Marlborough-based Digital Federal Credit Union has paid $5.2 million for the naming rights to the Worcester Centrum as part of a 10-year agreement. The building will be rechristened The DCU Center in December.
Marlborough-based Digital Federal Credit Union’s name will soon be in the bright lights. The credit union recently purchased the naming rights to the Worcester Centrum in a 10-year, $5.2 million deal. While some credit unions are tipping their hats to DCU, bankers are angered by the recent developments. DCU officials say they are simply utilizing the latest marketing strategy.
“[Bankers] criticize any good news about a credit union,” said Tim Garner, vice president of marketing and strategic planning for DCU. “Naming rights is a marketing tool.”
The Worcester Centrum opened its doors in 1982 and is home to the Worcester IceCats of the American Hockey League. The Centrum hosts various types of events including trade and family shows.
Conversion to the new name, The DCU Center, will occur in December. According to the credit union, the specific terms of the agreement include a one-time upfront payment of $4.8 million. DCU, with $2.4 billion in assets, will pay for the design, construction and installation of five exterior facility identification signs and an interior kiosk at the main entrance of the convention center.
Garner said the credit union’s board of directors made the decision to purchase the naming rights to the venue.
According to the DCU Web site, the naming rights will “assist in our growth and our ability to spread the good word about DCU and complement our overall branding strategy.”
The credit union also said the naming rights will allow DCU to expand into the Worcester area and service new members.
According to the credit union, it already has 93,000 members living within 50 miles of the DCU Center.
“It will also provide a variety of branch and ATM expansion opportunities,” according to the Web site.
Currently, DCU has nine branches in Massachusetts, two in New Hampshire and one each in Colorado and Georgia.
As part of the agreement, DCU will provide extensive marketing and promotional support for arena and convention center events, including cross-promotional opportunities on an ongoing basis with its rapidly expanding membership. Some of those direct-marketing tools will include statement inserts and messaging, inclusion in newsletters, Internet advertising and branch location displays. DCU is also the presenting sponsor for the upcoming Boston Pops Holiday Concert scheduled at the facility in December.
‘An Effective Tool’
In the credit union’s announcement about the naming rights, it said it looked at the success of other naming rights relationships nationwide.
“After seeing the success of naming rights relationships around the country, we believed that this opportunity would be an effective tool for our long-term brand awareness efforts,” Garner said.
However, Daniel J. Forte, president and chief executive officer of the Massachusetts Bankers Association, said the naming-rights news disturbs him. He acknowledged that he is not bothered by the way “traditional” credit unions are run, but said he takes issue with the large billion-dollar institutions’ operations.
“This [purchase of naming rights] is part of a marketing strategy,” Forte said. “There is nothing wrong with marketing.”
But, he added, spending money on naming rights is probably not what lawmakers intended when they decided to give credit unions a tax break. Forte said that Massachusetts taxpayers actually subsidized the naming rights.
“You’ve got to wonder where it stops,” Forte said.
Fitchburg-based Workers’ Credit Union President and Chief Executive Officer Frederick Healey said he wishes his credit union could have done what DCU did, but Workers’ is significantly smaller at $475 million in assets.
“It is a good thing for credit unions to get more notoriety and market branding,” Healey said.
Robert Kimmett, senior vice president of marketing and public relations at the Massachusetts Credit Union League, said the purchase of naming rights by credit unions is not unheard of.
“Community partnerships have worked out well,” Kimmett said.
Speaking specifically about DCU, Kimmett said although credit unions get a tax break, it does not mean they can’t spend money to market themselves.
“[The purchase of naming rights is] a legitimate marketing expenditure,” Kimmett said.
He said banks should not dictate what is an acceptable marketing tactic for credit unions.
Forte said he has sent letters to state and federal policymakers about DCU’s latest endeavor saying that the institution has become the “poster child” for what is wrong with the credit union industry.
“I don’t think we did a good job in the past to assure traditional credit unions that our concern is with the big guys, not the little guys,” Forte said. “We need to begin a better dialogue to identify what the public policy concerns are. This is [about] small community banks that are paying taxes, subject to [the Community Reinvestment Act], against one of the largest credit unions in the country.”
Forte said in the long run, large credit unions could become a threat not only to banks, but also to smaller credit unions.
But at least one of those smaller credit unions – Worcester Credit Union, which has approximately $72 million in assets and more than 9,000 members – has no problem with DCU’s purchase of naming rights.
“You have to look at it as a legitimate marketing strategy,” said Karen Duffy, president and chief executive officer of Worcester Credit Union. “[And] this is good for the city of Worcester.”
DCU also is planning to contribute to the Worcester community by participating in the Adopt-a-Classroom program. The credit union will sponsor six Worcester public elementary school classrooms and the teacher for each classroom will receive a budget of $500 to purchase books and supplies.
Duffy said competition between banks and credit unions will always exist and the naming-rights purchase is simply one way a credit union has chosen to market itself.
Duffy disagrees with Forte’s argument that average citizens subsidized the naming-rights purchase.
“It’s a bogus argument,” Duffy said. “We’re run differently.”
Duffy further defended her industry, saying if banks like credit unions’ business model, they should convert. However, Forte said asking for a tax-exempt status would be a tough sell to lawmakers while budget deficits continue to grow.
Jennifer Jope may be reached at jjope@thewarrengroup.com.
