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Naming Rights Market Finds More Takers, March 2nd, 2016

SBJ/Feb. 22-28, 2016/In Depth

Naming Rights Market Finds More Takers; Financial services, autos biggest buyers

By Terry Lefton, Staff Writer

At the height of the recession, naming-rights deals were terribly unpopular across America. A new NFL stadium in New Jersey, built to house the New York Jets and Giants, opened in 2010 without a corporate nameplate, as did the Dallas Cowboys’ $1.3 billion stadium in Arlington, Texas. Politicians put naming-rights deals in the same category as corporate jets and lobbied to have banks that had received federal bailout money end their sponsorships.

Fast forward to today and deals like JPMorgan Chase’s naming-rights deal with the Golden State Warriors’ future arena and U.S. Bank naming the Minnesota Vikings’ new $1.1 billion home field, opening in July.

The naming-rights market is now heated enough that in August, Mercedes-Benz said it was putting its name on its second NFL stadium, the $1.4 billion Atlanta Falcons facility opening in 2017. That deal came about a year after the Atlanta Braves announced SunTrust as a naming-rights partner for their $672 million ballpark. SunTrust Park will open in 2017.

One source said the Braves and SunTrust agreed on terms in less than a week. Derek Schiller, Atlanta Braves executive vice president of sales and marketing, would say only that the entire deal took less than a month to paper.

Still, even with an NFL stadium being built in the same market, “we had multiple bidders,” he acknowledged.

SunTrust has also signed on as a founding partner at the Falcons’ new stadium, where one of the luxury field-level clubs will also carry the bank’s name.

“For naming rights, I’m not sure if the right word is rebirth or renaissance,” said Van Wagner Sports and Entertainment President and CEO Jeff Knapple, who has been directly involved in more than 20 naming-rights deals over the past two decades, including Staples Center, MetLife Stadium and the recent SunTrust deal with the Braves, “but having seen the dark years of 2009-2010, I think it’s as robust as it has ever been.”

The economic turnaround and the associated recovery of U.S. companies’ balance sheets helped, of course. Still, the biggest reason cited for the rejuvenation of naming rights is the same one cited for the buoyancy of sports media overall.

“Naming rights are a brand association that cuts through the media clutter and can’t be DVR’d,” said Mike Belcher, vice president of media and consumer engagement at T-Mobile, referring to his company’s recent naming deal with the $375 million T-Mobile Arena, opening on the Las Vegas Strip in April. While T-Mobile will never be able to outspend competitors like Verizon and AT&T, an arena naming-rights deal increased the brand’s share of voice.

“Unlike most venue deals that are locally driven, this one was just unique; it has national scale, because Vegas is the No. 1 tourist destination in the U.S.,” Belcher added.

“Brands have woken up to the fact that they already have a lot of paid media; naming rights are an alternative,” said AJ Maestas, president
of Navigate Research, which has worked on more than 40 namingrights deals, including the recent hookup between Alaska Airlines and
the University of Washington (for rights to the field at Husky Stadium) and the Golden 1 deal at the new Sacramento Kings arena. “It’s a
seller’s market. I’ve never seen so many deals with so much competition. If brand A does not sign, brand B is pretty far along.”

Financial services and auto remain the biggest buyers. Outside of autos, foreign companies have not been a actor, but some see that changing soon.

“Right now the elephant in the room are international [foreign] brands,” said Rob Yowell of Gemini Sports, Phoenix, which is assisting with naming rights for Orlando City SC’s new MLS stadium. “Many of these have been local companies putting a stake in the ground. To some extent, there’s naming-rights nationalism. On the West Coast, there’s resistance to something like Cathay Pacific Stadium or Korean Air Lines Arena, but that will change.”

Branding is a given in these deals. More recently, there has been increased integration in a new building’s infrastructure.

“There’s now a higher level of [business-to-business] relationships and integration, where ownership is committing to business with the naming-rights partner,” said Michael Neuman, managing partner at Scout Sports and Entertainment, which negotiated a founding partner agreement for energy management specialist Schneider Electric at T-Mobile Arena in Las Vegas, and is helping to sell naming rights for what’s now the Verizon Center in Washington, D.C. “We also have research that shows the connection we’re seeing now between fans and the naming-rights partners has never been stronger. It’s really moving the needle on  purchase intent.

