Naming rights: Balancing art and science
As long as there are new sports venues being built, there will be eye-popping deals to name those buildings. In this section, Sports Business Journal presents its internal research and outside data from the companies that evaluate, negotiate and close naming-rights deals, including value to brands on traditional and social media; trends in the length of such deals; brand category distribution across leagues; and much more.
Research by David Broughton
Analytics and big data have fundamentally changed sales and marketing departments, say half of those responding to a 2018 McKinsey Global Survey.
But when it comes to naming rights — the biggest commitment in sports marketing — qualitative elements such as credibility and prestige are normally the deciding factor for brands, even in an age when the analytics are increasingly determining what happens on the field and everywhere else.
“The notion of naming-rights analytics is more prevalent today than ever, prompted by the [2008-09] recession,” said Jeff Knapple, who has sold dozens of naming rights, including for Staples Center and SunTrust Park, and who is currently handling a field naming-rights package for Dodger Stadium as chief partnership officer at Elevate Sports Ventures. “Brands know they need analytics to support their points of view [on naming rights], but it’s usually not the driver of that point of view.”
“All of these are part art and part science,” said Chris Hibbs, senior executive with Legends Global Partnerships. “Every brand cares about both, but the balance can vary widely.”
In addition to the SoFi Stadium naming-rights deal in Inglewood, Calif., reported to be worth more than $30 million annually over 20 years, Legends also helped close the agreement putting Allegiant Air’s name on the Raiders’ stadium under construction in Las Vegas.
Tony Schiller, executive vice president and partner at Paragon Marketing, has negotiated naming-rights deals for more than two decades — from New Jersey’s Continental Airlines Arena in 1996 to Pittsburgh’s PPG Paints Arena in 2016. “Exposure and impressions are significant relative to initiating a naming-rights conversation, but really, they are table stakes,” he said. “As pricing escalated, so did the insistence that naming rights be a platform for deeper activation and integration, as opposed to old school, which was just a lot of measurable branding.”
“The ROI on naming rights is always impression based,” said Charles Greenstein, Bank of America senior vice president of global sponsorship marketing. “There also can be direct revenue streams, especially with a financial institution or infrastructure provider. But it’s the intangibles that turn these deals.”
Putting a brand on a stadium or arena is a way to mark territory, which can include a “we’re headquartered here and we’re not leaving” statement, like Bank of America’s naming rights at Charlotte’s NFL stadium or Gillette’s at the New England Patriots’ home field in Foxboro, Mass. Related is the “we’re new, but this town is important to us” stake-in-the-ground naming rights, which is Chase’s rationale for placing its name on the San Francisco arena that’s the new home to the Golden State Warriors.
“Of course, you can try to measure consumer perception or attitude change around those, but those local plays are always the biggest reasons these deals are done in the first place, and they are qualitative,” Greenstein said.
First look podcast, with naming-rights discussion at the 11:35 mark:
Jacksonville Jaguars President Mark Lamping negotiated naming-rights deals when he was president of the St. Louis Cardinals for both the old and new Busch stadiums, with MetLife when he was president of the New Meadowlands Stadium and for the Jags for the current TIAA Bank Field nameplate.
“All these are done for commercial and community reasons, which accounts for so many being local,” he said, “but the rights holder also benefits from the best local deals.”
There’s a corporate ego factor driving the largest naming-rights deals, since only a select number of brands can afford them. “The biggest qualitative factor is the notion of [corporate] leadership, that idea that you are the company you keep,” Knapple said.
Financial institutions are easily the leading buyers of naming rights (see chart, Page 30). Chris Allphin, senior vice president at Van Wagner’s Team Advisory Group, thinks he knows why.
“What better way to communicate trustworthiness to potential customers than being big enough to be on my favorite team’s stadium?” said Allphin, whose agency is working with the Oakland A’s on their proposed new park, along with obtaining new naming rights for the Pittsburgh Steelers’ home field.
“If a brand needs to be trusted in a particular location, naming rights can be excellent investments, because they carry such a credibility factor,” said AJ Maestas, whose Navigate Research worked on recent naming-rights deals including Fiserv Forum in Milwaukee and Oracle Park, home of the San Francisco Giants. “I’d argue that we can quantify most anything, but how many brands need that level of exposure locked in for two decades?”
Of course, for brands with relatively low awareness, like SoFi or Allegiant Air, “they are challenger brands looking to build awareness and share quickly, naming rights can be a fast ticket,” said Zack Sugarman, senior vice president of properties at Wasserman, which worked on the property side for recent deals, including Hard Rock Stadium in Miami Gardens and the Chase Center in San Francisco.
Corporate responsibility, employee well-being and even recruiting considerations also can be powerful catalysts.
Earlier this year, when Lincoln Financial renewed its 17-year-old naming-rights deal at the Philadelphia Eagles’ home field, “certainly we tracked brand health, awareness and consideration,” to prove efficacy, said Lisa Buckingham, chief people, place and brand officer at Lincoln Financial, “but in a very tight labor market, where there’s a war for talent, having an asset like the Eagles can make a difference to [job] candidates with multiple offers.”
UCHealth, created from the 2012 merger of two health care systems in Colorado, was a new brand when the company named the Denver Broncos practice facility in 2016. “There are as many reasons for doing naming-rights deals as there are deals,” said Manny Rodriguez, chief marketing, experience and customer officer at UCHealth. He also managed the naming-rights deal at the Houston Texans’ home field when he was head of sponsorships and marketing at Reliant/NRG Energy. “We were a new brand, so we certainly measured awareness and consideration, but we really wanted to use the Broncos’ powerful affinities to convince people they should seek medical treatment — hopefully with us.”
Premier Partnerships President Randy Bernstein said local companies account for more than two-thirds of all naming-rights deals.
“Demonstrating the minimum number of impressions should be relatively easy, assuming you are dealing with top-tier properties,” said Bernstein, whose agency was involved with deals including the Moda Center in Portland, Mercedes-Benz Stadium in Atlanta and the Dolby Theatre in Hollywood. “Beyond that, the most important numbers are the ones that show the deal will get the naming-rights sponsor new direct business — especially if it’s taking that business from a competitor.’’
With exposure numbers a given, now some of the biggest debates are how much to discount those numbers in terms of their media equivalency — ratios that vary from 2:1 to 10:1, based on the assumption that a venue name on a static sign is less valuable than a traditional advertisement.
Of course, that discount is mitigated by naming-rights’ ability to break through the media morass. “It’s hard to reach the wide swath of individuals with just media,” said Kristen Phillips, Lincoln Financial’s senior vice president of corporate marketing, communications and strategy. “The NFL still has that bully pulpit compared to other sports; in a changing media environment, it’s a way to elevate your brand above the clutter.”
Even at a time when big data and analytics are more pervasive daily, naming rights will always be part science and part art.
“It’s an emotional play and ours is an emotional industry, you can’t get away from that,” said Elizabeth Lindsey, Wasserman president of brands and properties.
“Our experience is that it takes an emotional commitment by a certain type of corporate leader to commit to naming rights,” Van Wagner’s Allphin said. “Then you go in and see if the numbers are there.”
Editor’s note: This story is revised from the print edition.