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Stadium naming rights.


SkippyjonJones
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Been doing a bit of research on this. Over in the USA naming rights for stadiums is far more advanced and there are plenty of things to consider. For a start its all very well throwing around huge figures but there are other factors – such as how long do the naming rights last and how it will be paid –upfront or staggered transaction. A 50 mill amount up front is a lot of money – but if its over 20 years then at 2.5 mill a year becomes insignificant by 2029.

 

What’s included in the stadium naming rights – and how to value it?

Firstly what does the sponsor get? If t just the naming rights then its not much – if they add their name to other items then it pushes the prices up. Other items? Think corporate – signs around the stadium and to it. Names on napkins, plates, bins, letterheads, tickets – all of these push the price up. If the Sponsor gets seats, boxes and parking spaces then that will increase the price.

What else do they get – exposure to media is important – with 25 games plus a season at home then its pretty good exposure – factor in the success of the team, how popular it is, the potential audience and the fact that, unlike American sports, Liverpool is truly a global brand then the price rises further. Having Liverpool in the running for trophies every year increases again the exposure – plus there aren’t many places in the world where you can’t gain access to the games then is truly will be in the top rung of sponsorship exposure.

 

With a bigger stadium then the chance to host non LFC events increases – or even European cup finals where LFC are involved. Additionally the stadium will look to host non football events – and the naming sponsor will probably be associated with them too.

 

Any other factors?

Well the sponsor will need to be an established brand with every intention of keeping that brand name and using it for a long time. It will already be – or be on the verge of – worldwide recognition in order to maximize the exposure. It may also want the chance to sell its products in the stadium (IE a financial firm may sell its credit cards or other financial products inside the stadium – or be able to banish its rivals from selling there.)

Additionally there could be potential exposure and tie ins with the Liverpool website. It claims to be on of the most accessed – surely a chance for exposure there.

Finally there will be a need to consider the demographic of the audience that the sponsorship reaches – I’m sure that it will be after an audience that has money to spend – that’s an audience that Liverpool to wants to see attracted and the way that the game has developed into entertainment because of the coverage on the TV over the last few years will be appealing to potential bidders. You may not like it – but that’s the way it is.

 

I’d like to see a global sponsor who would tie into the world wide appeal that Liverpool has. I’d also like to see either money up front – or it to be paid on an increasing scale over a number of years – and from a financially stable company. Preferably one that has similar colour schemes as its logo. Maybe it could tie into shirt sponsorship too and then it could take further local initiates such as funding local kids teams and schools.

It may be fantasy land but would it be great to get all of this – and then see the sponsors build and maintain local premises – maybe even in Anfield and create local jobs as well?

 

As far as the money goes – well Liverpool tick all the right boxes as far as widespread appeal goes and value for the sponsor. Given the worldwide exposure that LFC attract I’d fully expect to see a stadium naming deal that on a per year basis is one of the largest in the world. One of the biggest I’m aware of is The New York Mets - $400 million over 20 years for their new stadium which is due to open in 2009 (1) . The Houston Texan ‘s get $300 Million over 30 years (2) and the closest you can get in England is Arsenals 45 million (sterling) over 15 years (3). There is no reason that Liverpool shouldn’t be able to get figures in the region of 5 million a year for a 20 year deal. Naturally they could look to expand that by tying in the shirt sponsorship. In real terms that would be worth some 50 million now for the name ( a payout of 100 million over 20 years). Expect to see a major stadium naming group involved soon – maybe even the Bonham group from Denver as they seem to be very big in this field.

Overall though – its not much in the scheme of the Liverpool Turnover – 5,000,000 a year won’t even pay the wages to our top earning player.

 

 

 

 

 

Mike.

 

 

 

Notes.

(1) If you assume that the sponsor could get consistent return on their money and actually deposit the funds up front then pay out a regular amount per year to the sponsored club then Citibank (the sponsors) would put on deposit about $210 million now , earn 7% and still pay $20million a year for 20 years. At a return of 10% then they’d need to find only (!) $170 million. Naturally minor little things like the tax they’d have to declare on those returns are being ignored for this simple calculation.

(2) At 7% Reliant would have to find $124 million now for their rights, at 10% then they’d have to find $94 Million now.

(3) Emirates would have to find 27.5 million sterling now at a return of 7% to fund the Arsenal Stadium deal (assuming its 3 million a year for 15 years for the stadium) and 23 million sterling now at a return of 10%.

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