O2 agrees to pay more than triple its first naming fee to keep its name on the London arena

As the venue's risk fell, the fee rose ^[19][17]. O2's first contract cost £6m a year and was signed when the future of the O2 and the surrounding site was far from certain ^[19]. "Everyone thought it would never work, that it was crazy building on the site of the Millennium Dome, it was considered the biggest white elephant," said Paul Samuels, president of global partnerships at AEG International ^[3]. "In the first deal we were talking about whether to put in clauses if the O2 couldn't hit 100 shows a year - last year we did 239," he said ^[2].

The new fee is about 3.3 times that first one ^[20]. The calendar is running at 2.39 times the 100-show floor discussed for the first deal ^[15]. A step of almost 50% to reach £20m implies O2 pays a little over £13m a year under the current contract ^[24]. All of these figures rest on an estimate. According to the Guardian, O2 is thought to be paying about £20m a year, and the deal is thought to be the largest renewal of its kind in UK history ^[17][16].

Set against the size of the venue, the fee is modest. Gareth Griffiths, director of partnerships and sponsorships at Virgin Media O2, said the main arena draws two and a half million people a year, and the rest of what the venue offers draws another 7.5 million ^[9]. On those numbers, £20m works out at about £2 a year per visitor ^[21]. It is roughly 13% of the venue's 2025 revenue ^[22].

A rights holder at another UK arena would say the O2 has just set the national rate. I'd expect owners to quote it in their next negotiations. But the figure was built on this arena's own results: a 239-show year and the best accounts in its history ^[2][4]. The only other UK naming deal in the record is Arsenal's, mentioned because it has run longer than O2's ^[7].

For Virgin Media O2, the trade-off is ten years of committed brand spending set against a savings programme. Its owners, Liberty Global and Telefonica, were reported last month to want £600m of cost cuts to calm investor fears over a £22bn debt pile ^[11]. The annual fee is about 3% of that target ^[23]. "Every pound we spend we do so very carefully," Griffiths said ^[12]. "Churn is still one of the most important metrics in the business, it is about keeping hold of valuable customers," he added ^[13]. He also said: "This is a 10-year investment in the UK ... a huge sign of intent." ^[14]