Sponsorship selection
When Naming Rights are Really Right
Some sales agencies and property representatives claim that the venue naming rights market has returned to health, behind a few significant deals signed in 2002. While building entitlements will always sell, demand for such big-ticket sponsorships is nowhere near the levels seen during the naming rights market's halcyon days of the 1990s. So what makes a naming rights deal a good one? A combination of market conditions, smart and savvy planning, and knowledgeable internal personnel or outside agencies negotiating the deal on your behalf. With many of the dot-com and corporate greed naming rights deals now resting in peace, let's scratch the surface on a few of the right reasons for, and components of a good naming rights deal.
Support Marketing Strategies: Your company is an unknown, privately held entity about to go public and/or is ready to go to market with a new product or service offering. Or maybe your company just went on an acquisition spree in a region where it has little name recognition and plans to rebrand the newly acquired companies. In any of these cases, a properly exploited naming rights deal can instantly make your brand familiar to millions of people, particularly in the region where the venue stands. It can also act as a destination-marketing platform and live case study for your products.
Short-Term Deals: Keeping in mind that you might want to build awareness, marketing strategies don't last 20 or 30 years. Come to think of it, many companies don't last that long either! So why would you allow yourself - and your company - to sign a deal that will likely have little impact so many years from now? What we're getting at is the fact that you should tie a naming rights deal, just as you would any marketing campaign, to specific objectives. Frankly, no objectives last for 30 years. It only takes one smart marketer to sign a six- or eight-year deal with a renewal option to start a trend!
Revenue Generation: Naming rights, especially for buildings that house major professional sports teams, do not come cheap. So why wouldn't you negotiate revenue guarantees in return for your investment? Pouring rights and retail opportunities make great sense for certain companies, but what if your company doesn't manufacture packaged goods or beverages. Become the preferred vendor to all of the entities who receive a piece of your rights fee. Think innovatively and develop a program that offers preferred pricing to the vendors of the building and its tenant(s). As an incentive to the properties involved, provide financial incentives whenever their vendors purchase your products or services.
Remember Finance Class?: Yes, we're talking about that important concept of the time value of money. If you aren't familiar with the concept and don't have any interest in a refresher course, just remember the immortal words of J. Wellington Wimpy of Popeye cartoon fame: "I will gladly pay you Tuesday for a hamburger today." If Wimpy is in some good investments, the future value of that money is worth more on Tuesday than it is today. Teams, municipalities and sports authorities want your naming rights deal to be front-loaded, so they can earn some nice interest over the life of the deal. Run an NPV analysis using your cost of capital under front-loaded, even payments, and back-loaded scenarios, and you'll be shocked by the results.
Assets That Make Sense: Buildings and teams throw everything, including the kitchen sink (or bathroom sinks... and stalls) into a naming rights deal. Then they jack up the fee because you'll be getting more exposure while fans see your logo on the door of the bathroom stall. You need not have your company's logo splattered over every bare space in the building. A pre-packaged naming rights deal presented by the building or team does not serve your needs. Negotiate a deal that includes inventory useful to your company and corresponds to your objectives.
