Is It a Good Idea to Sponsor Something Historic?

bleacher seatsWe’ve all heard about historic stadiums selling naming rights and the ensuing howls of derision. Naming rights sponsorship to the much-loved Candlestick Park was sold to 3Com, then Monster Cable, before voters in San Francisco voted in 2004 that when the Monster deal ended in 2008, it would revert to Candlestick Park. That only lasted a year before “financial realities” overturned the will of the people, although they haven’t been successful in selling naming rights again.

The venerable Princes Park in Melbourne sold out decades ago, but there are people who will never forgive Optus for renaming it Optus Oval.

And although this is mostly an issue with stadia, that’s not always the case. For the first time ever, New Zealand’s national rugby team, the All Blacks, have sold the front of the jersey to insurance giant, AIG. Blasphemy!

For some sponsors, being the first to sponsor a major, previously unsponsored, property seems like an enormous opportunity and too good to pass up. They devalue or completely ignore the downside, believing that tens of millions of eyeballs on the logo will outweigh the wrath of a few million passionate fans. Those sponsors are wrong.

Taking up sponsorship of something historic and beloved may be the right thing to do, or it may not, but a sponsor won’t be able to make an informed decision unless the full spectrum of impacts is understood.

How much do they care?

If naming rights sponsorship is on offer, the first thing a sponsor needs to consider is how much the fans care about the historic nature of their stadium, and the likely backlash if naming rights is sold.

Honestly, this is something that stadium owners should be taking into account way before it ever goes to market, but most can’t get past the dollar signs and don’t bother. Instead, they revert to first generation exposure as the main selling point and hope they can latch onto a sponsor who still believes in that crap. (For more on the generations of sponsorship and why being best practice matters, download white paper, “Last Generation Sponsorship”.)

San Francisco voters cared enough to take to the polls to preserve their stadium’s name. While the fact that only one team calls it home, and they won’t be for much longer, probably has a fair bit to do with the fact it hasn’t been resold, I’d like to think that sponsors also realised that having one of the biggest metro areas in the country ticked off at them – a fact already demonstrated at the polls – was not a good marketing ploy.

It isn’t marketing, it’s market cap

There are some studies that show that, upon announcement, market capitalisation of a stadium naming rights sponsor goes up by an average of 1.65%, with bigger and more sustained rises for home town sponsors and stadiums that house winning teams. It’s worth noting that other studies show much smaller to negligible impacts on market cap, but this is still a factor in many stadium naming rights deals.

If you are looking at taking up naming rights to a historically significant stadium primarily for the market capitalisation benefits, and therefore aren’t taking into account the marketing downside, you really need to.

If you do get a market cap benefit, it will only last so long, and I guarantee that won’t be as long as passionate fans could hold you accountable for tainting the epicentre of their favourite sport. You could lose market share, preference, and loyalty worth a lot more than the temporary market cap increase, and it will be hard to regain.

If you must, don’t ignore fan wrath

I get that you may end up with one of these sponsorships for political, market cap, or corporate ego reasons. Or, your marketing department may have decided that the upside was worth the downside. In any case, going ahead with one of these sponsorships doesn’t need to be an unmitigated brand disaster. The key to keeping the fans onside – or at least as onside as they’re going to be, in the early stages – is to add real value to their experience.

Don’t go into the sponsorship beating your chest about how great you are. Find some humility and address the fans. Tell them that you understand the choice to sell naming rights isn’t necessarily popular, and that you’re honoured and humbled to be part of a great sporting tradition. Tell them that, as naming right sponsor, you will be working closely with the stadium management to preserve and even bring back some of the most beloved traditions, and that you will be working to understand what the fans need and want, so that you can make the fan experience even better for them.

Your positioning could be that it’s going to be sold anyway, but at least your brand will be doing some amazing things to improve the fan experience. Then, of course, you actually have to do it.

Even better, take the position that your name may be on the stadium, but you consider it your mission not to be a “big stadium sponsor”, but to sponsor the fans. Again, then you have to do it.

You could gift it

In Stockholm, Swedbank bought naming rights to the new national stadium, to be called Swedbank Stadium. In an abrupt change of heart, they gifted the naming rights, renaming it Friends Arena, after an anti-bullying charity they support. Swedbank still gets all of the best arena-related benefits and amazing press, all of which they can use to achieve multiple marketing objectives. While this was a new stadium, there is no reason this technique can’t be used on a historic stadium.

There have also been sponsors that have purchased naming right to something that the community was outraged about being sold, and given it back to the people. They still leverage the significant platform to advance their brand, but in a Robin Hood-esque gesture, forego their corporate egos for giving something back to a community that really cares. Most recently, controversial loan company, Wonga, took up naming rights sponsorship to the 120-year old home of Newcastle soccer. Instead of putting their name on the stadium, as others had in the past, they opted to give the stadium back to the people, bringing back the original name of St James’ Park.

The rightsholder conundrum

The decision to sell naming rights to something historic is one that I understand, but with which I rarely agree. The pressure to raise more and more sponsorship is enormous, and an unsold naming rights or jersey front would seem to be a panacea, but is often based on flawed assumptions.

Unfortunately, many of these organisations are limiting their sponsorship revenues because they’re taking an old school approach to packaging sponsorships. Most sports packages would be primarily made up of logos, tickets, hospitality, and an official designation. Increasingly, we’re seeing more creative benefits, but they’re often seen as additive to the core package of tickets, logos, etc. The problem is that there are only so many places to put logos, and so many tickets and corporate boxes to go around, so if a sponsee needs to raise more sponsorship, they either
need to slice the same pie into ever smaller pieces or open up new territory. This is when sponsees make the big call and sell naming rights or a jersey front, but what they’re really selling out is the fans.

I’m not saying that selling a controversial sponsorship to something historic is always the wrong thing to do, but I’d certainly prefer to see a sponsee take a best practice approach to sponsorship, throwing out the old, rote packages and creating bespoke sponsor opportunities with ample ideas for leveraging against individual sponsor objectives. Doing that will increase the value of sponsorship packages, across the board, and may ameliorate the need to sell something drastic.

Need more assistance?

For all you need to know about best practice sponsorship selection, leverage, measurement, management, and more, you may want to get a copy of The Corporate Sponsorship Toolkit.

If you need additional assistance with your sponsorship portfolio, I offer sponsorship consulting, sponsorship training, and strategy sessions. Please drop me a line to discuss.

Kim Skildum-Reid
admin@powersponsorship.com
AU: +61 2 9559 6444
US: +1 612 326 5265

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