Stadium Naming Rights: Revenue Generating Opportunity

Stadiums, the epicenter of sporting activity, is increasingly becoming a prime asset for sponsorship. And for a good reason too. With the top league media rights value plateauing, the onus of maximising revenue has shifted towards commercial revenue stream which includes sponsorship. Technically, naming rights works as any typical sponsorship agreement where the brand or organization gets to advertise their brand by renaming the stadium with the brand name and certain areas where brand name would be displayed, in exchange for a certain agreed financial contribution. For the brand, it’s a well-defined and intended way to increase their visibility, build reputation, and connect with their local target audience. Recently Everton’s new stadium at Bramley-Moore Dock had agreed on a long-term naming rights with commercial law firm Hill Dickinson which is headquartered in Liverpool. Similarly, financial services giant Amex, which has its UK headquarters in Brighton has a long standing deal with the football club. For the club, naming rights offer an increase in revenue:

• Everton – Hill Dickinson: £10mn per year
• Brighton – Amex: About £8.33mn per year

As per Kroll’s Valuations Advisory Services, stadium naming rights for a top team has the potential to earn upto €30mn per season.

With the PE funds controlling a large network of top-division clubs, the quest for maximizing revenue opportunities is increasing. It has thus become be all the more essential to unlock all untapped revenue generating potential assets like the stadium naming rights.

In this blog, we look at the state of stadium naming rights in European football and a comparison with the status of professional sports leagues in the USA.

Across the European Football Landscape

For all the valid reasons of pursuing stadium naming rights, the European football market shows a surprising lack of efforts in this regard. One can argue that stadium ownership structures plays a big influence where clubs can benefit from sponsorship revenue through stadium naming rights like but then again, if there is a definitive model, structure and association with local authorities, it can be overcome. Case in point, German Bundesliga clubs which has one of the highest percentages of stadium with naming rights at 78%. towards utilizing stadium naming rights as revenue source. As per UEFA 2024 Benchmarking Report, some of the statistics say this loud:

• Only 18% across 700+ top-division clubs have stadiums with naming rights.
• Top-division clubs of 19 countries still don’t have a single stadium sponsor.
•  Countries with highest percentages of stadiums with naming rights:

AUSTRIA: 83%

GERMANY: 78%

• The industry with most naming rights: FINANCIAL SERVICES.

‘Big Five’ Leagues V US Professional Leagues

SportBusiness Stadium Naming Report states the current value of naming rights sponsorships across the top five soccer leagues in Europe and the five North American major leagues approximately totals $823mn from 147 deals. Amongst the ‘big five leagues’ only the German Bundesliga clubs have been able to maximise in unlocking the revenue potential with 14 out of 18 clubs i.e. 78%, having stadium sponsors, whereas clubs in other ‘big 5’ leagues are way behind. As per the latest European benchmarking data, percentage of clubs having stadium sponsors in the other leagues:

• Premier League – 25%
• LALIGA – 30%
• Serie A – 20%
• Ligue1 – 22%

In a completely contrasting situation, as per GlobalData, 91% of the professional sports teams across the five leagues namely #NFL #NBA #NHL #MLB and #MLS have stadium sponsors. Further categorizing into individual sports:

• NFL: 97%
• NBA: 97%
• NHL: 94%
• MLS: 90%
• MLB: 77%

The expanded universe of sports facility naming rights in the US is large, to the tune of 500+ deals. Sports Business Journal sports facility naming rights directory traces the earliest deal in the US to 1971 where F. & M. Schaefer Brewing Co. paid 25% of the costs to build the New England Patriot’s new $6.7mn stadium in Foxboro, Massachusetts.

Fan Voices

Stadium naming rights have traditionally had a negative perception from fans and a feeling that  ‘brand names associated with stadium erode its historic identity’ is persisting. A big example could be that of Newcastle United’s erstwhile owner Mike Ashley’s decision to rebrand Newcastle United’s legendary St James’ Park as the ‘Sports Direct Arena’, but it received one of the biggest backlashes. It can’t be confirmed whether this had anything to do with the fans being overtly upset with him for many other footballing and management reasons, but such a backlash would naturally make many brands think twice about entering into such an agreement. On the other hand, we have the Camp Nou – Spotify example which passed fan scrutiny rather peacefully.

Kroll’s Stadium Rights Valuation Report estimates that combined stadium naming rights valuation of top 36 clubs  from the ‘big five’ leagues as well as Scottish, Turkish and Dutch leagues can reach upto €303mn, with an average value of €8.4mn per season. The highest valuation could go to the newly redeveloped Santiago Bernabéu commanding value of approx. €30m per year to as low as €1.6mn for the stadium of RC Lens. A snapshot is given below

In Conclusion

Considering both sides of the arguments, it can be fairly established that stadium naming rights deserves to be taken more seriously by the clubs as well as the fans. Stadium naming rights contributing strongly to the club’s overall revenue that would allow football clubs to become more competitive.

This can also be stated that renovated or newly built stadiums are better positioned to take advantage of a naming right sponsor. Moreover, it not only improves the club facilities, both for fans as well as players, but also act as an opportunity to increase non-matchday revenue streams substantially.