September 16, 2008
Name That Stadium
Stadium and arena naming rights has become a big income producer for professional sports teams and there’s no shortage of businesses willing to pony up the dollars necessary to gain the exposure that comes with getting the company name on a facility.
Target, which already has its name on the arena that’s home to the Minnesota Timberwolves, has picked up another sporting venue after reaching a deal to have the Minnesota Twins’ new 40,000-seat ballpark named Target Field.
In addition to the ballpark, Target and the Twins are working together on Target Plaza, described by the parties as “a pedestrian bridge and public gathering space connecting Target Field to downtown Minneapolis.”
Jim Pohlad, one of the Twins’ owners, said, “Our state is lucky to have many businesses that provide outstanding support and commitment to our community, but none do it better than Minnesota-based Target. We are honored to be their partner.”
“We are excited about our partnership with the Minnesota Twins and the opportunity to continue our long history of community support,” said Gregg Steinhafel, president and CEO of Target.
In addition to naming rights and a strong brand presence at the new stadium, Target and the Twins are planning to jointly develop a wide variety of marketing and promotional programs. They also plan to work together on a number of community programs in the area.
Discussion Questions: Is there a strong business case to be made for companies seeking naming rights on professional sports facilities? What is your assessment of Target having its name on both the new stadium for the Twins and the arena where the Timberwolves play?
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It seems to me it would make a lot more sense for a local company to sponsor a local venue–oh, right they can’t afford it. So a national company like Target can and they choose Minneapolis? Who cares if they are from the area, there’s not much buying power there. Why not New York…Chicago? They’ll get a lot more bang for their buck and more national exposure.
Although that sponsorship really hasn’t proven very profitable. When watching a game on ESPN, do the sponsors really get noticed especially those with naming rights? NO, it still is the commercials, if good, that leave an impact.
It does seem Target is adopting the right strategy: support the community but also figure out how to make the sponsorship relevant through promotion and customer engagement. Without these elements, stadium sponsorship is simply another form of “spray and pray” mass marketing.
The real question is, what is the purpose of putting the name out there? If it is to build recognition, it has to be weighed against other advertising mediums. If it is being used to gain influence then the product in the stadium has to be considered. You can’t influence customers if you are sponsoring a product that generates little interest. Who is sponsoring the LA Coliseum? I don’t think anyone is because there isn’t a resident property. Without the underlying property the stadium has little value. There is only a business benefit if the underlying sports properties provide value to the facility. It would be interesting to know if many of these “naming” agreements exist that do not expire immediately if the team leaves the facility.
What do 3Com, Adelphia, Enron, and MCI have in common? They all bought naming rights to stadiums.
Do you know where BankOne Ball Park, Fleet Center, Network Associates Stadiums, PacBell Ball Park and Compaq Center are? The names have disappeared as the companies have been acquired.
While I believe that much of this naming is chief executive hubris, some of the economics seem to make sense. Staples has bought rights for the Staples Center in Los Angeles. It is a 20-year commitment at $5.8 million per year. In the scheme of national advertising, it doesn’t sound like much. But, do we associate the name with the retailer when we watch the Lakers play? I do.
The largest deal is CitiBank’s sponsorship of the new CitiField in NYC. That one is $20MM per year for 20-years. Now it is starting to sound like a lot. And, should American Airlines have a $195MM commitment to the arena in Dallas, when they are worrying about the cost of fuel and cutting back on flights?
Despite serious questions about the value of these naming rights, I do think the Target one makes sense. There is a local objective in the Target sponsorship. They are one of the biggest employers in the area. They have been great corporate citizens leading a renewal of downtown Minneapolis. Their description of the sponsorship seems very locally oriented. This sponsorship is not supported by sales in Minnesota Target stores. I am sure there is greater value to this Target sponsorship than to that of Minute Maid Park.
Whatever the merits of the naming rights of the Twins-Target 25-year multimillion dollar deal may be, and I’m sure there are many, I would like to see the day come when a new stadium is named “The Players Stadium” because the rich athletes coughed up money for the naming rights–or perhaps “The (Corporation) Stadium” because some rich corporation or the team owners footed all bills…and there are no taxpayer requirements.
Incidentally, the new Twins Field is being partially subsidized by a 7-county tax increase that was imposed without any voter participation. And selling the naming rights was a concession granted to the team to help offset the maintenance costs. The team said the naming rights, therefore, is a private business transaction. As the Church Lady might say, “Ain’t that special.” Good luck, Target! You better hope the Twins win. One wonders if the bottom teams in baseball, football and basketball enhance the sponsoring corporation’s appeal.
And what would a sports team do today if their playing grounds were called “Lehman Bros. Stadium?” Or “Bear Stearns Field?” Or “Merrill Lynch Park?” Or “AIG Grounds?”
Certainly there is value here as the exposure is huge. Part of my concern is that stadiums once had names that stayed with them for years. Now stadiums themselves tend to not be around that long. My point is that I would rather see a sports franchise and a business partner with a more long term approach. It is better business and I believe it better matches with the fans.
