The Current State of Sports Facility Naming Rights (August 2011) (SFR Vol. 12)
The Current State of Sports Facility Naming Rights (August 2011)
By: W.S. Miller
Health, Exercise Science and Sport Management Department
University of Wisconsin-Parkside
With approximately four decades of use, it is safe to say that the concept of selling overall facility naming rights for stadiums and arenas has become well-established in the industry. Every facility that comes on line these days seemingly either has an overall corporate naming rights sponsor, is pursuing one or publicly discloses that it is choosing not to pursue an overall corporate sponsor for any number of reasons. The latter scenario is especially true in situations where public financing for the facility is involved.
Like many other sports organization revenue streams, the market for naming rights at the start of the 2010 calendar year was facing numerous challenges. The stagnant economy was a substantial drag on the market with traditional sponsor sectors such as airlines and financial institutions enduring significant economic problems.
As a result, a variety of newspaper articles and media pieces appeared discussing the problems the naming rights industry was facing at the time. The gloom and doom scenarios posited by these articles, while accurately reflecting the thoughts of many industry observers at the time, likely only added to the perceived problems facing the market. It can reasonably be argued that this period was among the toughest naming rights markets since the concept really took off in the early-1990s.
However, it is often stated that it is darkest before the dawn. This definitely appears to be the case with the sports facility naming rights market as over the past twenty months the industry has witnessed a significant turnaround with a variety of positive developments being seen across the board. For example, as of August 2011, eighteen major league facilities have announced new or extended naming rights agreements since the start of the 2010 calendar year. In addition, the resurgence appears to be broad in scope as all five major leagues have seen deals completed and the corporate partners for these deals have come from a variety of sponsor classifications. This resurgence has also extended to the lower levels of sport as approximately twenty agreements have been completed for minor league, college and high school athletic facilities across the country.
To be sure, the recent market does not feel like the rush felt during the heydays of the 1990s. But, it would be virtually impossible to duplicate that market for any number of reasons. One key reason being that the playing field was virtually wide open during that time and like a stereotypical gold rush scenario. In fact, it can be argued that the recent resurgence of the naming rights industry is likely more beneficial for the sports industry over the long haul as it seems to reinforce the concept of sports facility naming rights usage and provides stability for this key revenue source.
2010-11 Major League Sports Agreements
As the accompanying chart illustrates (2010-11 Major League Overall Facility Naming Rights Agreements), the breadth and scope of the deals completed over the past twenty months shows that the major league naming rights market has enjoyed a broad-based recovery.
From a league perspective, there have been deals completed for six NHL arenas, four NFL stadiums, three MLS stadiums, two NBA arenas and three multi-sport facilities. No Major League Baseball deals were completed during this twenty-month period although two of the multi-sport facilities had MLB tenants. To be fair to MLB, as illustrated later in this piece, outside of the Florida Marlins it is unclear whether any of the teams not currently playing in a corporately named home is actively engaged in trying to secure a sponsor.
In terms of types of deals, there has been a wide variety completed throughout this period. Eight of the facilities are rename deals with new sponsors replacing old ones. Four were deals for facilities which were opening or opened within the past year. Two (Quebec City and Los Angeles) were for proposed facilities which developers hope to build and secure major league tenants for. Three (Seattle, Denver and Buffalo) were deals in which the sponsor undertook a renaming of a facility and added onto the contract term as part of the new agreement. Finally, the MTS/Winnipeg Jets agreement was an extension done in conjunction with the arrival of a new major league tenant.
From a timing perspective, there were six major league deals announced in 2010 with an additional twelve deals announced so far in 2011. During the 2011 calendar year, every month to date except May has seen at least one new major league deal announced.
When examining the sponsor categories of these completed deals, the similar broad base of recovery again becomes apparent. Six sponsors fall into the insurance/financial services category. Three manufacturing companies struck agreements during this period. The energy, media, retail and telecommunications categories had two deals each. Finally, the Livestrong/Sporting KC deal features a charitable sponsor.
