Posted on behalf of Jamie Palatini:
The NFL brings in the most revenue of all of the four major sports in the U.S. However, even Roger Goodell and company have not been able to avoid the economic woes which have plagued the nation over the last few years.
One of the biggest ways that NFL teams bring in money is by selling the naming rights of the stadiums they play in to a large corporation for an absurd sum of money. But recently, even that has not been a guarantee for some teams. Los Angeles has been trying to build a stadium for the last 15 years so they could lure a team back to town, but plans have stalled now in part because no corporation will pay money to put their name on the stadium. http://latimesblogs.latimes.com/lanow/2009/09/agreement-gives-proposed-nfl-stadium-in-industry-a-boost.html
Jacksonville is struggling more so than any other franchise right now. The are one of lowest
valued franchises in the league, they have the second lowest average ticket price, and have been unable to sell out the stadium this season. Their stadium is publicly owned, and does not have a name on it, which is a huge chunk of money that the Jaguars are lacking. http://www.nytimes.com/2009/10/03/sports/football/03jaguars.html
This habit of naming stadiums is in fact a fairly new concept. As of 1990, there were no baseball stadiums with corporate names; as of 2001, the majority of baseball, basketball, football and hockey arenas had sold their naming rights to large corporations (Leeds and Pistolet 584).
And while some may think that naming a stadium Heinz Field (thought you'd like that Prof. Burns), or the TD Bank Sports Center, the main reason is for the money. We cannot for get that sports are a business. Of course a franchise wants to win and be successful, but just as important and if not more important is the ability for that franchise to make money (Lavoie 162).
Do you wish that we could go back to the days where the communities took the brunt of the financial burden, and we would have more "Municipal Stadiums"? Do you think that there will ever be a situation, such as a tanking economy, where we will go back to a situation like that?
Whether you like having these named stadiums or not, it's impossible to ignore the financial impact that naming rights can have for a professional franchise.
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It is clear that in today's world, many view sports as a business more than just an entertainment or hobby. With more channels on television being dedicated to sporting events and the national view of sporting beginning at a younger age (ex. little league, high school basketball), sports corporations must look for ways to keep their programs growing and attracting more fans. In order to do so, they began gaining sponsors from different businesses and one of the most popular ideas was the naming of stadiums.
ReplyDeleteThe statistic in which was posted saying that within only 11 years, the majority of major league sports teams had sold their names to large corporations shocked me. I do not know about others, but there is a different feeling a fan receives when walking into Fenway stadium for the first time then walking into something named after a Bank. Leeds and Pistolet also mention that along with naming rights, these corporations may also receive other benefits such as
‘‘commercial time on broadcasts, signs and information kiosks at the stadium, and suites at home and road games in which to entertain clients’’ (Leeds and Pistolet 584). Clearly, the $139.6 that Lincoln Financial, the example given in the Leeds and Pistolet article, for the naming of the the Philadelphia Eagle's facility will greatly impact the team, I still believe it takes some of the fun out of sports, making it into such a business.
Also, within the Handbook of Sports Studies, Coakley and Dunning write "the reason few pro sports team owners own the facilities in which their teams play is that the government owns them" (Coakley and Dunning, 268). I found this interesting and how the owners do pay rent to the government, but it covers only a small amount of overall expenses (Coakley and Dunning, 268). So not only is the business world a big part of the sports world, but the political system has some power in it too.
I do not think there will ever be a time again when stadiums are not named after corporate sponsors. Sports are a huge money maker and are now used as major marketing tools. Corporations are using teams, stadiums, and players to sell their products and create a brand. We see it in so many aspects of sport that I do not think it will go away.
ReplyDeleteI also agree with Beth that there is a different feeling walking into a stadium like Fenway over a field named after a bank. You do feel a connection with the stadium and do not think of it as being owned by anyone but your team. When you walk into Fenway you do not see the name everywhere, however when you go to a stadium such as Gillette in New England their name is plastered on everything. This is a branding tool but as stated in the A Stadium by Any Other Name article it is not always that successful: “We find little evidence that the purchase of naming rights has statistically significant impact on the value of the companies that bought them” (Leeds and Pistolet). The study found that by naming a stadium after you company does not automatically increase revenue and popularity.
