CINCINNATI — Hamilton County taxpayers will likely come up empty-handed in the deal between the Cincinnati Bengals and Paycor HCM Inc. over the naming rights to the stadium once named for Paul Brown.
But the county, which owns the stadium, will have to take the team’s word for it. That’s because county officials say they still do not have details of how much the deal is worth.
“The financial terms and conditions of the Paycor naming rights agreement and other sponsorships have not been provided to the county. We continue to ask for the information,” said county spokesperson Bridget Doherty.
But Aaron Herzig, an attorney for the Bengals, said the team has given the county plenty of information, including allowing five different county attorneys more than 16 hours to review the naming rights agreement, except for some proprietary financial terms.
"The team has given the county more than it needs ... let's be clear. Under the lease, the only role for the county is that it has the right to consent to the 'proposed name.' It can only withhold consent if the name violates the law or is 'not suitable for a public building.' No one can seriously clam that the Paycor name violates the law or is not suitable for a public building," Herzig said.
The team sold the naming rights to Paycor in a sponsorship agreement dated Aug. 7. The team turned over the agreement and other documents to Cincinnati accounting firm Clark Schaefer Hackett to analyze.
Two weeks later, the accounting firm determined that the deal didn’t meet the threshold for taxpayers to collect any revenue from it, according to a two-page letter dated Aug. 22 that the Bengals provided to the county.
"Clark Schaefer Hackett is a respected accounting firm with its own professional and ethical obligations. It is a firm that the county has used before, and the team paid for Clark Schaefer to analyze the naming rights agreement and the lease at the encouragement of the county representatives. So we don't understand why the county would question Clark Schaefer's veracity or conclusions," Herzig said.
The letter did not contain any financial details of the deal. Herzig said the naming rights deal has a confidentiality agreement that contains the team's competitively sensitive information.”
"The county does not have a say over the financial terms of the naming rights deal, but of course the team has every incentive to get the best deal possible," Herzig said. "The team negotiated the best deal it could for the naming rights, because it wants to be able to continue to compete for top NFL talent. The team has no incentive to do anything else."
"Think of it this way, if you could get $10 on your own, but could only receive 70 percent of the next dollar, you would still want that next dollar because then you would have $10.70 instead of $10," Herzig said.
The team purchased the naming rights from the county in 1997 for $5 million.
The original lease states that the Bengals team is entitled to retain the first $16.7 million from the sale of the naming rights, plus 70 percent of any net revenues in excess of that. The county's share is 30 percent.
However, the lease also defines net revenue as "gross revenue minus the Bengals' cost of fulfillment," which includes the cost of signage suites, advertising, private suites, club seats, tickets and other products which would be subtracted from the total naming rights revenue.
In addition, all net revenues received over the next 16 years must be discounted to their value in the year 2000, using a discount rate of 6 percent. A $10 million payment in 2022 would have been worth $5.8 million in 2000, according to this inflation calculator.
“We calculated the net revenue expected to be derived from the sale of the naming rights … will not exceed the $16.67 million revenue sharing threshold stipulated in the agreement,” according to an Aug. 22 letter from the accounting firm to Cincinnati Bengals Chief Financial Officer John Helme, which was given to the county.
The Bengals confirmed they signed a 16-year deal with Paycor for the naming rights but have not disclosed how much the deal is worth.
Clark Schaefer Hackett Letter on Bengals Naming Rights Deal by paula christian on Scribd
