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Name of the game | The art of selling second-hand stadium naming-rights

Two of the biggest brands in sport recently started looking for stadium naming rights partners, but in very different circumstances.

In April FC Barcelona unveiled plans for a €400m renovation of its famous Camp Nou stadium. The five-year project, which will start next year, includes an overhaul of the whole 50-acre site and the bill will be partially footed by a naming-rights deal.

Then, in June, the Denver Broncos, the winner of the Super Bowl earlier in the year, announced an intention to sever the naming-rights agreement for Sports Authority Field at Mile High, after the sponsor filed for bankruptcy.

The NFL franchise aims to find a new partner for the venue. The two cases highlight both the potential and pitfalls of stadium naming-rights deals.

New York-based sports marketing outfit Van Wagner has been assigned by Barcelona to find a partner for the revamped Camp Nou. President and CEO Jeff Knapple describes the Catalan club as a brand “in the very top echelon of sports.” He adds: “If this was a new stadium, we would be talking about the biggest naming deal in history.”

But it isn’t, and therein lies a problem. The venue dates back to 1954 and has a rich and storied history. Won’t Camp Nou, to Barça fans, always be Camp Nou, regardless of any rights deal?

Knapple acknowledges this is an issue. “There is much more resistance to naming-rights deals in Europe, compared to in the US, where there is 80-per-cent market penetration among major sports league venues,” he says, noting the dichotomy when it comes to jersey sponsorships in the US major leagues.

“In Europe we arranged the Arsenal deal with Emirates, which was fine, because it was a new stadium. But it is difficult to find partners for existing stadia, because you are dealing with the brand equity of the existing name and all the history behind it. So we have usually shied away from those. However, Barcelona will be different because of the Camp Nou renovation.”

Espai Barça – the name of the new complex – will look like a brand new stadium. The football arena will gain a new roof, a tier of corporate boxes and an increase in capacity by 6,000 to 105,000. The façade will be remodelled with terraced hospitality areas for fans. A new basketball arena will be built and a retail and office development will replace the reserve stadium, which is moving off site.

“It is similar to what Chicago did with Soldier Field – a new skin around the existing stadium, with extra amenities giving fans more reason to stay on the site,” Knapple says. “The redevelopment of Camp Nou will improve the experience for fans and for the 4.5 million visitors the club attracts annually on non-match days.”

From Van Wagner’s perspective, the revamp means greater opportunity with the rights deal. “We can offer naming rights for not just the stadium and new basketball arena, but the whole complex,” he explains.

However, it is a sensitive process and involves working with the football club’s 140,000 ‘socios’ – the members who vote in the board of directors and so indirectly influence the decision. Significantly, the Camp Nou name is likely to remain. “We plan to tastefully integrate a global brand into the existing name,” Knapple adds.

Brand value

The Barcelona example demonstrates how a naming-rights opportunity can be approached when a stadium has years of brand equity stored in an existing name. However, for the Denver Broncos, the challenge is how to provide value for a new partner when the stadium has been operating for several years under a different deal.

First, though, the Colorado franchise has to extricate itself from the existing contract. Sports Authority attempted to auction off the naming rights for the venue in a move opposed by both stadium owner Denver Metropolitan Football Stadium District and the Broncos, but the latter has since bought out the remainder of the 25-year contract. This should smooth the way towards finding a new sponsor, but at what value?

“When the corporate naming partner of a venue changes and it is replaced by another, the brand equity in the new name is reduced,” says Jeff Marks, managing director of Los Angeles based sports sponsorship specialist Premier Partnerships. “We negotiated the Oakland Coliseum’s naming-rights deal for Overstock.com after it had been through four name changes in a decade. There was a lot of brand confusion. And recently the name changed again.”

In such circumstances the price of a deal may come down. Marks adds: “A company considering associating its brand with a stadium may reasonably say: ‘Why should we pay the same or more as the previous naming rights partner paid 10 to 15 years ago for a stadium that was brand new?’”

Mile High was built in 2001 and has had two naming-rights partners: Sports Authority and previously Invesco. According to Marks, it is now an “old stadium.”

“For the Broncos to secure a 10-year naming-rights deal now would be pretty good,” he says. “A stadium typically has a 30-year shelf life, in terms of naming-rights deals. If millions are spent on renovation, longer may be possible.”