This information did not surprise me but I still think it is a smart marketing tool for major corporations. By having your name out there as a sponsor of a major league stadium people are constantly saying the name. This name recognition is very important in branding. This is why so many companies are willing to pay large sums of money to name these stadiums and why this will continue to go on.
I think that NFL stadiums should be named after the team or a great player who had played for that team. However, I do understand that the NFL is a for profit organization and they make millions of dollars by allowing a business to put their name on a stadium. I do not think it is a good idea to place the entire burden on a struggling community, but for a strong community, naming rights would be nice. According to the Journal of Sports Economics, business's don't even notice an increase in sales after they sign a contract with the team to sponsor their stadium (Leeds and Pistolet 588). If these sponsors are not making money then why do they bother with the stadiums.
ReplyDeleteIt would be nice for communities to rally behind a team that they can truly relate to. Hometown owners in the MLB for example, named the field after themselves which is okay. Comiskey Park and Ebbets field were two of the first (Leeds and Pistolet). At least with the owners buying the field or stadium, the community has a chance to influence how things are run.
Lastly, I don't think a tanking economy will help the sports world at all. I actually think that if contracts continue to inflate and the economy continues to worsen, that entire seasons will be forfeited because the oweners can't afford to play. I do not think communities during tough economic times can support a multimillion dollar professional stadium. I hope that once the economy is revived that some communities will step up and support local stadiums, and take back the naming rights from major corporations.
Of course it is all about the money. For the companies who invest in the naming rights for the stadiums do more lucratively than ever so they must believe there is value despite the data suggesting otherwise.
ReplyDelete"We conclude that the popular press and existing literature have overstated the impact of naming rights on profits of firms" (Leeds and Pistolet, 593) Despite what the data says, I think that it does have an impact. I remember being little and going to the airport and I wanted to fly on United Airlines because the Bulls court was named "United Center". I was a big fan of Michael Jordan, so at a young age that impacted me to want to go to that airline.
I also had no idea what the new Mariners stadium safeco was. So I looked it up. That it advertising and marketing that is priceless to that company and DOES have a large impact on them getting their name out there whether the profits come or not.
-Nate Porter
This season is the last time football will be played at Giants Stadium. As a lifelong NY Giants fan, the switch to a new stadium is killing me. Not only are the prices on tickets going to get jacked up but Giants fans no longer have the permanent upper hand on Jets fans. All Giants fans loved the fact that the Jets played in a stadium named after the beloved Giants. With the upgrade to a new stadium the original name will not stay, a corporation will pay a ridiculous amount of money to pay for the naming rights. I don’t blame them; the stadium is in the biggest media market in the world and holds not one but two NFL teams, an MLS team and a variety of concerts (Bruce Springsteen is currently closing out Giants Stadium with five sold-out shows. I know this has nothing to do with the topic but a person will never be a part of something that is more “New Jersey” than seeing The Boss play at Giants Stadium.)
ReplyDeleteI was not surprised by the findings of the Leeds/Pistolet article. Having a company’s name plastered all over a stadium does not have an immediate financial impact “our main finding is that naming rights offer no economic value—in the form of abnormal returns—to the firms that buy them.” (Pistolet 593) It is hard for me to relate to being a fan of a team that has a corporate stadium, the three arenas/stadiums that I frequent most do not have a corporate name attached it (MSG, Giants Stadium, Yankee Stadium). I know that Bank of America is the largest contributor to Yankee Stadium but seeing their logo all over the stadium isn’t making me want to start an account with the bank. You are forced to use their ATM’s though; they are definitely reaping the benefits from that considering the prices at Yankee Stadium are absolutely ridiculous.
When Giants Stadium is renamed it will definitely be weird going there for the first time. The hometown effect will definitely decrease. I highly doubt that I will refer to it by its new name though. Nothing against the new stadium, it is going to be awesome, its due to the fact that for the last fifteen years that I have been going to Giants Stadium the name has been embedded into my brain.
