" supporting its claims. But a week ago the company issued a new statement standing by its products.
 
"Dozens of high profile professional athletes swear by the results they've experienced from wearing our products," the company said.
 
The company has been sued in the past week by at least three consumers, two in Southern California and one in Florida, alleging false advertising. The lawsuits seek class-action status.
 
If the controversy endures, it could hurt the Kings, said Paul Swangard, head of the Warsaw Sports Marketing Center at the University of Oregon. By selling the building's name to Power Balance, "you're endorsing that product," he said. "You've got to be careful about that stuff."
 
In the most famous example of a naming-rights deal gone bad, the Houston Astros paid $2.7 million to buy their way out of their stadium agreement with Enron Corp., the notorious energy trader that went bankrupt in 2001. The stadium was renamed Minute Maid Park.
 
"The global controversy surrounding Enron became an embarrassment" to the Astros, said David Carter, who runs the Sports Business Institute at the University of Southern California.
 
Of course, Arco's parent, BP, has been involved in its own public relations disaster recently with the gulf oil spill, potentially diminishing the value of its name emblazoned on the Kings' home.
 
Finding a new corporate sponsor for the building at least erases one of the Maloof family headaches. Losing Arco forced the Maloofs to scramble for a replacement at the same time they deal with anemic attendance and mounting frustration over the quest for a new arena.
 
The Maloof family also is wrestling with financial issues at its Las Vegas casino, the Palms. A report by the Bloomberg news service last week said the Maloofs could lose controlling interest in the resort to lenders. Joe Maloof said Tuesday the family is confident it will retain control of the casino.
 
The economy has damaged the market for arena-naming deals. As it was, the Kings' deal with Arco was among the least lucrative in major league sports. Phillips Electronics reportedly pays $9 million a year for rights to the Atlanta arena, while TD Banknorth pays $6 million for Boston's.
 
With Power Balance, the Maloofs are going into business with an unlikely player in a sports-marketing field dominated by such giants as AT&T, United Airlines and Pepsi. Power Balance did about $35 million in sales last year, the Orange County Register reported. The 4-year-old company has an entrepreneurial style and pizazz that surely appeals to the jet-setting Maloofs. The Power Balance "athlete community" includes such stars as Shaquille O'Neal, quarterback Drew Brees and soccer's David Beckham.
 
The company's founders are two Orange County men, Rodarmel, a 36-year-old former surfer, and his brother Josh, 26, a former Spanish tutor. In the firm's early days, the brothers gained word-of-mouth handing out wristbands to surfers and members of the University of Southern California football team.
 
Editor's Note: As the article indicates, Power Balance has admitted there is no "credible scientific evidence" that their product does what they say it does. First off, do you agree with the authors of this article that this is a controversial deal? What can the Kings do to ensure this deal does not backfire down the road? 
 
 
 
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