Stadium Naming Rights - Are They All That?

Old Trafford, or The Emirates(?) is the newest addition to an ever growing list of stadiums to have sold naming rights. In the current age commercial executives must be licking their lips at the figures achievable from selling these rights.

Emirates have added Old Trafford to Arsenal and Durham CCC in a move which will see two of the ashes test matches this summer played at Emirates named stadiums. Other well known examples include:

- The Etihad Stadium, Manchester City.
- The Reebok, Bolton Wanderers.
- Sports Direct Arena, Newcastle United.
- Ricoh Arena, Coventry.
- Wembley, EE to be incorporated (it should be called 'WemblEE', but I doubt that!).

Naming rights have been selling for astonishing figures, with The Etihad Stadium selling for £400 million over a ten year period - albeit with some questions from UEFA over the fairness of the agreement in relation to financial fair play. Further to this The Emirates deal with Arsenal will generate a not too shabby £150 million for the North London club.

Are these enormous fees justified? Let's take a look at some of the Pros vs Cons:

PROS
1) Naming rights create brand awareness - they are not necessarily meant to convince people to buy more products, rather create a 'top of mind' awareness and needless to say this is a valuable asset to Global brands.
2) Cheaper than TV? - If we jump into the American market where Met Life having the naming rights for the NYC stadium. In 2014 the stadium will hold the SuperBowl, an event where a 30 second advert would cost in the region of $2.5 million. With Met Life paying $200 million over 20 years, and of course more events to take place, you can soon begin to see the value.
3) Fans - There are an estimated 4-5 million Manchester City fans worldwide, once naming rights are confirmed the sponsor will be on the lips and minds in a matter of hours.

CONS
1) Negativity - Perhaps the Sports Direct Arena in Newcastle is the best example of this, with extreme negativity been shown towards the company as the club stripper away St James' Park.
2) Shock value being lost? - With the ever increasing list of stadiums to sell naming rights, the initial press coverage over agreements such as the Etihad's is becoming lower. Brands won't gain the initial exposure levels that we seen 10-15 years ago.
3) Not always a good match! - To jump over to the US market again and news of GEO Group (a prison company) confirming the naming rights of the FAU Football Stadium. The GEO Group have come under fire for bad treatment of inmates, which has presented ethical questions for the FAU. With protests already begun is this a deal with longevity?

I guess the summary should be centered around the fact that brands seem to be going this way, so they must be realising value somehow.

What does the future hold? Sadly this is the way the market is going and will continue as long as brands can get value and clubs need revenue. I predict that even those who have the view that this is like 'selling your soul' will eventually come round to the concept.

JL