I also think that the days of non-corporate naming rights have passed, which is sad in a way. Sports started out much more innocently in the sense that it was about the sport itself, rather than the money. But as times have changed, so has the nature of the sports industry. It has become a business first, and a form of entertainment second.
ReplyDeleteNaming rights are one of the most recent changes that support this shift. Names like Foxboro Stadium and Veterans Stadium are no more. In their place is a barrage of corporate names that, in most cases, have nothing to do with the sport being played inside or the city the stadium is in.
In his article “Political Economy and Sport,” George Sage wrote, “Professional sport industry creates a market for associated goods and services, so numerous businesses accumulate capital indirectly by providing those goods and services,” (Handbook, p. 266)
Companies buying naming rights and acting as sponsors are doing just that. For example, when you go to a Patriots game, all it takes is a quick glance around the stadium to see that Budweiser is a sponsor. So when a fan gets in line for a beer, he or she is will not find a Corona stand anywhere nearby because they’re not the sponsor - Budweiser is - and Budweiser is providing its “good” in the form of beer.
In “A Stadium by Any Other Name,” Leeds, Leeds, and Pistolet report that half of baseball and football stadiums and more than three-fourths of basketball and hockey arenas had sold their naming rights to companies by 2001. Such a statistic shows exactly how much society has changed since the early days of professional sports.
Companies assume that putting a name on a stadium and the perks that come with that, such as company suites, are more than worth the investment. Lincoln Financial, for example, said it made “good business sense” to buy the rights to the Eagle’s facility (Leeds, Leeds, and Pistolet; p. 584). From the company’s point of view, bringing potential clients, who may be die hard Philly fans, to their stadium suite might just help them turn those potential clients into clients.
Sometimes, however, companies pay to have their names on the stadium, and no one actually calls the stadium by its new name. For example, there are still people in Boston walking around saying their going up to the Fleet Center for the game. When TD Bank (then TD Banknorth) bought the home of the Celtics and Bruins, they went with the name TD Banknorth Garden. First of all, it’s kind of a long name for a stadium in that it’s five syllables long. We’re a society that enjoys shortcuts and nicknames, so instead of people in the bars stammering out the full stadium name, they simply call it the Garden - a throwback to the Boston Garden of yesteryear.
According to Leeds, Leeds, and Pistolet, the purchasing of naming rights did not improve the value for companies that bought them (p. 588). Buying rights seems like a good idea because a company’s logo and products have the potential to be all over the stadium or arena, but companies commit a lot of money to get these rights. It’s hard to predict when the market will turn against you, and when that happens, it seems unlikely that having the naming rights to a stadium will save a company.
I absolutely wish that all stadiums would be community-owned and named after a great player, coach or other figure in the franchise’s or city/region’s history. Unfortunately, that is most likely a wish that will go ungranted (pending a drastic governmental change to some extreme form of socialism or communism (hahaha)). I think a tanking economy may cause corporations to make desperate attempts to get their names on even more products. However, I could see the theory of a situation so bad that corporations are doing so poorly that there is simply not enough capital for them to spend to advertise. But that, of course, is far, far away from where we are now.
ReplyDeleteIn A Stadium by Any Other Name, the authors point out that “the financing of the construction of facilities for professional sports franchises has two sets of shareholders: the franchises themselves and the cities that host them…There has, however, been almost no economic research that examines the investment made by private firms in naming rights for stadiums and arenas” (Leeds, Leeds, and Pistolet, 581). Despite the lack of research or focus on the investment of private companies, it has clearly become glaringly evident to the public in the last two decades that marketing and advertising are taking over just about every aspect of sports. However, there can be benefits to the construction of these new facilities. Unfortunately, these benefits do not exist (or are reduced dramatically) when the private company is facilitating the construction.
