PPG’s name on the Penguins arena: Why this deal may pay off

You may not call the Penguins’ home PPG arena, but you might buy PPG’s paint.

The Incline Illustration
Sarah Anne Hughes

The Penguins played their last home game of the season on June 9 at Consol Energy Center before going on to win the Stanley Cup. Next week, the team will open its new season in the same building — but this time, the building will have a different name.

The Penguins and Pittsburgh-based company PPG have entered into a 20-year agreement to give the latter naming rights to the hockey, concerts and special events arena in exchange for an undisclosed amount of money.

As of today, the 6-year-old building is known as PPG Paints Arena.

Consol Energy is giving up naming rights after signing a 21-year, $105 million agreement in 2008. The company has laid off hundreds of employees in recent years as natural gas and coal prices decline. Believe it or not, Consol’s business woes did not come up during Tuesday’s announcement. Instead, the energy company declared on Twitter “mission accomplished.”

“Today, the name CONSOL Energy is as synonymous with our region as the other major brands that call Pittsburgh home. We are forever grateful for that,” President and CEO Nick DeIuliis wrote in an open letter. “Today, with our corporate transformation complete, the success and stability of the Penguins franchise assured and the future of the region on solid footing, we are proud to transfer the naming rights to the arena from one iconic Pittsburgh company to another.”

Neither PPG nor the Penguins has disclosed how much the naming rights deal is worth. But the move will likely cost PPG tens of millions of dollars based on similar contracts.

Elaine Luther, a professor from Point Park University’s School of Business, said the deal could potentially be a good one for PPG.

“If you do it for the right reasons, and it’s not a giant part of your spending, it’s probably a good thing to have your name” on a stadium or arena, she said.

Luther pointed out that PPG has been putting an increased focus on the paint part of its business in recent years. But while PPG Paints has aggressively expanded its retail presence, that doesn’t mean its name recognition has grown equally. As the Post-Gazette reported earlier this year:

Robert Gilbert, associate professor of business administration at the University of Pittsburgh, said that unlike longtime market leaders Sherwin-Williams and Benjamin Moore, PPG does not have strong consumer recognition outside of Pittsburgh because of its industrial heritage.

“Any time you try to rebrand, it’s a challenge,” he said. “Sometimes there’s significant existing equity in the original brand but if not, there’s a great opportunity to kind of recast what PPG stands for and to start from scratch.”

By having its name associated with an extremely popular — and winning – hockey team, Luther said PPG could increase brand awareness. When a consumer is shopping for paint, maybe they’ll pick up a can of PPG instead of something else.

Consol Energy, on the other hand, couldn’t benefit in that way. Owning the naming rights to a arena “doesn’t have that same multiplier effect” for an energy company, Luther said.

“You don’t get a choice where you buy natural gas from,” she said. “We don’t buy coal.”

For companies, naming rights deals boil down to exposure, said Yun-Oh Whang, a clinical assistant professor in the University of Pittsburgh’s Joseph M. Katz Graduate School of Business. It’s not clear what Consol — which doesn’t have a retail component — was trying to gain.

“Consol was wise to get out of that deal as soon as the opportunity presented itself,” Whang said. While he advised caution until the financials of the deal are disclosed, he said PPG “is a better candidate for naming rights.”

There are potential challenges, though. While other sports arenas like D.C.’s Verizon Center and Staples Center in L.A. serve as home to multiple teams, PPG Paints Arena has just one team to depend on: the Penguins. That means PPG Paints Arena will see less TV time, especially if the Penguins see their winning fortunes reversed.

“We can’t win forever,” said Whang, a longtime fan of the team.

But for the time being, at least, there’s a lot of potential benefit for PPG.

Luther pointed to the “Roaracle” phenomenon, as the San Francisco Chronicle dubbed it: Golden State Warriors fans make so much noise in the Oracle Arena that the technology company’s name is now part of the team’s lingo.

PPG could hope for the same type of fan acceptance, perhaps through an arena nickname like “The Paint Can.”

In fact, “The Paint Can” is already a thing that is happening — whether you like it or not.