Naming rights for stadia and other venues has become an important part of the sponsorship mix for many big brands, writes John Trainor.
There has long been a debate as to whether or not venue naming rights deals are a sound investment. While investigations into the potential of such business strategies got even more forensic during recent global and national economic recessions, which manifested itself in relative inactivity and shorter term deals, the facts are that such investments are on the rise again.
The reason for this resurgence in appeal of venue naming rights is simple…it works. Even when buildings don’t get out of the turf, sponsors see major return on investment. In North America, Farmers Insurance got probably the most publicity-per-advertising dollar ever for a stadium naming rights deal, given that no fees came into play as the venue was shelved – despite the insurer earning an estimated $6m in media value while the deal was being reported initially. Similarly in Ireland, the unbuilt eircom Park proved a super-efficient platform for the telecoms giant to fast track its re-brand from Telecom Eireann in 1999.
Venue naming rights has experienced dramatic growth in the past half a century and at its peak, the latest big deals being inked are huge. In North America, the first major stadium naming rights deals took off in the early 1970s when Buffalo-based Rich Products negotiated a deal to pay $37.5million over 25 years for the stadium used by Buffalo Bills. Four decades later corporate names blanket sports venues. MetLife are investing a reported $450million in naming the New York Giants Stadium, and $20million per annum deals are the new norm. Only 19 of 122 teams in the four major U.S. sports leagues play in a facility without a corporate name.
European Football, including UK Premiership Clubs, have also steadily embraced and added a venue naming rights deal to their bottom line, with top teams like, Arsenal playing at the Emirates Stadium, Manchester City playing at The Etihad Stadium, and team of the season Leicester City playing at King Power Stadium. Certain sectors of note are upping their game in Europe and North America, with telecommunications brands in particular beginning to challenge the traditional financial services sector dominance of venue naming deals.
The 2017 edition of ONSIDE Irish Sponsorship Industry Survey found that one in two rights holders in Ireland are actively exploring options around selling naming rights sponsorship to their venues and facilities and a range of sports and entertainment venues are exploring the market in 2017, including Thomond Park Stadium.
Fuelling the growth is the reality that many sports organisations need to grow revenue to maintain a competitive product on the field. Venue naming rights are high on the list of large scale revenue sources that can make a significant impact for a club – and quickly. Fans want their teams to be competitive on the field and understand business dynamics of modern sport. The predominant thing that fans want is their team to be winning. Research by ONSIDE into the area found that the Irish public are growing to embrace and support venue naming rights sponsorship programmes. A majority agree and support the idea that selling of sponsorship rights for a company/brand to have a sports stadium like Thomond Park named after them to help fund the future development of such a venue is a good idea – with less than one in 10 strongly against the idea of such sponsorships.
Aviva Stadium Showcase Sponsorship Success
Awareness of naming rights sponsorships of major venues in Ireland, like the Aviva Stadium, is significantly above wider sponsorship norms. ONSIDE research shows that over three-quarters of the Irish public are aware of Aviva’s associations with the stadium formerly known as Lansdowne Road. More importantly affinity, defined as feeling more positively toward a brand because of their sponsorship, is relatively strong amongst the Irish public for venue naming sponsorships. Aviva commands strong affinity, with a large numbers of Irish adults feeling better about the brand because of their association with the rugby and soccer stadium. As a result of such sponsorships, significant numbers are found through ONSIDE research to be more likely to consider using sponsors like Aviva as their preferred brand and recommend the sponsor to others.
And the wins can take many shapes and forms. Levi’s have gained major value beyond Naming Rights in its partnership with the San Francisco 49ers. Just take a walk inside Levi’s Stadium this NFL season, and one thing jumps at you…everyone’s in Levi’s. From the 49ers’ mascot to the team’s cheerleaders, Levi’s has outfitted them all. After signing its naming rights deal, Levi’s worked with the 49ers to adopt a strategy allowing the apparel company to outfit visible people related to the team, ranging from its mascot and cheerleaders to even the 10,000-plus concessionaires it employs.
A feature of the next generation of post-recession venue naming rights deals is the return to longer-term deals, with term lengths rebounding in recent North American venue deals. The rounded average length of new naming rights deals at the four major U.S. pro sports leagues was 11 years from 2010 to 2014, down from 17 years during the 2005-to-2009 period. Most recently, the average term length for 2015+ deals was 13 years.
Big picture naming investors like O2 and Allianz have used such alliances to win major brand building triumphs on a global stage. Allianz has capitalised on this investment expertise through a string of venues in London, Munich, Sao Paulo, Nice, and Sydney, while The O2 chain of venues in Europe were award winning and beacons of inspiration for sponsors.
Breaking New Ground in Ireland
To date in Ireland, the marquee venue naming sponsorships that have added millions to the value of the bottom-line of sponsors have been largely Dublin-centric, with pioneering deals by O2 (now 3Arena) followed soon after by Aviva Stadium. INM broke new ground through the naming of Munster Rugby’s Cork venue Musgrave Park (now Irish Independent Park), while another side to the development of the discipline in Ireland to date has seen a series of local GAA venues renamed, including Elvery’s McHale Park in Castlebar, Innovate Wexford Park and Netwatch Cullen Park.
The next round of venues likely to open the doors to naming partners may be found in landmark city venues including potentially the re-developed Páirc Uí Chaoimh in Cork and the new Live Nation operated Cork Events Centre. Other ‘facilities’ will learn from the success of Tayto Park and Guinness Storehouse that Ireland’s newest visitor experiences, and non-traditional buildings like the new Exo office building in Dublin, may well be spaces that lend themselves to a ground-breaking venue naming business case.
Globally, facility naming rights will continue to contribute to short term growth within the sponsorship industry. As future sponsors of venues like Thomond Park Stadium begin to make a worthwhile contribution on and off the pitch in terms of the fans experience of their memorable match days yet to come over the next decade, the goal will be to make their presence transformational and create a win-win through well done next generation venue partnerships.
Article first published in IMJ, March/April 2017, Vol: 43, No. 3.
John Trainor is CEO and founder of ONSIDE.