Quebecor Inc. is naming Quebec City's new $400-million hockey arena the Videotron Centre after its growing telecommunications business.
At first glance, the potential for Videotron to gain more brand awareness by putting its name on the prominent building appears somewhat limited. It already has a significant presence and consumer recognition in Quebec.
But though Videotron is known for its cable business, it also sells wireless devices and services. And with a current Quebec market share of only 12 per cent and aspirations to expand nationally, Videotron could certainly benefit from more exposure.
Quebecor won the naming rights to the hockey arena as part of an earlier agreement for management rights to the facility.
The company will pay Quebec's capital city $33-million when the arena opens as planned this coming September. Should Quebecor win a National Hockey League franchise, that amount would nearly double to $63.5-million. Under the 25-year management deal, Quebecor will also pay rent and a percentage of net revenue for events hosted.
Quebecor has been actively seeking an NHL team since at least March, 2012, but the league is said to be in no hurry to hand the company a franchise. Officials with Quebecor are limiting communication with reporters on the issue of late, seemingly in a bid to satisfy the NHL's insistence on discretion.
Quebecor recently purchased Quebec City's minor league hockey team, which will play out of the new arena, but it has no multi-year professional sports lined up for the facility. The company is controlled by sovereigntist Pierre Karl Péladeau, who left his position as chief executive last year to enter politics.
Naming rights deals like this one serve a few purposes. When it comes to hockey, it can help align a brand to Canada's game. Hockey is an extremely powerful property, the source of sponsorship battles between brands looking for the boost of Canadian pride they get by being associated with it.
Naming rights are also particularly valuable when there is a fit with the brand. That was the case for Canadian Tire Corp. Ltd., which in 2013 took over the name of the Ottawa Senators' home arena from Bank of Nova Scotia. Canadian Tire has been investing heavily in recent years in sports sponsorships in order to build its cachet as a sports retailer, particularly with its Sport Check stores.
Naming an arena also gets the brand a mention on telecasts without having to pay for advertising. And by naming the entire arena, rather than simply paying for a rinkboard advertising spot, a brand gets to be on the lips of every fan in a certain market.
For a regionally-focused business like Videotron, that can be valuable. While Quebecor's media properties are dealing with flat or declining revenues, Videotron wireless is growing. The five-year old effort had about 630,000 subscribers and counting at the end of the fourth quarter.
Desjardins Securities analyst Maher Yaghi has said he believes Videotron will be able to win a 20- to 25-per-cent share of the Quebec market within the next two years as it takes business from rivals with new offerings like Apple's iPhone. Its current share is estimated at about 12 per cent.
Quebecor harbours the desire to expand its Videotron wireless service outside its home market but those efforts depend on regulatory changes that may or may not materialize.
Without such an expansion, there's still growth available in Quebec. At last count, the province ranked last among provinces in wireless penetration rates, with about 67 devices per 100 residents.
The Videotron Centre is currently under construction with much of the arena's exterior already completed. Financing was roughly split between the Quebec government and Quebec City, which has said it would borrow $125-million and cut the jobs of 500 workers to help pay for the project.