STADIUM NAMING RIGHTS DEALS FAIL TO POSITIVELY IMPACT STOCK PRICE
Stadium naming rights deals have become a lucrative source of revenue for sports franchise owners, but shareholders should not expect these deals to positively impact the company’s stock price. Sports Economist Michael Leeds studied statement rights deals over a 25-year period and has been quoted as saying “we find little evidence that the purchase of naming rights had a statistically, significant impact on the value of the companies that bought them, even less evidence that the impact was positive, and no evidence at all that there was a permanent, positive impact.” Some marketing experts will go as far as to say companies investing in stadium rights lose value, pointing to several companies that experienced financial distress or bankruptcy shortly after the deal was signed (i.e. Citigroup, ProPlayer, Trans World Airlines, Adelphia Communications).
Howie Long-Short: Rams owner Sam Kroenke is looking to sign the most expensive naming rights deal in NFL history. It’s been reported that Kroenke is asking for $600 million over 20 years. To put that number in perspective, the last 2 NFL stadium rights deals combined equaled $554 million (Falcons/Mercedes Benz (DDAIF) - $324 million/27 years, Vikings/U.S. Bank (USB) - $220 million/25 years) and just prior to making the move to Los Angeles, the Rams signed a deal worth just $158 million over 20 years for a potential new stadium in St. Louis. I wouldn’t want to be a shareholder in the company that ends up lining Kroenke’s pockets.
Fan Marino: Molson-Coors (TAP) has the best stadium rights deal in all of sports. Not only do they not pay for the naming rights to the Rockies’ Denver home (Coors Field), they have naming rights in perpetuity; and it cost them just $15 million, back in 1990. In March, the Rockies signed a 30-year extension with the state division that owns Coors Field; meaning TAP brand awareness will continue for another generation of baseball fans, on the house.