| Pacific Bell Park, home of the San Francisco Giants, was a venue for last week's World Series.
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There are currently more than 50 corporations involved in major sponsorships of U.S. sports facilities.
Success and failure
For wild success, one need look no further than the World Series play at San Francisco's Pacific Bell Park or Anaheim's Edison International Field last week -- a major naming-rights coup for the California utility and telcommunications company.
On the flip side, Enron Field in Houston became the splashiest example of how a naming rights deal can go wrong -- with the Houston Astros baseball team ultimately paying more than $2 million to end its relationship with the bankrupt and disgraced energy company. (The stadium is currently named Minute Maid Park.)
Other problems may have a lower profile but are no less serious a financial concern for sponsors and sports teams alike.
Changing marketing strategies
For example, a change in marketing focus has led Ericsson to announce recently that it will not renew its naming rights deal for the Carolina Panthers' football stadium in Charlotte, N.C. Regardless of how well Ericsson Stadium may have worked as a marketing platform, the telco has decided to refocus to business-to-business from a consumer strategy. It is now seaching for another corporation interested in taking over the remainder of its contract.
Dennis Howard, a professor at the James H. Warsaw Sports Marketing Center of the University of Oregon, points out that to be effective, such sponsorships must be tied to a specific marketing platform.
"By and large, the way these deals make any sense is if they are part of an overriding marketing plan for the company so that there's the exposure element but there's also a strong sales element," he said.
Getting exposure is not synonymous with brand building, Mr. Howard said. What really distinguishes good naming-rights pacts is the "tangibility of these deals as opposed to standard advertising transactions."
According to Mr. Howard, who next spring comes out with the second edition of his book Financing Sport, the factors that enhance a naming rights deal include:
- Making sure the sponsor's brand is a logical fit for such a facility
- Being the first to put your corporate name on the facility
- Linking to a facility that hosts more than one pro sports franchise, such as arenas that are home to both a National Basketball Association and National Hockey League team
- Extending from the idea of multiple sports tenants, linking with a facility that has a full slate of other activities such as concerts throughout the year to give the naming sponsor maximum visibility and opportunities to use the facility
- Offering a direct sales component or other product showcase or exhibition areas on-site for the naming sponsor
- Providing hospitality opportunities on-site for the sponsor's key clients.
About 70% of facilities used by pro sports teams now have some type of corporate sponsorship, Mr. Howard said, up from only about one third in 1997.
In this "cluttered terrain" of stadiums and arenas bearing corporate names, the ability to sign such a deal is no slam-dunk for facility owners.
"There are still at least a dozen major facilities out there where they have been selling their naming rights for, in some cases, years that have had no success" in finding a sponsor, Mr. Howard said.
He favors naming rights deals set over a definite period or a shorter duration than the two or three decades that characterize many current arrangements.
It makes more sense to sign a short-term deal, of say five to seven years, with a number of renewal options with a right of first refusal, Mr. Howard said, so the sponsor can re-evaluate whether it's maximizing the benefits of the deal and generating the kind of return it had hoped for as the sponsor's market conditions change.