Big brands buying stadium naming rights: Is it worth it?

by Staff Writer

As a Giants fan, I must admit, it's difficult for me to refer to my favorite football team's home field as “Met Life Stadium”. Though it's only been little more than a month, and “New Meadowlands Stadium” didn't exactly flow off the tongue either, it got me wondering if I'll ever be able to call it anything but “Giant's Stadium” -even though that was a completely different building.

 

Oh, and a side note to Met life: no matter how hard you try, THIS will always be “The Met”.

 

It got me wondering if a contract of $20 Million/year for 25 years could ever return a positive ROI from the marketing value of such a purchase? It's a growing trend among new sports arenas, stadiums, and ball parks…even performing arts centers. Does it really work? If so, where's the proof? As I researched and considered both sides the the argument, I found myself torn.  So we present you with a few common arguments for both sides so you can decide for yourself.  Let us know what you think in the comments.

 

Some arguments against:

 

  • Historically, nothing indicates a positive ROI for these moves. Depending on how you quantify it, you could even make the argument that company value actually declines after purchasing the naming rights of stadiums. Citigroup needs a $300 Billion bailout 2 years after purchasing the naming rights of Met's Citi Field. Even fruit of the loom, with what was Pro Player Park, a sports friendly brand with a more than acceptable name for a football stadium, couldn't save them from chapter 11 bankruptcy. Of course in both of these cases one had nothing to do with the other. If owning naming rights to a stadium has a positive ROI on brand value, there's little proof to back that claim. In fact, even if by complete coincidence, there appears to be a negative correlation between the two.
  • I will be no more likely to buy [Met Life Insurance]. I've even heard a few Giants fans proclaim that they'll, in fact, be less likely (from spite?). While I understand their frustration, I don't necessarily agree with their stance, but I certainly don't feel more compelled to go with Met Life either. For this purchase to have positive ROI, am I supposed to believe that they will earn $500 million more in profits if they hadn't done it? That's hard to imagine…even after 25-50 years. How many people would this need to convince? Where are they? I don't believe I've never met one. Not in NY, anyways.
  • The tactic is being abused, so any positive effects are diminishing. Not only are some of the contracts short lived (stadiums change names too regularly), but some brands (such as American Airlines) own the right to multiple stadiums. The Miami Heat play in the American Airlines Arena, and the Dallas Mavericks play in American Airlines Center. Or is it the other way around? It's being treated like billboard advertising. So not only is this where a lot of the growing animosity about the 'purity/history of sports teams' comes from, but it also diminishes the effectiveness of the tactic altogether.
  • The teams just don't need it.  If the Giants and the Jets play in their new stadium for 80 years, the naming rights alone will have paid for the entire initial building cost ($1.6B)  But two football teams in the largest market in the U.S. sharing the cost is more than enough to make it profitable.  Unless this deal reduces the cost of tickets to the fans, it just seems greedy.

 

Some arguments for:

 

  • Branding on this scale is not about ROI, it's the cost of staying relevant. From a business perspective, This type of branding is not meant to convince people to buy your product. It's simply to remind people your brand of product(s) exist. It's to create top of mind awareness to products you don't (necessarily) have a personal preference for. To stop spending money on this form of branding may (in fact) improve short term profits, but at the expense of long term market share.
  • Compared to TV advertising, it's a bargain – a 30 second television spot costs about $2.5 Million during the superbowl. Met Life Stadium will host the superbowl in 2014 where the total advertising revenue will be more than $200 Million. The stadium (and it's name) will be front-row-center for the two weeks leading up to the game as well as the prominently displayed branding message during the game. This is only a single event among many in a 20 year contract.
  • Some matches are better than others. Not all brands are the same, and not all teams are either. Even though Met Life is headquartered in NYC, doesn't mean that the people of the big apple will embrace it. As a brand and family name, Heinz is more locally engrained in Pittsburgh, than MetLife to NYC. But it's also a brand you can easily associate with football. It's a near perfect match. The only better match I can think of is if JetBlue had won the contract in the Meadowlands as was rumored. Then Jets and Giants fans alike would have had a lot less to complain about…for obvious reasons.
  • It is becoming the new norm. There may be a diminishing effect for purists and the older generations, but for the newer generations (arguably the target audience for the long-term), this will be the norm for stadium names. And still (but also to reinforce the last point too) there are teams that you just can't touch (yet?): Yankees, Red Sox, Green Bay Packers just to name a few…
  • It's easy money for the team: If the Giants and the Jets play in their new stadium for 80 years, the naming rights alone will have paid for the entire initial building cost (Yes I repeated that from the last argument against)  So not only is it too profitable to pass on, if you don't have 2 teams sharing the cost in the largest market in the U.S. you may need some extra income to help pay for the cost of a new stadium.

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