To date, the only interest in Mile High has come from one of Colorado’s legal marijuana businesses, though Marks dismisses this as “a publicity stunt” and says the NFL would block it.

Attributes

Marks’ advice for a stadium operator in the Broncos’ situation – needing to attract a new naming partner and airbrush their previous sponsor’s associations – is to step back and think about the venue’s attributes and what kind of partner would be best suited to it.

He says: “Denver will need to ask themselves: ‘What are we selling? What is unique about our venue? How has the market changed since the stadium rights were last up for grabs?’ A stadium operator cannot go to the market with the same old story. The seller will take advice on what the market looks like.”

Marks adds that it is important to step into the mindset of CEOs of the companies considering becoming naming-rights partners.

“For them, this isn’t about slapping a new name on the sign,” he says. “They can buy billboards for brand exposure. They want to find shared values between themselves and the stadium which help their business.

“In some cases, this may simply be a lesser known brand who see it as a way of boosting their exposure. Kabam, the gaming company, was previously a regional business in Berkeley, but they put their name on the University of California football field and are now seen as a national player. Globe Life Insurance wanted to get their brand into Texas, so they put their name on the Texas Rangers’ stadium in Arlington.”

Knapple says there is sometimes an “emotional” connection. “The New England Patriots’ stadium in Foxborough was known as CMGI Field until the sponsor hit problems during the ‘dot com’ crash – so the venue operator switched to Gillette, a global brand employing thousands in the Boston area,” he explains.

One crucial aspect of any rights deal that changes a stadium’s name is an integrated PR and community strategy, according to Knapple.

“The Ottawa Redblacks’ Canadian Football League stadium has over a century of history and was previously named after a famous coach, Frank Clair,” he explains. “When the venue was redeveloped, we arranged a deal that renamed the stadium TD Place. We made a point of honouring Frank Clair, building a statue of him outside and educating fans about why the deal was necessary.”

Ottawa’s new stadium was part-funded by retail, commercial and housing that was developed on the same site. Knapple believes this trend will only grow. “Clubs are developing new approaches to the fan experience, making their stadia 365-days-a-year destinations,” he says.

More broadly, the knowledge of how to finance new stadia is increasing, Knapple adds. “In Europe relegation has been a roadblock for financing and naming. It is a reality the finance sector, notably Goldman Sachs, has begun to accept and they have mechanisms in place for offsetting those concerns. So we’re likely to see a new wave of stadium-building in the coming years.” Good news for the naming-rights sector.

HOW MUCH ARE NAMING RIGHTS REALLY WORTH?

Naming-rights deals have one main consideration – the cash. However, are the sums announced when contracts are signed a true reflection of the deal’s worth?

“Whatever you read in the papers about value, there is a whole back-end story we are not hearing,” Marks says. “Companies may be getting millions in hospitality or advertising inside the stadium, which bumps up what they can claim about the value.”

Going by official figures, MetLife Stadium has the biggest naming-rights package in history. The insurance company’s deal for the New Jersey home of the New York Jets and Giants, signed in 2011, is worth $450m over 25 years. The neighbouring New York Mets Major League Baseball franchise agreed a $400m contract with financiers Citigroup, which saw their new stadium named Citi Field on completion in 2009 and a similar figure was announced for Dallas Cowboys’ deal at AT&T Stadium the same year.

However, Knapple says: “The numbers are biased, because it is in the interests of both team and brand to inflate it. In reality, eachtransaction is slightly different. With naming rights, 60 to 70 per cent of the contract looks exactly the same in all agreements; the remainder will vary according to the brand and customers and market.”

Steven Slayford, senior reporter with SportBusiness International sister title Sports Sponsorship Insider, feels it is misleading to compare headline stadium-naming values because the contracts are often for different durations.

He thinks the MetLife Stadium deal is probably worth closer to $400m for the full 25-year term and is confident that the New York Mets figure of $400m is accurate. He adds that the Dallas Cowboys’ deal with AT&T is most probably worth $17m to $19m per year, but, as information about the length of this deal is not available, it is difficult to compare this with the MetLife or Citigroup agreements.

However, cash is not always king. Knapple is currently “filtering potential brands” for Barcelona’s stadium naming rights. “Cash is important, but it won’t be the only consideration,” he says.

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