Art Williams nailed it. I also like Doron’s idea of sponsoring more local teams. Without really good measures, my gut is that this produces more loyalty and ROI than putting your name on a stadium.
The value of the sponsorship to the brand is in some ways related to the brand personality itself. If the brand image involves leadership, “attitude” or a certain lifestyle the association works. Busch Stadium would be a good example, while I’m not sure what “U.S. Cellular Field” does for the mobile phone business.
The value of the sponsorship to the company can also be civic-driven goodwill. The Target Center/Target Field relationship in Minneapolis is a good example there. Minneapolis has a history of corporate/civic partnership–academic partnership as well. For example, I visited the newest building at the U of M Carlson School of Business with my daughter recently. Prominently logoed signage proclaimed the sponsorship of state of the art classrooms buy local companies such as Target, General Mills, TCF Bank and others. Not a bad move for companies wanting to get a crack at the best and the brightest of the local crop.
The question is really how to measure the value of generalized brand building. Does having the Target name on a stadium drive more customers to the stores? Drive more sales per customer?
Overall, there probably is a strong emotional connection that loyal sports fans will transfer to Target (this connection has been better documented, I believe, in the NASCAR arena). So, assuming the company continues to do well (and how many stadiums were named after companies no longer around?) it is a partnership that should do well and add value to the the company buying the naming rights.
Naming rights for a stadium or arena can generate significant exposure for the sponsor. Look at how many times Invesco was mentioned during the Democratic National Convention. The question is whether or not naming rights build consumer loyalty. I’m sure that the sponsorship industry would argue “yes,” but I’m not so sure. Does the facility being named just become a word or do consumers really associate the brand with the building and the teams?
I suspect it might have more to do with the pride and vanity of the company wanting to have its name on a sports venue. It seems like quite a stretch for me to believe that people would be influenced to buy Wrigley’s gum because of its name on one of the most famous baseball fields, for example. And would I choose shopping at a Target store over a Walmart because their name is on a field? Tie-in promotions make a lot of marketing sense but they are usually not dependent on who has the naming rights to the stadium.
If a company has a big marketing and advertising budget, is very civic minded, and has a CEO that is a sports fan then they should go for it. For any other companies, I think they can find much better ways to spend their money.
It’s more associative branding than a sales driver for the sponsor. Although having 40 to 80 thousand people walk by your name and sportscasters mentioning your brand to millions doesn’t hurt.
There is an emotional element here and the association with the franchise is what works. It can bring prestige to a brand. Target is a big player in Minnesota, so why not sponsor all the local teams? Big corporations should have a role in the community beyond opening stores.
Companies name stadiums after themselves because their executives are sports fans and they aren’t measuring the rate of return on their “brand investment.” American Airlines paid to put their name on a Broadway theater in New York City. Do airline passengers go out of their way to fly American because their name is on a theater? Did Texaco’s multi-decade sponsorship of Metropolitan Opera radio broadcasts motivate millions to visit Texaco gas stations? Companies that put their names on stadiums would be better off investing those funds to improve customer service.
There’s no doubt that there’s huge money being made from naming buildings. The bigger question is, why do companies spend so much money?
Companies like Target find it important to name these large centers where they have large numbers of employees, and thus families and friends. A Huge part of it is goodwill.
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It seems to me it would make a lot more sense for a local company to sponsor a local venue–oh, right they can’t afford it. So a national company like Target can and they choose Minneapolis? Who cares if they are from the area, there’s not much buying power there. Why not New York…Chicago? They’ll get a lot more bang for their buck and more national exposure.
Although that sponsorship really hasn’t proven very profitable. When watching a game on ESPN, do the sponsors really get noticed especially those with naming rights? NO, it still is the commercials, if good, that leave an impact.
It does seem Target is adopting the right strategy: support the community but also figure out how to make the sponsorship relevant through promotion and customer engagement. Without these elements, stadium sponsorship is simply another form of “spray and pray” mass marketing.
The real question is, what is the purpose of putting the name out there? If it is to build recognition, it has to be weighed against other advertising mediums. If it is being used to gain influence then the product in the stadium has to be considered. You can’t influence customers if you are sponsoring a product that generates little interest. Who is sponsoring the LA Coliseum? I don’t think anyone is because there isn’t a resident property. Without the underlying property the stadium has little value. There is only a business benefit if the underlying sports properties provide value to the facility. It would be interesting to know if many of these “naming” agreements exist that do not expire immediately if the team leaves the facility.
What do 3Com, Adelphia, Enron, and MCI have in common? They all bought naming rights to stadiums.
Do you know where BankOne Ball Park, Fleet Center, Network Associates Stadiums, PacBell Ball Park and Compaq Center are? The names have disappeared as the companies have been acquired.
While I believe that much of this naming is chief executive hubris, some of the economics seem to make sense. Staples has bought rights for the Staples Center in Los Angeles. It is a 20-year commitment at $5.8 million per year. In the scheme of national advertising, it doesn’t sound like much. But, do we associate the name with the retailer when we watch the Lakers play? I do.