In Chapter 9 of the Handbook, Economics and Sport, the author gives five arguments for justifying the use of public funds for such constructions. First is that the construction itself will bring temporary jobs as well as jobs for stadium personnel. Second is the injection of capital into the local economy by providing these temporary or new jobs. Third, the franchise will attract people from outside the community, thus bringing their money to spend in the community. Fourth, the mere presence of the franchise will bring many different forms of media attention to the community and possible exposure for local businesses. Finally is the psychological and sociological impact on the citizens of the community and their feelings of a positive association with (possibly) a winning team (Lavoie, 165-66).
It’s sad to think that most likely at some point there will no longer be any stadiums or arenas not named after corporations. There is a certain nostalgia and more of a feeling of connection to places like Fenway Park, Wrigley Field, Yankee Stadium, Madison Square Garden, etc. Having experiences at places like that allow for a sort of lore to be passed down from generation to generation without the stories and memories including huge sponsorship deals and advertising revenues.
Stadiums will always have a name of a corporate sponsor. It is a business and any football team or sports team will tell you, at the end of the day, its all about money. Take the new Cowboys stadium for example, im not sure what the name of the stadium is or if it have been named yet but whoever gets the naming rights to that stadium will make tons and tons of money.
ReplyDelete"The firms that buy naming rights believe that the rights provide greater visibility, which leads to higher profits"(Leeds Pistolet, 593). This is basically saying that when a company gets that naming rights to a sports facility, they are hoping that they get something in return which in reality, is money.
"The names on professional sports facilities have changed over the years to reflect the sources of funds used to build or refurbish them" (Leeds and Pistolet,584). Everytime a team plays in the stadium, the commentators will say for example, we are live from FedEx Field or whatever the name of the staidum is. The companies or corporation who owns the stadium gets a lot of recognition and this also helps with the money.
Whoever came up with the idea of having naming rights to a stadium was a brilliant idea. The bottom line is that money is the motive and sports is not just entertainment, its a business because money is involved.
Sure, I wish that stadiums would be owned by the cities in which they are located, but that is just not realistic, and I don't think we will ever see those again. For every "Yankee Stadium," there are five more "AT&T Parks" and "M&T Bank Stadiums."
ReplyDeleteFor teams that have to pay high-priced athletes and coaches, there is no better way to make fast cash than to sell the name of the building.
Marc Lavoie wrote about sports economics, referring to owners signing free agents (164). Owners sign these players hoping that they will fill their corporate-named building, adding more exposure to both the company that bears the name as well as the team that plays there.
However, as Eva Marikova Leeds, et al. writes, naming rights don't always pay off for the company. Table I (585) shows 12 companies that had their names on stadiums and went bankrupt or gave up their name due to financial distress. Chris Isidore calls this "the stadium sponsorship curse" (585).
I love the fact that I root for the Yankees, who play in Yankee Stadium, and the Giants, who play in Giants Stadium. Unfortunately, the latter building won't exist next year. That said, it will always be "Giants Stadium" in my heart, no matter what the highest bidder gets to call it.
Sports are a business and with this economy I understand that they have to get their money wherever they can. I know that everyone has said that there's a different feeling when you go to Yankee Stadium, but honestly I get the same feeling of excitement when I go to Gillette Stadium. And I don't think that I'd feel any different if it were Patriots Stadium. The team is the team no matter what the name of the stadium they play in is.
ReplyDeleteBut to be honest, with this economy many teams do not have much of a choice but to follow in this economic trend and name their stadiums after a company. Companies believe that by putting their name on a stadium that they will recieve great advertising and have their name displayed everywhere. Leeds and Pistolet say, "Our main finding is that naming rights offer no economic
value—in the form of abnormal returns—to the firms that buy them." This proves that even though you go to Gillette Stadium, it doesn't mean that you will buy more Gillette razors. Therefore studies show that even though its a big ad, it doesn't work as well as they think.
Coakley and Dunning say, "All studies have shown, as one would expect, that a better home team attracts more spectators, but it should also be pointed out that good visiting teams also generally sttract more spectators." Fans are going to attend if your team is good or if they are playing a good team.
