I actually think these deals can be very beneficial for the outside company. Marketers pay $3 million for a 30-second Super Bowl spot. For a similar fee (sometimes less, sometimes more, sometimes a lot more, depending on the team and the city), a company can have its name mentioned thousands of times per year in news stories, on television, or even on merchandise. If the team makes it to the World Series, or the NBA Finals, or even hosts an All-Star Game, the company gets exposure that would normally cost tens of millions on the open market.
Yet despite all of that, the naming rights market has almost completely seized. The Nationals are entering year two in their new park, and still haven’t landed a sponsor. The Dallas Cowboys are opening a new facility next season, and haven’t found anyone willing to pay Citi-like money. Possibly playing off of that, the Giants and Jets (who move into their new digs in 2010) don’t even seem to be looking for a partner right now.
Obviously the timing is horrible for the teams involved, particularly the Nats, who are essentially losing money every single day that they don’t have a sponsor. Companies are cutting costs wherever possible, and no one wants to be making naming rights deals while slashing jobs, or being bailed out by the government.
But for marketers, this might be a perfect opportunity. This is very much a long-term investment, and could be had at a tremendous discount right now.
Consider one deal that just got done: the Pittsburgh Penguins are hooking up with Consol Energy, for an estimated $2-4 million per year. Yes, the Consol Energy Center. Doesn’t quite roll off the tongue like PNC Park or Heinz Field. But Consol is one of the few local companies that could afford this type of deal. And they’re not paying much more than Mellon did to sponsor the Penguins’ current arena.
Companies should be pouncing right now. It’s certainly unconventional to put millions of dollars into a marketing deal during the worst economic downturn of our lives. But this is a 20 to 30 year investment, not a Super Bowl ad (which are rightfully taking it on the chin, despite a hot start before the crisis). If a naming rights deal brings surplus value in a normal market, imagine what it could do at discount rates.
Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com
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