Scouting For Naming Rights Opportunities During Covid-19

It’s not just the prospect of cut price deals that should be alerting brands. Some venues have seen their naming rights deals disappear during Covid-19 – which means they are urgently looking for replacements (representing a new opportunity for brands). Others that previously wouldn't have considered a naming rights deal might be open to doing so now in order to protect their future. Again there is a downside risk, which is that brands may be seen as forcing their name on a heritage venue – thus generating fan hostility. But, once again, careful planning could make brands seems like benefactors. A current example is Leicester Tigers’ decision to rename its home ground as Mattioli Woods Welford Road in a five-year deal that will help bolster the club’s finances in the face of the pandemic. The Independent reports that: “It is the first time Leicester have issued naming rights to the stadium they have occupied since 1892. The agreement comes at a time when a number of Gallagher Premiership clubs face uncertain futures due to Covid-19 fallout.”

Some brands might hesitate at the thought of signing a sponsorship deal in the current climate. But the beauty of naming rights deals is that they generally last for a long period of time – sometimes decades. So even if the first year of a new partnership doesn’t deliver as much as it might have done Pre-Covid-19, there’s still plenty of time to take advantage in future years. At the same time, it’s worth keeping in mind that the value of naming rights deals isn’t limited specifically to audiences attending at venues. Even if the current optimism surrounding new Covid-19 vaccines doesn’t result in crowds returning during the 2020/21 sports/cultural season, there is some media exposure to be had courtesy of behind closed doors events.

So, leaving aside the particularities of Covid-19, what is the appeal of a naming rights deal? Chris Baylis, CEO of The Sponsorship Collective, says naming rights is “top tier when it comes to exposure as well as the privilege of total exclusivity. A simple example is the Super Bowl. Stadiums participating in the event are mentioned frequently, so the company gets the benefit of having their name repeated over and over throughout the season. The build up can last for days, weeks or months, with the stadium receiving significant publicity across television, online, print, billboards, radio and more.”

On top of that, says Baylis, “many stadiums/arenas are hosts to more than one sport. Often, major city venues cater to all four major sports and the more successful the team, the more positive the association is for the brand. Of course, the venues also provide other sources of entertainment with more exposure gained for live concerts.”

A UK example that underlines this point is the new Tottenham Hotspur stadium, which is currently in the throes of seeking a naming rights sponsor. Leaving aside the fact Spurs are currently top of the Premier League, the state-of-the-art multi-functional venue is also able to host NFL games and major concerts, which means a naming rights sponsor would gain access to a range of distinct audience segments.

As UKSA has noted before in one of its many case studies, the benefit of naming rights doesn't stop at brand exposure. These days, there is an increasing emphasis on elements that deliver revenue-generating opportunities and brand engagement. In the field of US college sports, for example, when Public Service Credit Union unveiled its new 15-year naming rights partnership with Colorado State University, it also secured a range of rights related to the entire university campus and community. These included opening branches, installing ATMs and marketing cobranded products to students and staff. There was even provision for PCSU to offer financial literacy classes to students.

Not every naming rights deals comes with a university campus attached, but there is an expectation that venues and stadia will go the extra mile when seeking to support their partners. In a 2017 analysis of the sector, Nielsen Sports EVP commercial operations Lars Stegelmann stressed the importance of adding a digital/data dimension: “The goal of any naming rights sponsorship should be to leverage the fan data generated through digital infrastructures, in order to learn more about the various visitor groups at hand.”

Stegelmann identifies two key ways in which naming rights deals can be used to engage more effectively with the people passing through the proverbial turnstile. The first is to link the sponsor to value-added mobile services. Offering fast lanes to enter the stadium, e-ticketing and the ability to order snack and drinks from their seat are all ways to create positive buzz around a naming rights brand. The second is to use the venue’s proximity to talent to generate content – interviews, highlights, behind the scenes video – that will engage fans. This kind of content can be branded by the naming rights sponsor and is not limited to consumption in the confines of the venue itself.

Initiatives of this kind have intrinsic value to fans. But they can also address the possibility that fans might not like the idea of a naming rights partnership (this is a particular risk in sports like football and rugby where there is often a tribal loyalty attached to venues). While some fans will recognise that naming rights is part and parcel of the modern commercial landscape, others will resent the fact that their beloved venue has been badged with a brand (especially in a renaming scenario). So anything the brand can do to win over fans may help dissipate fan resistance or resentment. Naming rights sponsors that attach themselves to free drinks, early access to tickets, cut price tickets or money can’t buy competitions are all fan-pleasers.

An up to date analysis of the market comes from KPMG, which published its own insights into the football naming rights sector at the end of September 2020. A useful resource with some excellent data-based analysis, KPMG’s view is that “the market in European football is still underdeveloped, with the exception of the German Bundesliga (78% of whose stadia are sponsored). Regarding all 98 clubs in European football’s top five leagues, only 30% of them have stadium naming rights partners. Only a fifth of the stadia are sponsored in the English Premier League, Italy’s Serie A and France’s Ligue 1 (all at 20%), followed by the Spanish La Liga (at 15%). Interestingly, Turkey’s Süper Lig and England’s second tier, the Championship, have more venues with a naming sponsor than those five bigger leagues.”

Surveyed by industrial sector, KPMG says financial services is the biggest spender in terms of sports venue naming rights. The company cites the interesting example of Allianz: “The German insurance giant has built a global portfolio of supported clubs, the ‘Allianz family of stadiums’, sponsoring eight venues on four continents, including six football clubs, paying a total of around € 30 million annually.”

KPMG acknowledges that there are risks with naming rights, primarily the possibility that fans will reject the association. So it argues that “the right moment to involve a naming rights sponsor could be during the refurbishment of old stadia or for the development of a new, well-equipped venue that provides a top-notch user experience and can be used for multiple purposes, making any name change more acceptable, even for the most loyal fans.” By this measure Tottenham’s new stadium is a key opportunity, as is Real Madrid in Spain. “Real have been renovating Santiago Bernabéu since June 2019,” says KPMG, “set for competition in the summer of 2022. The club is predicted to sell the naming rights to the refurbished stadium.”

KPMG says the uncertainty around the pandemic makes it hard to estimate the fair value of new stadia sponsorships. But it does seem to suggest that now is a good time for brands to go bargain-hunting: “At least for some time, sponsors are not going to pay pre-Covid prices, as they are also suffering from the economic downturn and are well aware that in the current market they have strong negotiation power. Also, this is true not only for naming rights, but for all sort of commercial deals,” says Andrea Sartori, KPMG global head of sports.

For rights holders and brands interested in exploring the naming rights option, another useful resource is this series of tips from law firm Lewis Silkin. Penned by partner Alex Kelham, there is a wealth of advice on everything from scope of rights to technology.