My conclusion is that fans will go to a stadium based on the team on not based on the name of the stadium. If fans aren't even affected that much by the ads or the name of the stadium, then I say let them do it if it means keeping the team. With this economy, let them do what they need to do for the sake of the sport.
As has been previously stated, professional sports are all about business, and business is all about money. It is because of this that we see big-time corporations’ names across the top of many stadiums and arenas. However, it is definitely possible that these names will not last very long, and that there is in fact hope that the original names, or team names of these stadiums and arenas may return.
ReplyDeleteThere is no question that teams are always trying to improve financially. They will do whatever it takes to put fans in the stands, as this increases the size of their bank accounts. This is illustrated in Drennan’s Not Just a Party in the Parking Lot: An Exploratory Investigation of the Motives Underlying the Ritual Commitment of Football Tailgaters, when it refers to tailgating. It states, “Practically speaking, the findings of this study are important for universities, sports leagues (e.g., NASCAR, NFL), and businesses (e.g., corporate sponsors, athletic brands) that would like to create and capitalize on rituals to which consumers are committed over time” (103). This shows that team executives will even look to rituals such as tailgating as a chance to make money off of them.
Teams also feel that they are improving by building fancy new stadiums. However, in order to create these new stadiums, they need corporations with big enough wallets to help them build. Sadly, this often happens at the price of losing the previous name of the stadium to the corporations. However, as data has shown, most corporate sponsors do not benefit financially in the long run by posting their names atop stadiums. In fact, many of them have ended up going bankrupt and removing their names due to financial issues. This is illustrated in Leeds et al.’s A Stadium by Any Other Name: The Value Of Naming Rights, when it states, “several firms that purchased naming rights have relinquished them due to bankruptcy or have not renewed them due to financial losses” (585).
So keep your heads up, sports fans and executives. There is hope of seeing your favorite team’s name at the top of the stadium, rather than the name of your bank.
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ReplyDeleteWhen answering some of the questions that Jaime asked I feel that I wouldn’t want to take the brunt of the financial burden because that would probably mean I wouldn’t be able to go to as many games as I’d like to. This being said, when Jaime mentioned the cost of the Jacksonville Jags that’s completely true. I’m a Jags fan and I go to the games I can make but I have yet to see a game sell out. The most fans I’ve seen was verse the Tennessee Titans and there was barely 2/3 of the stadium filled. If it was put on the shoulders of the community to pay for the stadiums I feel that a lot of teams wouldn’t have enough places to play, because not enough people are willing to pay when the price is low, so why would they pay more when the prices go higher?
ReplyDeleteBy having naming rights, a professional franchise can ease their minds about making sure they have a stadium for their players. In addition within Leads’ article he agrees with my previous statement when it’s stated that, “half the baseball and football stadiums and more than three fourths of basketball and hockey arena had sold naming rights to private corporations. Even colleges have begun to sell the rights to their athletic facilities” (584). This brings up another good point, with college stadiums. I think it’s a great idea for them to be jumping on the band wagon with this because it’s extremely smart. I feel that they will have the weight off of the shoulders for a little while, and could begin to focus more on winning games and keeping fans. For example, I mentioned in the first day of class my boyfriend is a football player at Yale and they don’t have naming rights, their stadium it strictly called the “Yale Bowl”. I’m assuming that the reason for this is because they probably have enough money coming from alums, rich parents and their charitable donations and the football boosters that they really don’t need naming rights. Therefore, overall what I'm trying to say is that if the owners of the football stadium are worried about keeping up their stadium they should get naming rights. However, if they feel sufficient they necessarily don’t have to, but they should keep in mind that if the economy should have an even deeper crisis that they might have wished they had.
In addition Drenten’s article has a lot to do with keeping up the financial stand points of the stadiums. Most people buy professional football tickets just so they can party beforehand (aka tailgating. Some see tailgating before games as a sport itself. “Rivalry is an inherent feature of tailgating, as it is directly related to competitive sports. Some symbolically demonstrate their competitive natures through the food that they prepare” stated Denten in his article on page 100. This will get people from outside of the community to come to games rather than just the locals (Handbook, Lavoie-165) Therefore having pregame parties for tailgating is a smart financial tactic to lure more fans into buying more fan gear, food, drinks, programs, souvenirs, tickets, etc.
