Every time a company buys naming rights to a stadium, their executives get challenged. Is this really a good deal? Why does it seem like companies who have put their name on stadiums face greater economic trouble than those who pass on the idea?
I think the latter might be more perception than reality –- that the percentage of companies that sign naming rights deals and then file for bankruptcy are somehow much greater than those that don’t sign deals and don’t file for bankruptcy.
Answering whether naming rights deals are good deals depend on two things: price and activation.
In order to sell these rights, teams show companies what the “impression value” of the stadium is. That is, how many times will the company’s name be mentioned in the media.
The numbers being shown to these companies -- ranging from millions of impressions to hundreds of millions of impressions a year –- are real. But there’s a big difference between having a 30-second ad and having your company’s name mentioned 30 times. I’m just throwing it out there, but I think that tens of thousands of impressions can equal what one 30-second ad can do as far as driving business to a company.
We just had on Wes Thompson, CEO of Sun Life Financial , whose company reportedly paid an average of $4 million over five years to put its name on the stadium where the Miami Dolphins play.
Because this is the seventh name change the stadium has had, the impression value has already been severely compromised. Simply put, fewer people are willing to call it by its official name because they’ve been put through the ringer. So Sun Life’s first job is to find out exactly how much it has been devalued — even with the Pro Bowl and the Super Bowl coming up.
But the next job is to convince fans why they should have their insurance through Sun Life. That is the essential leap that makes naming rights worth it or not.