Big NFL stadium deals might actually be worth the cost

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The NFL kicked off the 2016 season Thursday at Sports Authority Field in Denver, a rematch of Super Bowl 50 between the Broncos and Panthers. But the real winners this year could be stockholders of the companies who own naming rights to stadiums around the country.

Research has shown that a sports team's on-field performance can have a dramatic effect on the share price of a company with its name slapped on a venue, sometimes making up in market capitalization the entire cost of a multiyear stadium-naming deal. A pair of researchers from the University of Connecticut wrote a paper to be published in 2017 in the "Critical Finance Review" that will suggest that up to 127 basis points (1.27 percent) of market capitalization can accrue to a company directly as a result of having its name on the side of a stadium — but only under certain circumstances.

Twenty-four of the 31 NFL stadiums have sponsors, some for hundreds of millions of dollars. Many teams don't release the details of the naming-rights deals, but industry analysts and insiders put together estimates. We know U.S. Bank sponsors the Vikings' new home in Minneapolis, but we don't know exactly for how much. The company has described a $220 million reported figure as being "on the high side."

Among the paper's findings: The biggest impact for stock returns happens on games that have less competition for viewership. Think Monday night games and playoff games that get aired for the whole country, rather than the Sunday afternoon games that get only a regional broadcast.

The other factor that really matters: Winning when you're not expected to. Upsets — especially at home — drive a sponsor's stock price much higher.

When a company's stock gains an extra 1 percent in market cap, that can be huge in real dollars. We're talking about giant companies: One percent of a market capitalization worth $50 billion is a gain of $500 million. That would more than cover the value of a multi-year deal.

The problem in Denver

That said, a company could sponsor the Super Bowl-winning team and still go out of business. That's what happened with Sports Authority, which bought the rights to put its name on Denver's stadium. The company is now bankrupt and sold off its assets. The naming rights for the facility that most fans know as "Mile High Stadium," however, haven't yet been settled.

America means two things: football and lawsuits. And of course, the Denver stadium-rights deal has found its way into court. In August, the Broncos released a statement: "There is no timetable for securing a new naming rights agreement, and the name of the stadium—Sports Authority Field at Mile High—has not changed at this time." Shortly thereafter, it was agreed that Sports Authority would pay the Broncos $50,000 and the Broncos organization would make the next payment of $3,601,890 to the stadium on behalf of the defunct sporting goods company, according to a report.

The Broncos can now seek a new sponsor.

Plenty of other big-time stadium sponsors have gone bankrupt or otherwise disappeared, from venues hosting the NFL and other sports. Enron, Air Canada, CMGI, National Car Rental, PSINet, United Airlines, Adelphia and TransWorld Airlines.

For more details about the UConn research, click here.