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Is Mercedes-Benz Really The Right Partner For The Superdome?

Mercedes
Mercedes

I've been surprised by a lot of naming rights deals, but never more surprised than last night when the Times-Picayune reported that Mercedes-Benz has signed a naming rights deal to put its name on the Superdome.

Why?

Louisiana is the 5th poorest state in the US, with a median income of $42,000. The average Mercedes-Benz owner has a median income of about $175,000. That should come as no surprise as the average Benz costs more than $42,000.

When I expressed my skepticism about the deal on Twitter last night, many said that this wasn't a New Orleans deal. It was simply a good buy at what was likely a bargain price for national and worldwide exposure.

After all, in the next year and a half, the Superdome hosts the BCS National Championship Game, the Men's Final Four and the Super Bowl in 2013.

Exposure is enough for some brands, maybe University of Phoenix or Jobing.com, which has naming rights to the Cardinals and Coyotes facilities in Arizona.

But all brands are not equal. They are at different points in their life cycle. And that means all naming rights deals are not equal. Stronger brands have a higher burden to prove their deals work beyond the exposure of their name being mentioned. Why? Because mentions aren't worth nearly as much to established brands.

Beef O' Brady's is thrilled with mentions from its bowl game sponsorship, Citibank — which left its deal with the Rose Bowl — expects a higher return on investment.

And that brings us to Mercedes-Benz. This is not a brand that benefits from just mentions. It's already the 12th most valuable brand in the world, according to Interbrand.

No one says, "I've never heard about this Mercedes thing."

There's only one brand that has a higher value, Toyota — whose name is on the Rockets arena in Houston. What that means is that in order to make Mercedes has to work harder than almost any other company to justify return on investment. Some of that will be helped by the fact that they're paying less than they would for their name on a spanking new arena (the exact terms are currently not known).

So that gets me to why this is a local market deal and not the national and international deal that my critics say it is.

If this is a charitable deal, I'm fine with it. It's a nice thing to do for an area that has been ravaged by Katrina. If it's something Mercedes is doing to pay back Saints owner Tom Benson, who owns a Mercedes dealership, I get that too. But if it's the marketing deal it's being made out to be, I'm not so convinced. It's going to be dependent on what the final dollar figure is.

Not only is Mercedes an established brand, it also has a very high entry barrier. You can't buy something with the Mercedes logo on it for $599 like you can buy an Apple iPod . The only way there's a return on investment is if Mercedes can sell cars. And the only way that's happening is through experiential marketing in and around the stadium.

A mini dealership at the stadium, the ability to test drive a car or at least sit in it, three or four models on the concourse with prices and a sales representative.

In order for this deal to work, it comes down to the local market. Saints fans have ponied up a lot of cash in a down economy, but there's not enough fans in this market that can afford a Benz to make this deal worth it.

Questions? Comments? SportsBiz@cnbc.com