Global naming rights deals are now worth $750 million annually according to a new report from Sponsorship Today.
The research analysed 548 deals across 32 countries and found that the USA accounted for exactly half of all deals and 58% ($434m) of total spend .
The biggest deal, however, is Etihad’s sponsorship of Manchester City’s stadium ($30m p.a.) followed by the proposed $700 million, 30-year Farmers Field in Los Angeles, with Citi Group (Citi Field/$20m p.a.) and MetLife (MetLife Stadium/$18m p.a.) taking third and fourth place.
“Farmers Field is an interesting development because there is as yet no stadium and no tenant,” says Sponsorship Today editor, Simon Rines.
“Despite this a naming rights agreement has been signed, demonstrating the importance of such sponsorships to new stadium projects.”
The report identifies clear differences in market maturity according to territory and this is reflected in both deal values and rights durations.
“In the more mature markets, where naming rights are well-established, values are considerably higher and the duration of deals is longer. In the USA, for example, the average deal value is $1.57 million but that is spread across 276 deals, the majority of which are for small, low profile venues. Major venues command annual rights of between $6m and $20m per year. Even taking into account the small deals in the US, the average duration is still 14.4 years. In Japan, on the other hand, there are significantly fewer deals, but most are for large, high profile stadia with a maximum annual fee of $5m and an average value of $1.74m. The average duration in the country, however, is just 3.7 years.
“The research clearly shows that deal values in mature sponsorship markets tend to be higher, but what is equally important, is that the duration of those deals is significantly longer. It suggests that there is an understanding among sponsors that the only way to really get value for money from stadium naming is to be there for the long term.”
The report also shows that within the BRIC (Brazil, Russia, India and China) nations, there is very little naming rights activity.
“We’ve seen two of the world’s biggest deals in China and Brazil, but beyond that there is very little activity. Cultural resistance in Brazil, for example, is a huge issue with the media generally refusing to use corporate names. With all of the new stadia projects in the run up to the next World Cup, the focus may well be on Grêmio’s recently signed $16.7m annual deal with Industrial and Commercial Bank of China (ICBC) for its new 60,000 seat stadium. If fans and media accept this deal, then others could follow in the country.
“In China growth is likely to be slow but there is arguably more potential in Russia, which is hosting the 2018 World Cup and is, again, building new stadia.”
In terms of sport, multi-purpose venues account for the largest slice of the market on 29%, followed by soccer (23%). American Football, however, takes 20% of all spend despite there being only 34 deals for the sport.
The biggest investors in naming rights are financial services, followed by telecommunications, airlines, car manufacturers and energy companies.
One of the interesting findings was the relative lack of big global sponsors in the list:
“If you go through the data, you don’t find many big deals from the likes of Visa, McDonald’s, Coca-Cola, Hyundai, MasterCard, Samsung, Adidas and Sony etc,” says Rines.
“You do see a few of the big global sponsoring brands such as Emirates, Barclays and Ford, but on the whole naming rights deals tend to be local or regional in outlook and clearly fulfil different objectives to deals signed with, for example, big international federations.”
The report also suggests that naming rights activation strategies will need to improve for values to keep rising.
“There has been some criticism in the industry of naming rights with people saying that it is little more than a branding exercise and sponsorship has generally moved on from this. There have, however, been notable exceptions where brands have worked hard to engage people and use their rights to add value to the fan experience. In the case of Allianz, for example, the brand actually created a targeted experiential campaign that travelled the world. Activation can, therefore, be powerful if done creatively, but this is still the exception rather than the rule.”
Table of contents
Report: Activation & Case Studies - includes Allianz Arena case study