Priciest Naming Rights Deal Ever?

Naming rights in play at new Los Angeles football stadium

  • by Lisa White
  • Published: May 9, 2017

LA Rams/LA Chargers are eyeing most lucrative naming rights deal in history.

With the St. Louis Rams and San Diego Chargers both relocating to Los Angeles’ new $2.6-billion Inglewood, Calif., stadium, which will open in time for the 2019 National Football League season, speculation has begun on naming rights.

With bidding reportedly at least $30 million a year for a minimum 20-year deal, according to the Sports Business Journal, this would be the priciest naming rights deal in the history of the NFL.

It is being reported by numerous sources that 62.5 percent will go toward paying for the stadium, with the remainder split equally between the two teams.

“The amount is in line for naming rights,” said Eric Smallwood, managing partner of Apex Marketing Group, Inc., located in St. Clair, Mich. “They won’t have problems obtaining interest.”

As of last week, AT&T, which has naming rights to the San Antonio Spurs, San Francisco Giants and Dallas Cowboys venues, as well as a sponsorship at Atlanta’s new Mercedes-Benz Stadium, was the only company considering the offer. The telecommunications giant is considering relocating to El Segundo, which is about five miles from the new stadium.

Naming rights deals are typically not disclosed and the Rams’ organization declined to comment for this article. However, the New York Times reported that AT&T’s deal with the Dallas Cowboys stadium was between $17 and $19 million per year. Also, CBS Sports revealed that Mercedes-Benz is paying $324 million over 27 years or $12 million per year for the Atlanta Falcons stadium, and U.S. Bank’s naming rights for the new Vikings Stadium in Minneapolis is $220 million over 25 years, or $8.8 million per year.

“The price and longevity of the naming-rights deals is a function of the marketing inventory and that’s business-to-business and business-to-consumer assets,” said David Carter, professor of sports business at the University of Southern California’s Marshal School of Business and executive director of USC’s Sports Business Institute. “In Los Angeles, it won’t be limited to one or the other.”

Part of a 300-acre mixed-use complex, the Inglewood stadium will have a capacity of 80,000 and is slated to host Super Bowl LV in 2021. The stadium is being financed by Rams’ owner Stan Kroenke and will be leased by the Chargers for their home games.

“With MetLife Stadium (in East Rutherford, N.J.), they reportedly signed a deal for $17-to $20-million for 25 years, so that may be the new bar,” said Smallwood. “The San Francisco 49ers are reportedly receiving $220 million for 20 years [from Levi’s], which is believed to be the second highest [naming-rights deal].”

According to Carter, comprehensive deals that include transportation, technology or financial services will reach both B2B and business-to-consumer segments, and naming rights sponsors tend to be more eager to jump on board during the build-out phase of a stadium to optimize the amount of money coming in from the naming-rights deal.

“To do this early on, and add the naming-rights sponsor into elements of the stadium, makes tremendous sense and ensures value,” said Carter. “Still, I don’t think it’s a one-size-fits-all; with new buildings, there is tremendous buzz, so the earlier sponsors align with that, the better. The notoriety begins when the shovel goes into the ground.”

Carter added the timing may be less important with buildings already constructed.

In terms of marketing inventory, it’s difficult to tell if the deal is a good one until all the elements are revealed.

“If naming rights are being sold for a modest amount, it may be more about the value of cornerstone partnerships, like the naming of the field,” said Carter. “By the same token, if the deal is worth a lot, the sponsor may be giving up marketing inventory. You can’t get caught up on the number until you know what the marketing aspects look like.”

Carter said something else to bear in mind is, with today’s rapidly advancing technology, sponsors have to be more mindful of the stadium’s useful life.

“The life of today’s venues is becoming shorter in terms of the ability to generate revenue for the team and owner due to rapidly changing technology,” he said. “With facilities needing upgrades every five to 10 years, there is an ongoing investment that’s needed, so naming-rights partners need to keep this in mind.”

 

  • by Lisa White
  • Published: May 9, 2017