Of course, that doesn’t mean a brand can assume the mere association will achieve the desired results.

“Putting a name on a building for the sake of branding does not fulfill its potential,” said naming-rights veteran Randy Bernstein, whose Premier Partnerships is selling naming right to the Miami Marlins’ home ballpark, the Ed Sullivan Theater in New York and the University of Colorado’s football and basketball facilities. “It’s a full 360-degree embodiment of the assets of the property that really pays dividends.”

With the exception of Farmers Field, completing a naming-rights deal has always been a sign that a stadium or arena project is more than just a blueprint on a shelf. With most projects now using the sports/entertainment venue as a traffic anchor for a mixed-use year-round facility, it can even help spur additional funding.

“There are still some doubters that our project gets done,” said Rick Welts, president of the Golden State Warriors, who recently announced a long-term naming-rights deal with JPMorgan Chase, which one source valued at $20 million-plus per year. “Getting that done first sets the table for everything that comes after.”

Note that the Warriors’ new arena won’t open until 2019. Another naming-rights aphorism that’s truer than ever: The walk up, or time before the building opens, is often more valuable than afterward. After all, it’s the only time when one brand is leveraging the new facility.

“That certainly goes into our conversation as far as when and how to sell the new park and development,” the Braves’ Schiller said. “There is so much value beforehand but you don’t, generally speaking, put a price tag on that, nor do you in most cases actually charge for it.”

Quantifying the value of any marketing platform is problematic. Still, those involved in naming rights say that having more data available than ever — from Repucom’s exposure numbers, to traffic counts for buildings facing major roadways — has made their job easier. “The magic in [naming-rights] sales now is having someone who understands the media and analytics world who can validate the sale for you,” Schiller said. “That level of expertise probably doesn’t exist within a team, so you really have to go outside.”

CAA represented both Chase and the Warriors in their recent deal, which raised more than a few eyebrows across the industry. Still, Welts said that an outside sales agency was vital “for strategy as much as for salesmanship.”

Barring another recession, naming rights will remain like other pricey real estate: expensive but something with generally reliable value.

“In a sound-bite world, naming rights have staying power,” Knapple said. “That’s something that’s not going to change.”

 

NAMING-RIGHTS DEALS ANNOUNCED SINCE JANUARY 2015
VENUE (CITY) TENANT(S) TERMS
– Mercedes-Benz Stadium(a) (Atlanta) Atlanta Falcons; Atlanta United FC(b);
– Chick-fil-A Peach Bowl 27 years / $324.0 million
– Chase Center(a) (San Francisco) Golden State Warriors 20 years / $300.0 million-$400.0 million
– Videotron Centre (Quebec City) QMJHL Quebec Remparts 25 years / $237.5 million(c)
– U.S. Bank Stadium(a) (Minneapolis) Minnesota Vikings 25 years / $220.0 million
– Nissan Stadium (Nashville) Tennessee Titans NA
– National Car Rental Stadium(d) (St.Louis) St. Louis Rams 20 years / $158.0 million
– Golden 1 Center(a) (Sacramento) Sacramento Kings 20 years / $120.0 million
– Spirit Communications Park(a) (Columbia, S.C.) Class A Columbia Fireflies 10 years / $3.5 million
– Silverstein Eye Centers Arena (Independence, Mo.) ECHL Missouri Mavericks; MISL Missouri Comets 10 years / $2.75 million
– MUSC Health Stadium (Charleston, S.C.) USL Charleston Battery 5 years / $925,000
– T-Mobile Arena(a) (Las Vegas) TBD Just under 15 years(e)
– Vivint Smart Home Arena (Salt Lake City) Utah Jazz 10 years/NA
– SNHU Arena(f) (Manchester, N.H.) ECHL Manchester Monarchs 10 years/NA
– Dort Federal Credit Union Event Center (Flint, Mich.) OHL Flint Firebirds; MASL Waza Flo NA
– Jimmy Johns Field(a) (Utica, Mich.) United Shore Professional Baseball League (Independent) Utica Unicorns NA
– Mapfre Stadium (Columbus) Columbus Crew NA
– Target Center(g) (Minneapolis) Minnesota Timberwolves; Minnesota Lynx NA

Source: SportsBusiness Journal research

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