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3 March, 2021

Naming rights for big clubs

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Few teams have been reluctant to change the name of their stadiums like the European teams. Giving part of their identity to a brand is something a lot of fans are not willing to do. Because it implies giving away one of the symbols they identify with.

In the US market, this does not happen. This new model to generate a new revenue stream, started in the 1980s, and it was very well accepted. In Europe, clubs did not adopt this model until the year 2000, and it has developed very differently.

80% of the Bundesliga stadiums have a naming contract. Allianz, Mercedes Benz, Commerzbank, or Red Bull give name to some of the greatest sports venues in cities such as Munich, Stuttgart, Frankfurt, or Leipzig. But this development has been possible thanks to the fact that the stadiums are part of the city’s property. On the other hand, the United Kingdom, where the stadiums belong to the clubs, the naming represents only the 20%. There, the pressure fans put on managing boards to resist change is much greater. And all the other countries in the continent are in a similar situation; it reaches 10%, or even lower, as is the case of Spain, where it is only 5%.

According to experts, this panorama is going to change dramatically. The pandemic restrictions have decreased the income derived from ticketing. This has happened globally, in stadiums without an audience and in those that adopted the bubble model, or even where there was a limited capacity. All clubs have suffered losses, but those which had a naming contract have had additional income in comparison to those who did not.

Specialists also point out that renovation works in stadiums also speed up this change. Currently, fourteen big European football stadiums are being renovated, some of which are negotiating a naming rights contract for the first time. Brands are more likely to partner with renovated venues, and fans usually show less resistance to change when it comes to the opening of their new pitch.

Given the terms of the new current contracts, we can conclude that the US is following the same operation model. The NFL has set the model to follow. Not only because it has the most stadiums linked to a naming right, but also because most of its teams have embraced the game revenue model. The sponsor pays a maximum amount if they hold all games, but they reduce it for every game that is not played. In 2020, this league cancelled the pre-season and international games because of the coronavirus restrictions, but they kept the rest of their schedule. So, their Nissan, Heinz, FedEx, or Mercedes Benz venues did not lose visibility, nor did the league lose its income. The advantage of having such contract has become more evident.

But naming is not just about putting the name at the top, it includes a broader operation agreement. American and European contracts are similar in this aspect, since their contractual obligations add brand visibility during the games, boxes assignment, and the use of venues to hold corporate events. The sponsoring businesses also aim to participate in the management of teams. Financial and insurance companies, particularly, provide services for the club. Food companies participate in the operation of the food court with their products. This is a long-term relationship.

And that is where we can see the difference. In the US, with a well-developed model, most current contracts have been signed for 20 to 30 years. The most recent ones will not conclude before 2040. Such a long period gives little opportunity for growth in a market that had slumped significantly in 2008 but has been growing since 2010. Now you can only find a place in those teams that are releasing their naming rights for the first time.

This is the prevailing scenario in Europe, and that is why the experts focus on it.

The continent has a lot of possibilities for growth, with teams that have a great international exposure and, therefore, greater visibility for the sponsoring brands. Also, these leagues are more open to this kind of contracts now. In Autumn, some have been signed new rights, such as AXA with Liverpool FC training centre, or AO with the Manchester Arena, that will now be the AO Arena.

The pandemic has not stopped the sports world, which is getting ready for the moment when vaccines will make our lives easier to go on. Within a year, when the stadiums will finally open their doors again, we will be able to sit in the stands and watch a game, surrounded by a crowd of strangers. The emotional bond with something that has been wished for so long will be much stronger, and the big brands will want to be there, enjoying the benefit of helping to make this possible. It’s a good opportunity in the near future for brands to opt in a naming right partnership and stand out in a moment where people will want to engage again at the stadium.

 

Martín Sacristán

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