The value of stadium naming rights
The global football stadium-naming rights market has grown exponentially in recent years to become a multi-billion-dollar industry. With top clubs securing lucrative big-brand deals worth upwards of USD 100m, it is unsurprising then that these partnerships are increasingly becoming integral to the business models for clubs and represent one of the three most valuable sponsorship income streams alongside agreements with kit suppliers and shirt sponsors.
Nevertheless, there remains significant potential in this area of sports marketing for growth. Of the 98 teams in Europe’s top five leagues, only 32 had stadium-naming rights deals in place for the 2019/2020 season. Premier League clubs Arsenal FC and Manchester City top the table with partnerships with airlines Emirates and Etihad Airways respectively, worth a reported EUR 12 million per year, with clubs from the top divisions in Spain, Germany and France occupying the remaining positions in the top ten with deals ranging from EUR 4 million to EUR 10 million per year.
Given the patent value in stadium naming rights deals, why aren’t they more widespread? “It’s a difficult sell for clubs, because it’s one of those binary deals – you either sell it or you don’t,” says Diarmuid Crowley, Director of Populous Consulting, which specialises in design-led business planning. “With other sponsorships, you might have an inventory of eight to ten packages and sell five or six – but with naming rights, your target market is going to be limited and it’s a significant investment.”
The difficulty comes in quantifying the value of naming rights partnerships. While the financial gain for clubs is obvious, brands are required to weigh a multitude of tangible and intangible factors against any potential outlay. Ever since chewing gum magnate William Wrigley put his name to the home of MLB side the Chicago Cubs in 1927, increasing exposure and brand awareness have been key drivers in companies choosing to invest in stadium naming rights deals. However, in the digital age brands have come to demand much more.
“Emirates have said that one of the biggest benefits from the Arsenal sponsorship is not in the global branding it delivers, but the customer data and analytics they get from the club through social media and other platforms, which of course help in their own customer engagement and loyalty programmes,” says Crowley. “That’s how brands are increasingly looking at this – they’re looking at data analytics and the extent to which you provide access to new business for them, so they can calculate an accurate return on what is a very substantial investment.”
Of the intangible benefits of naming rights deals, communicating trustworthiness and building goodwill with potential clients are among the most significant for brands. German financial services company Allianz has acquired naming rights to no fewer than seven stadiums on four continents including the Allianz Arena in Munich, home to Bayern Munich; and the newly opened Allianz Field in St Paul, Minnesota, home to Major League Soccer side Minnesota United FC. The firm states that its continued investment in stadiums is driven by a desire to support local communities by “helping develop magnets for global industry and tourism in key regions worldwide.”
Prestige also has its part to play; companies have always been keen to align themselves with successful sports teams. James Hogan, CEO of Etihad Airways, said in 2011 of the airline’s reported GBP 400 million naming rights agreement with Manchester City FC that the partnership made business sense at a time when “Man City's winning attitude is bringing increased success for the team on the national and international stage."
The deal has allowed Etihad to align itself with a project that is seen as overwhelmingly positive by fans and the community in helping to regenerate East Manchester and elevate the city on the global stage. This will undoubtedly be a key driver for Tottenham Hotspur FC in securing a naming rights partner for its new billion-pound stadium in London, where the development is touted as being a catalyst for regeneration in the local area.
Simon Borg led the design of the stadium’s brand activation scheme for architect Populous. His team, he says, implemented a model for “integrated brand activation”, allowing for sponsor branding to be embedded into the building itself. “With the high values now at stake in stadium naming rights deals, it is no longer enough to simply slap a sponsor badge on the side of the building. That won’t wash with brands or venues,” says Borg.
Instead, his team focuses on making sponsor branding a part of the stadium in a way that adds value to any potential naming rights deal: “The work we've done in positioning the club’s emblem on the façade of the Tottenham Hotspur Stadium allows for the potential addition of a naming rights partner in a prominent position – in an area where it will gain maximum exposure to fans visiting the ground and on TV.”
But for clubs without a shiny new stadium to sell, what can be done to maximise the commercial value of stadium naming rights deals? The key, says Crowley, is in presenting a vision of the club that aligns with a brand’s values and what it is trying to showcase.
“We’ve seen with the sale of naming rights for historic stadiums in Europe for the likes of Villarreal and Ajax that existing venues still have a huge draw for brands,” he says. “It’s about creating the right proposition. Amazon, for example, has chosen to put its name to the Climate Pledge Arena in Seattle because the renovations currently underway will create the world’s first net-zero arena – and that message aligns with the company’s goal of inspiring global climate action. More and more, particularly at the high level, brands aren’t just looking for media exposure, they’re looking for a real alignment of ethos and vision.”