The largest deal is CitiBank’s sponsorship of the new CitiField in NYC. That one is $20MM per year for 20-years. Now it is starting to sound like a lot. And, should American Airlines have a $195MM commitment to the arena in Dallas, when they are worrying about the cost of fuel and cutting back on flights?
Despite serious questions about the value of these naming rights, I do think the Target one makes sense. There is a local objective in the Target sponsorship. They are one of the biggest employers in the area. They have been great corporate citizens leading a renewal of downtown Minneapolis. Their description of the sponsorship seems very locally oriented. This sponsorship is not supported by sales in Minnesota Target stores. I am sure there is greater value to this Target sponsorship than to that of Minute Maid Park.
Whatever the merits of the naming rights of the Twins-Target 25-year multimillion dollar deal may be, and I’m sure there are many, I would like to see the day come when a new stadium is named “The Players Stadium” because the rich athletes coughed up money for the naming rights–or perhaps “The (Corporation) Stadium” because some rich corporation or the team owners footed all bills…and there are no taxpayer requirements.
Incidentally, the new Twins Field is being partially subsidized by a 7-county tax increase that was imposed without any voter participation. And selling the naming rights was a concession granted to the team to help offset the maintenance costs. The team said the naming rights, therefore, is a private business transaction. As the Church Lady might say, “Ain’t that special.” Good luck, Target! You better hope the Twins win. One wonders if the bottom teams in baseball, football and basketball enhance the sponsoring corporation’s appeal.
And what would a sports team do today if their playing grounds were called “Lehman Bros. Stadium?” Or “Bear Stearns Field?” Or “Merrill Lynch Park?” Or “AIG Grounds?”
Certainly there is value here as the exposure is huge. Part of my concern is that stadiums once had names that stayed with them for years. Now stadiums themselves tend to not be around that long. My point is that I would rather see a sports franchise and a business partner with a more long term approach. It is better business and I believe it better matches with the fans.
Art Williams nailed it. I also like Doron’s idea of sponsoring more local teams. Without really good measures, my gut is that this produces more loyalty and ROI than putting your name on a stadium.
The value of the sponsorship to the brand is in some ways related to the brand personality itself. If the brand image involves leadership, “attitude” or a certain lifestyle the association works. Busch Stadium would be a good example, while I’m not sure what “U.S. Cellular Field” does for the mobile phone business.
The value of the sponsorship to the company can also be civic-driven goodwill. The Target Center/Target Field relationship in Minneapolis is a good example there. Minneapolis has a history of corporate/civic partnership–academic partnership as well. For example, I visited the newest building at the U of M Carlson School of Business with my daughter recently. Prominently logoed signage proclaimed the sponsorship of state of the art classrooms buy local companies such as Target, General Mills, TCF Bank and others. Not a bad move for companies wanting to get a crack at the best and the brightest of the local crop.
The question is really how to measure the value of generalized brand building. Does having the Target name on a stadium drive more customers to the stores? Drive more sales per customer?
Overall, there probably is a strong emotional connection that loyal sports fans will transfer to Target (this connection has been better documented, I believe, in the NASCAR arena). So, assuming the company continues to do well (and how many stadiums were named after companies no longer around?) it is a partnership that should do well and add value to the the company buying the naming rights.
Naming rights for a stadium or arena can generate significant exposure for the sponsor. Look at how many times Invesco was mentioned during the Democratic National Convention. The question is whether or not naming rights build consumer loyalty. I’m sure that the sponsorship industry would argue “yes,” but I’m not so sure. Does the facility being named just become a word or do consumers really associate the brand with the building and the teams?
I suspect it might have more to do with the pride and vanity of the company wanting to have its name on a sports venue. It seems like quite a stretch for me to believe that people would be influenced to buy Wrigley’s gum because of its name on one of the most famous baseball fields, for example. And would I choose shopping at a Target store over a Walmart because their name is on a field? Tie-in promotions make a lot of marketing sense but they are usually not dependent on who has the naming rights to the stadium.
If a company has a big marketing and advertising budget, is very civic minded, and has a CEO that is a sports fan then they should go for it. For any other companies, I think they can find much better ways to spend their money.
It’s more associative branding than a sales driver for the sponsor. Although having 40 to 80 thousand people walk by your name and sportscasters mentioning your brand to millions doesn’t hurt.
There is an emotional element here and the association with the franchise is what works. It can bring prestige to a brand. Target is a big player in Minnesota, so why not sponsor all the local teams? Big corporations should have a role in the community beyond opening stores.
Companies name stadiums after themselves because their executives are sports fans and they aren’t measuring the rate of return on their “brand investment.” American Airlines paid to put their name on a Broadway theater in New York City. Do airline passengers go out of their way to fly American because their name is on a theater? Did Texaco’s multi-decade sponsorship of Metropolitan Opera radio broadcasts motivate millions to visit Texaco gas stations? Companies that put their names on stadiums would be better off investing those funds to improve customer service.
There’s no doubt that there’s huge money being made from naming buildings. The bigger question is, why do companies spend so much money?
Companies like Target find it important to name these large centers where they have large numbers of employees, and thus families and friends. A Huge part of it is goodwill.