Current Major League Usage
After the recent flurry of deals during the past twenty months, it is apparent that the sale of overall facility naming rights remains firmly entrenched as a key revenue source for most major league sports facilities. In a figure that could be astonishing to some, 76% (107/140) of teams in the five major North American professional sports leagues currently play in facilities with naming rights agreements in place.
- 66% (20/30) of MLB teams currently play in a corporately-named facility.
- The Florida Marlins appear to be actively seeking a naming rights sponsor for their new stadium scheduled to open in 2012. However, they already play in a corporately-named facility (Sun Life Stadium) so the overall percentage would remain the same if they can strike a deal.
- It appears unlikely that any other teams will secure naming rights sponsors in the near term. The reason for this assertion is that most of these teams play in facilities with names that are seemingly iconic (Baltimore, Boston, New York Yankees, LA Dodgers), named for a previous owner (Atlanta, Chicago Cubs, Kansas City), or have previously stated publicly that they do not want a corporate naming sponsor. Of course, this position is always subject to change based upon financial needs or changes in operating philosophy.
- 72% (13/18) of MLS teams currently play in a corporately-named facility.
- Published reports indicate that the Houston Dynamo is seeking a naming sponsor for their new stadium scheduled to open in 2012. It is unclear whether the remaining four teams (Columbus, DC United, San Jose & Vancouver) playing in non-named facilities are pursuing a sponsor at this time.
- 83% (25/30) of NBA teams currently play in a corporately-named facility.
- It is unclear whether the remaining five teams (Detroit, Milwaukee, New Orleans, New York and Portland) are seeking a naming rights sponsor. However, it seems highly unlikely that the Knicks would pursue a naming rights sponsor for Madison Square Garden.
- 69% (22/32) of NBA teams currently play in a corporately-named facility.
- Published reports indicate that the Dallas Cowboys have been seeking a naming rights sponsor. The status is unclear for the remaining nine teams. However, one might safely assume that seemingly iconically-named facilities such as those in Chicago and Green Bay will not pursue an overall sponsor. Also, facilities that have previously eschewed a sponsor such as Cincinnati, Cleveland and Kansas City seem unlikely to pursue one.
- 90% (27/30) of NBA teams currently play in a corporately-named facility.
- It is unclear whether the remaining three teams (Detroit, New York Islanders and New York Rangers) are seeking a naming rights sponsor. It again seems highly unlikely that the Rangers would pursue a change for Madison Square Garden. Detroit and the Islanders also appear unlikely to pursue naming sponsors for their current facilities. This could obviously change if either secures a new facility.
Other 2010-11 Naming Rights Agreements
The broad-based recovery for the completion of major league naming rights agreements has also extended to other levels of sport. In minor league professional sports, approximately twenty naming rights agreements have been announced or extended since the start of the 2010 calendar year. This averages out to about one new contract being announced every month. These deals cross all spectrums in areas such as sport, type of facility (stadium or arena), market size, types of deals (new or renames) and contract term. Minor League Baseball stadiums in places as diverse as Brooklyn; Omaha, Nebraska; and Lansing, Michigan have secured new naming sponsors in the past twenty months. Arenas in Bridgeport, Connecticut; Evansville, Indiana; Rockford, Illinois; and Toledo, Ohio are among those that have announced deals during the same time frame.
College and high school athletic programs have also enjoyed the benefits of the recent upswing in naming rights agreements. Colleges such as the University of Washington, Louisville, Minnesota-Duluth and North Dakota State have all completed stadium, arena or field corporate naming deals in the past twenty months. During that same period, numerous high schools across the country have also sold stadium and field naming rights in an effort to generate needed revenues. Schools in Ohio and Texas have been particularly notable in this regard.
Finally, while the focus of this article is on overall facility agreements, it is important to note that anecdotal evidence indicates that the market recovery appears to extend to other naming rights opportunities as well including spring training facilities, practice facilities and entertainment venues. Internal opportunities such as stadium clubs and premium seat opportunities also appear to have fared well over the past twenty months.
