What’s the Return in a Stadium Naming-rights Deal?

In the past, baseball, football, and other professional sports complexes were generally named after an important individual or based their location. Very few teams played in stadiums tied to a corporation.

In fact, in 1953, the Anheuser-Busch brewery wanted to buy the naming rights to the St. Louis Cardinals’ stadium and rename the park “Budweiser Stadium”. However, the league wasn’t too excited about naming  stadium after booze. So, instead, Augustus Busch renamed the stadium “Busch Stadium” using his family’s surname. And shortly after the investment was made, a new beer called Busch Bavarian Beer was introduced to the public in an effort to capitalize on the stadium’s new name.

However, it wasn’t until the late 1990s that the purchasing of stadium naming rights became a widespread marketing tactic. At this time, it became common practice for brands to be signing $400 million naming-right deals over 25 years.

Fast forwarding to today, the selling of naming rights is generating more money than ever. Farmers Insurance recently signed a $700 million deal to put its name on a sports and events stadium that lacks an official team and even has yet to be built.

So, where is the value in all of this?

Well, it’s hard to say. The return on investment with naming-rights deals is difficult to measure because of the many factors that are involved.

The obvious benefit of a naming-rights investment is increased brand awareness. It can make billions of positive impressions in the minds of consumers.  How is this possible? Well, marketers argue brand visibility goes well beyond the venues’ visitors. The venues and company branding can be seen by consumers as they scroll through their Facebook news feed, commute to work, play an online video sent to them by a friend, or watch the news. This type of marketing isn’t intended to persuade consumers to buy a product. It’s used to simply keep or create top-of-mind awareness for a brand.

However, historically there is no proof of positive ROI for a naming-rights tactic. Michael Leeds, an economist at Temple University, has done research on naming rights deals.  “The bottom line was we found really no evidence of any major impact on a company’s profits,” he said.   

Some marketers even argue that corporations investing in stadium naming rights lose value. For example, two years after purchasing the Met’s field, Citigroup was in need of a $300 billion bailout.

With that being said, most marketing experts can agree that when investing in naming rights, you are purchasing an opportunity not guaranteed profitability. Having the degree of visibility discussed earlier will help you leverage other marketing tactics, but if a company intends to spend the majority of its marketing budget on a stadium sponsorship, it’s likely it will never see the return on the initial investment.