Inside the World of Naming Rights: A Good Deal for Brands?

Close up of blank name tag
Daniel Grill/Getty Images

Entering into a naming rights sponsorship deal can be an effective and lucrative deal for a retail business looking to put its name in front of thousands of people. Putting on events and constructing stadiums is a costly business, and teams need all the fiscal help then can get. The Houston Chronicle reports that of the 122 professional football, baseball, hockey and basketball teams in the NFL, MLB, NBA and NHL, 85 play in stadiums that have a naming rights deal with a corporation.

If your business is looking to place its stamp on the world through a naming rights sponsorship, there are many benefits that make it worth the cost.

Brand Exposure

Marketers know that simply putting your brand in a place where people can see it is the first step to success, and naming rights have power to do just that. In the case of a stadium, every single game becomes a subtle advertisement for your brand as newscasters, fans and even the game's announcer will be saying your companies name over and over again.

Depending on the stadium, prices vary tremendously. For example, ESPN Sports Business reports that the naming rights for the home stadium of the Jacksonville Jaguars cost Alltel approximately $620,000 a year, whereas the rights for the home stadium of the Houston Texans cost Reliant Energy $10 million a year. Compared to the $3.8 million price of a 30-second Super Bowl XLVII commercial spot, these are practically bargain prices.

The exposure your brand gets all season long is incomparable to any other form of advertising, and doubles if two sports teams share the same stadium.

Psychological Considerations

Bear in mind when seeking out naming rights that not every stadium or event is going to want a corporate name stamped on their stadium.

As this post from Dish on college football's biggest matchups points out, many college stadiums still prefer prestigious names like Bobby Dodd Stadium and Notre Dame Stadium, but NFL stadiums are more willing to go by names such as FedEx Field and At&T Stadium.

With this in mind, take care when choosing an event or location to purchase naming rights for, so that the brand exposure you get is positive and you aren't responsible for negatively impacting fan's attachment to the original name. Candlestick Park in San Francisco went by that name for 35 years, but between 1995 and 2008 it went by 3Com park and Monster Park before settling back on its original name — but in reality, most fans were too emotionally invested in “Candlestick” to call it anything else. However, in the case of smaller sponsorships for such things as minor league teams or even Little League teams, the psychological effect can be positive for fans, especially when your sponsorship carries the bulk of the cost.

Expense Versus Return

In a way, naming rights behind sports stadiums is something like gambling — America loves a winner, and when a team is winning, the effect is positive for your brand. Luckily, the inverse is not true; researchers at the University of Connecticut found that when an NFL team wins a Monday night game, it has a statistically significant positive effect on their sponsors' stock prices (with an average increase of 0.51 percent), but team losses only average a shift of 0.01 percent.

In this way, sponsorship of sports teams in general seems to have a power return on investment with very little risk, though it does require a relatively long timeline for the economic effects to be felt.

Lastly, this is an expensive option for a retailer and as you just read, does not have an immediate return. So be smart and do not go "all-in" on this marketing idea. Read this article for more clever retail marketing ideas.