TTC considers selling naming rights of stations

Should Toronto sell TTC station naming rights? The TTC is considering selling sponsored naming rights to its subway stations as a way to generate revenue.

Corporations spend millions of dollars on naming rights to sports and entertainment venues and the TTC is now exploring a similar concept a concept to offset ongoing financial pressure.

TTC board member and city councilor Stephen Holyday proposed the motion, which the board adopted at its meeting on Thursday.

“We need to look to see if this (is) doable, if there is interest because that's the first step in solving our financial issues,” Holyday said in an interview with CTV News Toronto. “It’s a test of ideology at city hall whether or not we’re willing to think outside the box and look within before we turn to other levels of governments, taxpayers and transit riders to fund financial pressures.”

The TTC will now explore potential revenue opportunities for naming rights and sponsorships. That could include selling the naming rights for transit lines, stations, the TTC’s rolling stock and other assets.

“I think we have to look at all things including like this to avoid future fare increases and future cuts,” Holyday said. “There is opportunity out there, just look at Scotiabank Arena as an example, a place like Scotiabank Arena has a 20-year naming rights deal worth $800 million.”

Other agencies in the United States have sold naming rights for transit lines and stations including Philadelphia and San Diego.

The Ontario government rolled out this concept for Go Train stations, but so far it has only applied to one station. Metrolinx and Durham College signed a 10-year deal for Oshawa Go station.

Metrolinx did not provide details on the amount of revenue it will generate, citing financial details “are commercially sensitive and can’t be shared.”

The idea is not new in Toronto – back in 2011, the city and TTC approved a policy for selling naming rights, but nothing materialized.

Marketing experts say the concept is rare and branding stations may lead to headaches for transit riders, especially those who are not familiar with the transit system.

“There are two important criteria which I think the TTC should employ. The first is to make sure they don’t confuse riders – if your start renaming stations that their name is actually for their geographic location, you’re going to confused people,” said David Soberman a professor at the University of Toronto’s Rotman School of Business.

“The second is also make sure the contracts are short term so they can cut the contract if the idea is not working or resign the contract if the idea is working.”

Soberman points out that incentives likely won’t be aligned between transit agencies and sponsors. He also notes that unlike sports and entertainment venues, companies may see little value in sponsoring a transit line.

“As a sponsor you're going to be interested in what does the value of the sponsorship create, is it a modern station, does it fit with my brand or is it a rundown station.”

The TTC has already made service cuts to routes and increased fares to address its budget shortfall.

“I think we have to look at all things including like this to avoid future fare increases and future cuts,” Holyday said.

Transit advocates argue selling naming rights would not generate enough revenue to address the financial challenges and would result in confusion for riders and tourists.

“We do think it’s a distraction from the bigger picture which is this immense budget shortfall that will need all three levels of government to come to the table,” said Shelagh Pizey-Allen, the executive director of the TTCriders.

The motion also calls for additional advertising opportunities for properties, vehicles, online and print materials.

The board has directed the TTC to report back on the matter at its meeting in June.