Firms get their platform - at a price

Dubai's Roads and Transport Authority claws back Dh1.8bn in construction costs by selling naming rights to the Metro.

The First Gulf Bank Metro Station on Sheikh Zayed Road in Dubai.

DUBAI // When construction of your commuter rail line has cost billions, it helps if you can claw back some of the costs. That's what Dubai's Roads and Transport Authority has done, to the tune of Dh1.8 billion (US$490m), by selling the naming rights to the Metro stations and the two lines.

It was, said the RTA in announcing the naming scheme in March last year, "a world-first revenue model for public transport infrastructure", offering local and international companies the opportunity to "anchor their association with Dubai". The opportunity triggered something of a bidding frenzy: by December, the RTA announced that offers had exceeded expectations and the rights to name the first batch of stations had gone for more than Dh1.8 billion.

The money will certainly come in handy; last week, the RTA confirmed that the cost of building the Metro had nearly doubled, from the originally projected sum of Dh15bn to Dh28bn. "The ability to secure a station name from the outset is unique," said Mattar al Tayer, the board chairman and executive director of the RTA, at the launch of the scheme last year. "No other government in the world has planned naming rights as part of its transport infrastructure at conception stage," he said.

"We expect this innovation to make its mark worldwide and kick-start a new marketing concept that sees governments raising funds to improve services, while giving companies a totally new platform for marketing, sampling and customer interaction." The blogosphere is not so sure: "Imagine the London Underground having a 'Vodafone line', or trains stopping at 'Gillette east'," wrote one blogger. But in this, as in so many things, Dubai is rewriting the rules, as another blogger pointed out: "Dubai doesn't really fit the mould of any other situation, so more power to them."

Among the names that will soon become synonymous with stops on the Red Line are the Majid Al Futtaim Group (Mall of the Emirates and Deira City Centre stations), Nakheel (Nakheel station, the Palm Deira station and Nakheel Harbour & Tower station) and Emirates Telecommunication Corp (Etisalat station); the Etisalat rights purchase alone reportedly cost Dh135m. Commuters will also have to get used to Sharaf DG, First Gulf Bank and Dubai Airport Free Zone stations. Not all the names are quite so snappy: Gulf General Investment Co has opted for GGICO station.

Abdul Mohsin Ibrahim, the RTA's head of strategy and corporate governance, said the idea of naming rights had arisen when a number of firms approached the authority about marketing opportunities on the Metro. By April 2008, more than 120 companies had requested documents to apply for the rights, and nearly 250 had expressed an interest in bidding. "Both local and international brands are queuing up to become one of the first companies to brand a station, with requests received from as far afield as Japan, Greece, Spain, the United Kingdom and India," Mr Ibrahim said at the time.

A lucky eight corporate partners, including Dubai Holding, Emaar and Emirates Airline, which helped to finance the Metro's construction, have been honoured by having their names assigned to stations. After a year of bidding, exactly how many stations have been branded remains unclear. Last month, it was reported that the names of two of the stations had been abruptly changed, and that only 10 naming rights had been awarded.

Media reports said Burjuman station had been changed to Khalid bin Al Waleed station after an RTA official said Burjuman's management had declined to pay for the naming rights. The RTA has declined to speak further about the issue. [e-mail]