Overall, maintaining a stadium obviously requires the fans as the most crucial part. From the tailgating to the actual merchandise, the fans are a part of everything. Knowing that companies want naming rights to broadcast their product all over a stadium, is something that the stadiums without naming rights should be thinking about. Considering the economic stand point we are in now, and think about what would happen if it got worse.
The days of stadiums being municipalities of cities is coming to a close, in fact, the sun has set on them. Sports is now one of the biggest businesses in the world. Everything has a name on it. Look at the world of soccer for example, each team has a jersey sponsor which can generate a ridiculous amount of revenue. When David Beckham came to the LA Galaxy, his jersey was one of the top sellers of the year. I can honestly tell you that I do have one and people have come up to me asking me what Herbalife is, and I don't even have a clue. (After that I looked it up, it's some scam herbal supplement. Anyway...)
ReplyDeleteThe time of named stadiums is over. Almost every stadium now has a corporate name on the side of it (i.e. Shea Stadium becoming Citi Field... regardless, it's still Shea.) It's a useful marketing tool because it gets the fans interest and always will keep that company in mind. If I was a fan of the Miami Heat, and I went to the American Airlines arena, I may be more inclined to find AA if I'm a dedicated Miami fan.
Most of the companies that put their names on a stadium have "relinquished them due to bankruptcy or have not renewed them due to financial losses. Several lother corporate sponsors have retained their deals despite severe financial distress." (Leeds Pistolet, 593.) So all the extra media coverage they're getting isn't even helping most of the companies out. At least from this point forward, things can only get somewhat better.
Sports is all about money and because the "sports nation" if you will is growing by the day. With sports becoming more popular it will be hard to get away from having big name sponsers buy naming rights to stadiums.
ReplyDeleteI do not mind the naming right that much, just as long as it is within reason. Stadiums like Pepsi Center, Gillette Stadium, Safeco Field are all simple and do not sound that bad. Unlike Quicken Loans Arena in Celveland.
Teams need to take moeny any way they can get it, I'm sure it will not be long before there are ad's in every 5 yard interval on the football field.
Posted on behalf of Mike Mancuso:
ReplyDeleteNo sport or business for that matter has been able to totally avoid this economic recession we are currently experiencing. The NFL is no different. Yes, we all want our teams to make the playoffs and hopefully reach the ultimate goal of the Super Bowl, but we still need to realize that this is a business. Lavoie may have out it best saying "Of course a franchise wants to win and be successful, but just as important and if not more important is the ability for that franchise to make money." (Lavoie 162)
So yes sponsorships play a huge role as teams need that financial stability and backing from a major corporation. The Pistolet article clearly states “our main finding is that naming rights offer no economic value—in the form of abnormal returns—to the firms that buy them.” (Pistolet 593) But how can that be? Earlier in the article they talk about how naming rights are not the only benefits the company gets, "commercial time on broadcasts, signs and information kiosks at the stadium, and suites at home and road games in which to entertain clients." (Pistolet 584)The sponsors pay and fund so much to the organization and help out so much with team promotions and giveaways. Why would these sponsors put so much on the line if they weren't financially smart decisions? These are the true businessmen they know whats best and how to run their companies.
The Jacksonville Jaguars are a great example. Their stadium is not named and they do not have the stability these other teams have. They offer some of the cheapest ticket prices in the league and do not sell out their game. So how much money can they possibly be making compared to other teams not even in big markets but that are sponsored.
We are seeing the role of sponsorships growing during this economic recession. The WNBA recently became the first American sport to sell advertising space on the teams actual jerseys. We have seen this work and boost revenue over in Europe for years now and it will be interesting to see, what effect this will have on other sports here home. Some believe that once one sport commits to it (like the WNBA already has) that the other sports will soon follow.