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MCLELLAN: What are naming rights worth?


It’s pretty commonplace, even here in central Iowa. Sec Taylor Stadium became Principal Park, and we all remember the blip on the news when Vets became (ultimately) Community Choice Credit Union Convention Center at Veterans Memorial. Naming rights have become big business, and it’s not just happening at professional sports facilities.

Some colleges (Harvard and the University of Colorado – Boulder to name two) have sold naming rights to their restrooms. Many communities either already have or are considering selling naming rights for parks, bridges, roads and recreational facilities.

While it seems like this is a new trend, the truth of it is that it’s decades old.

The origin of naming rights agreements is rooted in baseball. The first recorded agreement was in 1912 when the Boston Red Sox’s ball park was renamed Fenway Park to create publicity for the stadium owner’s real estate company (Fenway Realty). A second example is the Chicago Cubs, which renamed their stadium Wrigley Field to promote the owner’s chewing gum company. These examples are exactly why a company would spend millions of dollars to name something. In both Fenway’s and Wrigley’s case – the company name became synonymous with the sporting team.

Today, well over two-thirds of top-level baseball, football, ice hockey and basketball teams currently play in branded facilities. In 2011, MetLife paid more than $400 million for a 25-year deal that allowed them to name the Jets/Giants stadium MetLife Stadium.

But the name was just the beginning. Here are some factors you need to consider should you ever find yourself in the position of a naming rights buyer or seller.

• Length of time: Most naming rights go for a minimum of 10 years but some deals, like MetLife Stadium, stretch out as far as 25 years. Beyond the obvious, more years equal more value, be sure to factor in time plus payment terms.

• How will it be paid? If you’re the seller, an all-cash, all up-front deal is nirvana, but the trade-off is that you can probably command a higher price if you stretch out the payments. • Visibility: This is a twofold consideration. One is the physical aspect of visibility. Where is the signage going to be in terms of the city/area and traffic patterns? How many people will see/drive by the signage/building on a monthly basis? The other aspect of visibility is, how many people frequent the facility?

• Marketing extensions: Here’s where the real value comes in for most modern deals. Odds of you becoming a Wrigley Field may be remote, but the marketing exposure can be anything from renaming a road to kiosks in the facility that tout your wares.

• Become my customer? Lots of the naming rights deals include preferred vendor consideration. When Alltel Wireless bought the naming rights for the Jacksonville Jaguars stadium (which has already been resold to EverBank), they also included that they were the IT/telecommunications provider for the facility.

• But how much is it worth? Ah, there’s the rub. The real answer is – it’s worth what someone is willing to pay for it. So much of the value is intangible (exposure, prestige, awareness), and the tangibles are probably not something the buyer would have purchased en masse, that it does boil down to perceived value.

For many businesses, a naming deal can catapult them onto the public’s radar. They just have to decide what that’s worth to them.

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