Monetizing Modern Naming Rights

A banner on the roof of a stadium, prominent logo branding inside an arena – these are the basics of naming rights sponsorships. How can sponsors be innovative to take advantage of digital opportunities around their naming rights?

Lars Stegelmann | Repucom€60 million over 10 years: Just weeks ago, Bundesliga club FC Schalke 04 and brewing company Veltins made headlines with the extension of their naming rights agreement for the Veltins-Arena (and the right to sell beer there, of course). That sum, however, likely pales in comparison to what the International Petroleum Investment Company (IPIC, Abu Dhabi) is prepared to pay for the naming rights to the venerable Estadio Santiago Bernabéu in Madrid, funds which will go towards covering the cost of the stadium’s renovation.

Since the home field of current baseball world champions Chicago Cubs was named “Wrigley Field” nearly a century ago, naming rights to sports venues have continued to gain traction as a sponsorship tool. In European football (first & second leagues and national stadiums of UEFA’s member countries), more than 170 naming rights agreements are currently in place. These contracts cost sponsors some €150 million over the course of the 2016-17 season; just 10 years ago, the total was only a third of that amount (€48 million). With naming rights not yet seeing widespread use in France, Italy, or Spain, Germany and England represent the main driving forces behind this trend.

Tremendous potential in arenas not yet subject to naming rights

Meanwhile, Europe’s football stadiums are far from the only possible ways to enter this market: In Germany, for instance, more than half of the multipurpose arenas that can accommodate more than 3,000 people do not yet have a naming rights partner.

This means that investing eight-figure sums in annual sponsorship rights – as global players like Citigroup (Citi Field in New York), Levi’s (Levi’s Stadium in San Francisco), and Philips (Philips Arena in Atlanta) have done – is not always necessary. In fact, sponsoring a multipurpose arena of this kind requires significantly lower investment.

Direct contact with fans increases sponsorship value

The investments sponsors make typically include the exclusive right to interact directly with the audience attracted by a given venue. In the past, such opportunities were reserved for the venue’s event organiser or anchor tenant; they now represent a key component of what makes naming rights valuable.

Vivint, an American provider of smart home services, shows how a company can turn naming rights into a vibrant sponsorship while establishing ties with fans. Since acquiring corresponding naming rights in 2015, Vivint has been able to use the Vivint Smart Home Arena – which hosts concerts and conventions along with the home games of the NBA’s Utah Jazz – to present its own interactive product showcases to potential customers. This multipurpose arena in Salt Lake City is currently undergoing a €110 million renovation effort designed to provide fans with an improved game experience, including through the availability of high-speed internet access.

Two strategic objectives: user data and fan insights

To make efficient use of fan engagement, the goal of any naming rights sponsorship should be to leverage the fan data generated through digital infrastructures in order to learn more about the various visitor groups at hand. Turning fans into frequent paying customers then requires a professional data management system.

When it comes to their fans and visitors, sponsors and rights holders should know three things in particular:

  1. How many fans are out there?
  2. How important are they to the brand and products in question?
  3. Will a given partnership turn fans and visitors into customers?

Along with conventional surveys, clustering fans in order to identify groups that would be receptive to targeted outreach can help answer these questions.

Adjusting content and services to new fan preferences

Whether it’s e-ticketing, ordering snacks and drinks from their seats, picking up purchased merchandise on-site, or using fast lanes to gain preferred entry to stadiums, these different fan groups are looking for tailored services they can access on mobile devices.

Meanwhile, high-quality evocative content – interviews, event highlights, and exclusive glimpses behind the scenes, for example — is another way to get partners involved. In addition to video content, digital assets like event-specific stickers or photo filters that sponsors and event organisers can create together are gaining relevance in this regard. The power of live interaction in particular is enabling clubs to connect with fans directly and achieve high engagement rates through social media.

Courage to forge new partnerships results in added value for all stakeholders

It is now up to arena and stadium operators, clubs, event organisers, and naming rights holders to put together innovative, attractive rights packages and develop high-quality content they can release through their digital sales and marketing channels.

However, all of the parties involved will need to be bold enough to break with their previous marketing models and enter into new partnerships. The promising business models that can arise as a result are also evident outside the realm of sport: In car-sharing, for example, Daimler and BMW are planning to join forces in a partnership that would have been unthinkable just a few years ago.

Such efforts are the only way to mobilise the critical link in the value chain: the many fans and visitors that arenas and stadiums attract. When this succeeds, all of the partners involved stand to benefit from the rising value of naming rights for years to come.

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Lars Stegelmann, Executive Vice President Commercial Operations, Nielsen Sports, regularly provides sports business insights. This time, he talks about the development in naming rights sponsorship from branding to fan monetisation. Keen to discuss suitable approaches for your company? Please contact Lars Stegelmann.