Did Mayor Lee’s Lack of Marketing and Sales Skills save Salesforce $120 million from Transbay Center Naming Deal?
Santa Clara earned 2X more than SF for venue naming rights. According to Forbes.com, Iconic SF Transbay Transit Center deal would fail to make top twelve venue naming deals in America.
Did a lack of marketing and sales experience by Mayor Ed Lee and Ed Reiskin just cost San Francisco Taxpayers $120 Million Dollars?
Did San Francisco Mayor Ed Lee’s lack of basic professional marketing competency and salesmanship hurt San Franciscans by selling out valuable City assets at a steep discount to a private company? Case in point: According to SFist.com Salesforce’s naming rights deal for Transbay Tower and Transit Center. The deal? $110 million over 25 years or 50% less of what Levi’s paid for the naming rights to 49ers stadium in Santa Clara.
Does Santa Clara have more cache than San Francisco or does Santa Clara have far better deal makers than our very own Mayor Lee?
This is the kind of losing deal we get as San Franciscans from Mayor Lee, a former attorney, city purchasing director and administrator who doesn’t seem to understand even the most basic tenents or best practices of marketing and salesmanship. The cost of this lack of skill to San Franciscans? The people of San Francisco get screwed out of at least $120 million dollars.
The cost of elected officials and government agency executives not having qualified marketing and sales experience prior to selling City assets continues to undermine the value of our city by leaving money on the table in the salesforce deal, how many other sweetheart deals has the Mayor delivered since his appointment to the office?
A Tale of Two Eds: A great deal for them, not so good for San Francisco
Mayor Ed Lee entrusted SFMTA Director Ed Reiskin to save the disastrously failing Transbay Terminal project by filling in budget gaps by selling the naming rights to the Mayor’s legacy project, however, with only 10 seconds of googling, I found a half dozen naming deals far more valuable than the deal Reiskin and the Mayor made with Salesforce. (see chart)
Salesforce’s Naming Deal discount violates TJPA Board Policy
By selling the naming rights to Salesforce at nearly a 50% discount compared to what Levi’s paid to Santa Clara’s venue, The Salesforce Transbay Transit Center naming deal violates Rule 1 from Transbay Joint Powers Authority’s №016 Under “Financial Matters” Advertising Policy “Objective 1: Maximize Revenue for the Transbay Program.” Clearly, you don’t maximize revenue by offering deep discounts to an asset that is in great demand.
Think there weren’t any other interested parties involved in winning the naming of the Transbay Tower and Transit Center? The Mercury News reported there was plenty of competition for naming Santa Clara’s new stadium:
Levi Strauss beat out 31 other interested companies from around the world — including three to five unnamed corporations that were in the final stages of negotiations.
Before some of you quack about stadium rights being more valuable due to their promotional rights from sports broadcasting and the like, you would be wrong. Public assets such as the Golden Gate Bridge, Palace of Fine Art, Coit Tower and Golden Gate Park are far more valuable than sports venues. Can you imagine Google buying the naming rights to the Golden Gate Bridge?
The Transbay Transit Center was sold as this generation’s big civic contribution to the future of the City. Apparently at $2 million a year for 25 years, the Mayor revealed that either he is incompetent at sales or he is competent and did a giant personal favor for Salesforce in exchange for political donations or favors.
Since I can’t believe that Salesforce president, Marc Benioff would ever conduct himself in such an obviously public and unethical way, I’m left to conclude that Mayor Lee sucks at sales.
As a professional marketer, I’m supposed to like wins like this for great marketers like Salesforce––and it is a big win for them — lots of brand opportunity for what amounts to a rounding error from the company’s annual revenue.
The problem is that this deal comes at a great cost to the City.
According to the chart, Forbes.com reports that Levi Strauss acquired naming rights to the San Francisco 49ers new home for $220 million over 20 years. Salesforce gets naming rights to The Transbay Tower and Transit Center for a measly $110 million over 25 years.
Don’t Hate Salesforce for Mayor Lee’s Horrible Dealmaking
Salesforce didn’t cause the Mayor nor Ed Reiskin, nor the Board of Supervisors to over commit or overbuild or overspend on the Transbay project. SFMTA’s mishandling of the project budget and construction shows near Trump-level, Taj Majal level incompetence right here in San Francisco. Sadly, it’s not the only case of the Mayor’s office struggling to deliver major construction costs on time or budget, are we going to be selling the naming rights to the beleaguered Central Subway too? Any takers? Google, are you listening?
There are no developers losing in this deal. There are no investors losing in this deal. There are no politicians or SFMTA agency staff losing on this deal. There are only hundreds of millions of taxpayer dollars being spent on something which doesn’t enrich anyone in SF other than a select few well-connected developers and real estate agents. I have no issues with developers making money. They should make all they legaly can. The problem is that incompetent marketing and sales ability from Mayor Lee coupled with epic project mismanagement by SFMTA may force him to seek ever more one-sided deals to San Francisco’s disadvantage.
Our Mayor continues leveraging SF land use for political contributions and favors that he and our Board of Supervisors are all too eager to spend for their own political purposes. Our mayor is failing. Our Board of Supervisors are failing and our government agencies are failing. The Mayor doesn’t know how to market or sell. Any halfwit can sell a $10 gadget for a dime. While the deal is a win for Salesforce, it’s a perfect example of why public officials need training and deeper expereince in real-world high-dollar marketing and sales before being allowed to conduct private sector deals like this.
If Mayor Lee is going to continue to sell out our City, it would be great if all of San Franciscan’s could get some meaningful long term benefits from the deal. What could San Francisco do with that extra $100 million bucks? I’m sure the reader could think of a few noble causes.
Should we cut the Mayor some slack? He might not be Steve Jobs, but the City needs the money
Does the Mayor’s desperate dealmaking due to widening budgetary gaps for the City and SFMTA absolve him of making such a poor deal with Salesforce? No. Mainly because the Mayor is primarly responsble for the funding crunch City Hall is in to begin with. SFChronicle.com reported in August 2016 that:
“The average San Francisco worker makes $108,774 in salary and $49,864 in benefits, including medical, dental and vision care and pension contributions. An income of $108,774 is just over 150 percent of the median salary in San Francisco.” “…Mayor Ed Lee has gradually added 4,500 employees during his 5½ years in office. Next year’s  budget is projected to add 300 workers.” [note: that’s a $522,115,200 per year payroll expense based upon the average salary] The same article reports that “The percentage of the city’s budget [$9.6 Billion] that goes toward city employees has remained at about half for many years.”
Thanks to the excessive hiring policies of our Mayor and supported by our Board of Supervisors, San Francisco government has more employees than we can afford. The Mayor is without a plan to sustain their employment other than taxing voters, small businesses shake-downs and selling off City assets. The Mayor and his colleagues don’t understand how to market and sell the services and value of this City. Not only have they sold out our world-class City, they’ve sold it out at an embarrassing and inexcusable discount.
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