Conclusions & A Look Ahead
Over the past twenty months, the sports facility naming rights market at all levels of sport has experienced a significant amount of stabilization and recovery. This is especially true on the major league level. The recovery appears to be broad-based from the perspective of the teams participating, the types of deals, and the types of sponsors involved in making these deals.
As 2010 opened, it appeared to be one the lowest points ever for the concept of selling naming rights for sports facilities, especially on the major league level. Over the past twenty months, the market has shown tremendous resiliency both stabilizing and enjoying a significant upswing in the number of deals being completed. In fact, it could be argued that this is another “golden age” for the naming rights market. It will be interesting to see how the market behaves going forward and whether this golden age can continue.
While the naming rights market appears strong right now, it is one that has endured a great deal of ebb and flow since it took off in the 1990s. Looking ahead, there are several things that interested observers might want to watch for:
- First, the uncertain and seemingly stagnant economy remains an obvious and significant risk factor for the naming rights market at all levels of sport. The naming rights market suffered greatly during recent economic slowdowns in both the early and late 2000s. One has to assume that this would occur again in the early 2010s if the economy endures another significant downturn. Should this happen, it could be tough to strike new agreements and contracts with existing sponsors could be at risk.
- Second, regardless of the state of the economy, it is likely that the market will see a natural slowing in the sale of overall facility naming rights on the major league level through at least the end of the 2012 calendar year. The key reason for this prediction is that the tremendous deal pace we have seen over the last twenty months will be difficult to sustain simply because of a diminishing number of available opportunities. Of the thirty-three major league teams that are not currently playing in named facilities, most have seemingly made the decision not to pursue naming sponsors for a variety of reasons such as the desire to keep the current (often iconic) names of their facilities or because they are likely to pursue a new stadium or arena in the very near future. As a result, there are only a handful of major league teams that appear to be actively seeking naming rights sponsors at this time. With most facilities in the midst of long-term arrangements or not pursuing a deal, unless major league expansion teams are created or new stadiums and arenas are built, the major league market pace is likely to naturally slow over the next year or so.
- Third, in light of the aforementioned diminishing number of available opportunities, it is possible that the major league market could see more swap out/rebranding situations such as the recent Invesco/Sports Authority change in Denver. This approach could allow both teams and sponsors to re-examine their long-term business strategies and strike agreements (often with term extensions) that are beneficial for all parties going forward.
- While the major league market might slow, there appears to be a substantial number of opportunities still available at the minor league, college and high school levels of sport. The need for schools to secure new avenues of funding makes it likely that these entities will explore the expanded use of naming rights in the near term. There will be two items of interest here. First, will schools start to move more toward corporate naming rights agreements versus traditional donor programs? Second, will sponsors (especially large dollar sponsors) shift their dollars into these opportunities as the pool of overall major league deal opportunities grows smaller?
- Finally, the ability to sell internal and external opportunities at all levels of sport including the majors also has been strong recently. It is likely that facilities/teams will continue their attempts to further explore these opportunities. The main question will be how far can they go in terms of naming sections of a facility in order to secure new revenues?
© Copyright 2011, National Sports Law Institute of Marquette University Law School & W.S. Miller, all rights reserved.
 Most naming rights observers consider the early 1970s naming of NFL stadiums in either Buffalo or New England to be the first naming rights agreements. Stadiums such as Wrigley Field were usually named for previous owners and no apparent payments were made for this right. Thus, these were not true naming rights agreements as typically defined by the industry despite the presence of a corporate sounding name.
 In Seattle, the agreement was a “rebrand and extend” situation as CenturyTel acquired the old naming sponsor, Qwest, and rebranded the facility formerly known as Qwest Field. The Buffalo situation also involved an acquisition followed by a facility rebranding in conjunction with a contract extension. In Denver, there was a “rename and extend” situation as Sports Authority replaced the former naming rights sponsor, Invesco.
 The “current play” total includes the Minnesota Vikings who play at Mall of America Field at the Hubert H. Humphrey Metrodome.