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COMMENT

14/11/2011
The media has already given its verdict on Newcastle United’s decision to sell the naming rights to its famous St James’ Park stadium. The damning criticisms have included the fact that it’s very difficult to rename existing stadia in the UK, that it has trampled on over 100 years of proud history and that the value of the rights will be negligible anyway. The media’s response to similar plans aired by Chelsea has been relatively subdued.

There are a several issues that have gone unreported that make Mike Ashley’s (Newcastle’s owner) plans appear even more questionable and Chelsea’s more plausible.

First, it is important to understand that Newcastle United is a strong brand in its own right. Its large, passionate fan base is one of the key brand strengths, its proud history is another and part of that history is its home; St James’ Park.

By damaging the relationship with the former and appearing to degrade the latter, the club’s board has effectively done as much damage to that brand as could be achieved with a single press release.

The current likelihood of a major international company wanting to take naming rights is very low and given that Northern Rock has just announced termination of its primary deal with the club (not, according to the bank, because of the latest controversy), the issue could devalue the shirt sponsorship rights as well.

Arguably the most bizarre decision made by the club, however, is to brand the stadium as the Sports Direct Arena (named after Mike Ashley’s sports goods company) for a year to showcase the opportunity. What it has showcased to date is the sheer naivety of the club’s board. First, naming rights deals work over a long-term. They are not used for short-term tactical marketing or generating brand awareness but for long-term relationships and brand building.

Look at naming rights deals around the globe and it is very rare to find any that run for less than five years and most significant examples run for 10 years at minimum. It’s difficult to see how the Sports Direct Arena name can be activated to create a ‘showcase’. There is little time to do anything significant to bring the new name to life, especially with such universal derision among the football, media and marketing communities.

So what can the board prove to potential sponsors?

Surely had they wished to demonstrate levels of stadium name awareness and positive resonance, they would have been a lot better basing the marketing on the existing name. What they are inviting now is a comparison between awareness and positive feelings that surround St James’ Park with the results from the change. There is only one way this can go and it won’t be appealing to sponsors.

The type of major sponsor that the club is targeting will be represented by sophisticated marketing professionals. They already understand how naming rights work and they know how to research the value and potential; they don’t need an irrelevant and counter-productive exercise to help make their decision.

Of course there is an argument to say that the club is being very clever and what they will ultimately offer is the opportunity for a sponsor to come in and take the shirt and naming rights sponsorships at a high level and in the process become the fans’ hero by reverting the name back to St James’ Park.

Such a cunning plan would be undermined by a couple of factors. Sponsors aren’t going to be duped into paying over the odds – they know that the naming rights is a poisoned chalice and if they took just the shirt rights, they would pay for just the shirt rights – they might insist that the stadium name reverts as a condition, and that would just make the whole exercise a complete farce. Second, will a sponsor really want to work with a club that has such a penchant for PR own goals? If so, the chances are that the value of the deal will reflect the perceived expertise of the management. Sponsors want to work with rights holders that understand their needs and form genuine partnerships – they are wary of those that don’t show commercial nous.

Given that Northern Rock has just announced the termination of its primary shirt deal with the club (the bank states that the decision is not related to the naming rights publicity), Newcastle United is now under even more pressure to secure a major sponsorship deal of some sort in the coming months.

With the team doing exceptionally well in the Premiership – it is currently in third place without having the huge player investment of other teams competing for the top spots, the mood at St James’ Park (sorry I mean the Sports Direct Arena), should be positive. Instead the club has been mired in anger and ridicule – and not for the first time in its history, it’s the directors that have been the cause.

The sponsorship community is now also awaiting the outcome of Chelsea’s attempt to sell rights to its Stamford Bridge stadium. It remains to be seen whether this will be successful and there are certain to be strong voices of disapproval among the fans. If the club can achieve a good deal for its rights, it will break new ground. No other club in the UK has managed to sell rights for a major existing venue in football, nor indeed has this happened internationally where the culture of naming rights is similar to that of the UK.

Chelsea will certainly have a better chance of succeeding than Newcastle. First, the club has gone about the process in a more professional way having explained the need to increase stadium capacity to compete and fans are aware that the Financial Fair Play rules could hamper the club’s ambitions unless new revenues are found. If it remains at Stamford Bridge, a major redevelopment could dovetail with a naming rights deal to make it more acceptable to fans.

Equally important, however, is that the demographic and attitudes of the fanbase are very different to Newcastle. Chelsea’s ground is in affluent west London with season ticket prices starting at £595, whereas Newcastle is based in the more working class North East and season tickets start at £345.

Although both clubs have a long and proud history, Chelsea has been seen as a more commercial and ‘trendy’ club for several decades. The fans saw the first three-tier stand opened in England in the 1970s, hotel and leisure infrastructure built in the 1990s and the words Chelsea and big money are regularly uttered in the same sentence.  Its fans, therefore, are more likely to be accepting of commercial change than those of Newcastle. This is not a value judgement and it certainly doesn’t mean that either set of fans is right or wrong – it is a simple fact that there is a difference. In the case of naming rights, it means that Chelsea are more likely to overcome what will be very significant obstacles to successfully achieve a change.

Related content:

Report:   Sponsorship Activation & Case Studies - includes analysis of naming rights best practice

Journal:  Consumers’ Perceptions of NFL Stadium Naming Rights

             Questioning the Name Game: An Event Study Analysis of Stadium Naming Right

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