Naming rights have rescued major California businesses before. Now the chief of the often-belittled California High Speed Rail Authority (HSR) thinks they might be at least part of the answer to keeping the half-built bullet train system going long enough to actually carry passengers. Call this Part 2 of HSR’s survival strategy. Just make sure many of the fees are collected in advance and that they’re enough to make a difference.
Frequently called a boondoggle, the train has already secured Part 1 of its fiscal survival plan, an absolute must after President Trump cancelled $4 billion in federal grant money for the poorly planned but partly-built project.
That happened when Gov. Gavin Newsom this fall signed a new law called SB 840, giving the train project one-fourth of the state’s take (or about $1 billion a year) for 20 years from cap-and-trade fees of companies that pay to continue their polluting ways. That won’t build much in a project whose cost is now estimated at over $100 billion. But it’s decent seed money.
HSR director Ian Choudri first floated the idea of leveraging that money’s presence to help sell naming rights. Some laughed. But Inglewood’s year-old Intuit Center brought in about $500 million for its naming and Aspiration Partners, a financial technology firm that went bankrupt in March, reportedly offered $1 billion. And the Intuit Center cannot even move.
If it costs that much to plaster your name on a building, imagine how much could be raised by selling naming rights for a constantly-running luxury train. When finished, the project is to link San Diego and Sacramento. Naming rights could be sold for everything from the entire system to engines, rail cars, stations, and even individual seats, along with exclusive rights to advertise inside train cars. Names could also be featured beside each mile of track.
Consider what might have happened to the former Staples Center in downtown Los Angeles, home to the basketball Lakers and Sparks and the hockey Kings. When Staples office supplies removed its name and money from the building, it might have turned moribund, without an identity.
But the Singapore-based Crypto.com exchange for bitcoin and related financial products stepped in. Today the arena has a name and $35 million yearly in naming fees, the largest such deal anywhere. It’s about double what AT&T pays for naming rights on the Dallas Cowboys’ stadium.
Now think of the bullet train, which appears more desperate for cash than any sports facility.
This project is many years behind schedule in carrying its first passenger, and even then, it will likely be in 2033 and only between Merced and Bakersfield.
The original plan voters approved was to open the Los Angeles to San Francisco run by 2020.
The first leg of this system will now cost an estimated $35 billion, more than the original budget for the entire plan.
Enter naming rights. Besides putting their name on various parts of the project, companies could buy development rights for land around stations. They could fund and name tunnels and perhaps charge for each passing train. Or they could buy rights to name stretches of rail. All this could add up to a lot.
Whether it could produce the sums still needed to build out the system is strictly speculative. But Choudri notes that all environmental reviews for the Los Angeles to San Francisco run are in hand and a rail system suitable for high speed operations already exists between San Francisco and San Jose.
HSR officials tout the fact they have built 54 structures and laid 70 miles of track, almost half what’s needed for the Merced to Bakersfield run.
The real question is whether this system can ever overcome its founding mistake, which was to build essentially parallel to Highway 99, rather than on the often-wide state-owned median strip of Interstate 5 along the western side of the San Joaquin Valley.
In short, can it overcome the greed of politicians who insisted this system run through towns they represented, rather than open spaces devoid of job-seeking constituents?
Email Thomas Elias at tdelias@aol.com.