In 1973, while New York City was staggering through a financial crisis that would eventually lead to a highly publicized federal government bailout rejection, the world renowned New York Philharmonic received a great philanthropic gift. Avery Fisher, the founder of the Fisher Electronics stereo equipment firm, donated $10.5 million to the Philharmonic at a time when every Big Apple cultural institution was desperate for funding.
In gratitude, the Philharmonic renamed its Lincoln Center home the Avery Fisher Hall. And for the past forty years, while the Fisher Electronics brand has faded into history, Avery Fisher Hall has grown to become a global brand that symbolizes the essence of superb classical music.
Since the 1970s, though, the growth of philanthropy has come to dwarf the economic value of a “one time only” $10.5 million donation. In an era when MetLife pays $17 million to $20 million annually for the naming rights to the stadium of the NFL’s Giants and Jets teams, the Philharmonic can receive far more money by reselling the naming rights of its music hall.
More than ten years ago, though, the descendants of Avery Fisher threatened to sue the Philharmonic when it presented a plan to resell those naming rights. And the law appeared to support their position; Fisher’s original pledge agreement clearly stipulated that his name “will appear on tickets, brochures, program announcements and advertisements and the like, and I consent in perpetuity to such use.”
Nevertheless, the word “perpetuity” no longer means “forever” in today’s hyper-charged economy. Two weeks ago, the New York Philharmonic announced its repurchase of the naming rights from Fisher’s descendants for $15 million. The institution will then be free to turn around and resell those rights to a new donor for far more money.
In the short term, the Philharmonic will certainly benefit from the resulting infusion of new capital. Considering the physical condition of its aging music hall, those funds will undoubtedly be put to good use.
But in the long term, there is a risk that the naming rights will come to be perceived as a commodity that is available for rent, as opposed to an honor that is bestowed upon the worthy. That may not pose a problem in the near future; after all, as long as the New York City economy continues to thrive, the Philharmonic’s “rental revenue” may soar.
But during the next economic downturn, if the value of the music hall’s commoditized name declines precipitously, the Philharmonic may be left without a willing lessee. That’s when it may learn that by commoditizing an honor, an organization may inadvertently cheapen its brand “in perpetuity.”