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Lee Schafer

Insights on Twin Cities business and economics

Home Delivery Explodes, Great for the Consumer and a Headache for Business

There was a little news splash last week from the rollout of Amazon.com's one-hour delivery service in the Twin Cities.

What made this particularly noteworthy, however, largely escaped me. It's really nothing more than another reminder that the options for quick in-home delivery are exploding here in the Twin Cities.

It’s difficult to know where to start a list. In addition to the Amazon.com news, you may recently have read that the delivery service Instacart has linked up with Target Corp. to deliver groceries.

Consumers in the Twin Cities also can outsource their beer run using a mobile phone application called DrinkFly. Four liquor stores will now deliver into my neighborhood using it.

Then there’s the Uberization of home delivery, with a service called Postmates that has rolled into the Twin Cities. Much like Uber, with its application to arrange automobile rides, this service has a mobile app that will let consumers arrange to have something picked up and delivered to the house. That means it’s also looking for drivers along with customers

The appeal of some of these services is a little bit difficult to grasp, although maybe that’s just a sign that it’ll be difficult to break a 30-year habit of picking up groceries in a store and lugging them to the car.

What is clear, however, is that managers ofconsumer-oriented companies large and small must have a strategy for extending the supply chain all the way to the front door of the customer’s residence. There’s nothing about this management problem that appears easy to figure out.

Nothing Clever About Medtronic Plaza - As a Deal

After the Minnesota Vikings and Medtronic announced that Medtronic's name would go on the plaza in front of US Bank Stadium, the e-mail notes came in again. Readers were insisting that Vikings Chairman Zygi Wilf is one clever dude and he’s once again completely outfoxed us.

Why, just look at the money Wilf was already getting for the naming rights for a stadium owned by the public. And now, it turns out, he even will get money for selling the name to the plaza fans will walk through to enter the stadium.

Zygi, brother Mark Wilf and cousin Leonard Wilf are the principal owners of the team and they are certainly accomplished business people. There’s at least a chance that they are near geniuses at the art of the deal. But there sure hasn’t been that much evidence of genius when selling the rights to name the stadium where their National Football League team will play.

The reason, of course, is that having a team get the money for the naming rights is hardly novel to Minnesota. It’s done that way everywhere.

And the reason the teams get the money is that naming rights are really nothing more than the team selling paid advertising for their sporting event.

No big time sporting event means no fans and no extensive media coverage, which in turn means no consumer eyeballs and no value in naming rights.

US Bank ‘s paying, best we can tell, $7.5 million per year to put its name all over what is now called US Bank Stadium. Since that deal was announced, Mercedes-Benz bought the rights to have its name on the still-under construction $1.4 billion stadium in Atlanta that will be the home field for the NFL’s Atlanta Falcons and Major League Soccer’s Atlanta United.

The Atlanta deal is for 27 years, and estimates for this one are up to $20 million per year. Mercedes also has the rights to the NFL stadium in New Orleans, and that figure is widely reported to be $6 million per year.

The Twin Cities was the nation’s 15th largest media market in one recent ranking, with about 1.7 million TV households. Atlanta was bigger, with about 2.3 million TV households, but not so much bigger that it justifies annual payments that are more than twice what they are here. Meanwhile, greater New Orleans was the 51st largest media market, less than half the size of the Twin Cities.

These look like good deals for the teams, at least compared to what we think are the terms here in Minnesota.

Yet there is no particular reason to think Falcons principal owner Arthur Blank or Saints owner Tom Benson are exceptionally clever deal guys, or to suggest they have outfoxed anyone. In that way, they are just like the Wilfs.