Academic journal article International Journal of Sports Marketing & Sponsorship

Questioning the Name Game: An Event Study Analysis of Stadium Naming Rights Sponsorship Announcements

Academic journal article International Journal of Sports Marketing & Sponsorship

Questioning the Name Game: An Event Study Analysis of Stadium Naming Rights Sponsorship Announcements

Article excerpt

Stadium naming rights programs have proliferated over the past decade, yet we have no direct evidence that these types of sponsorship programs help companies develop their long-term brand equity or even provide a short-term boost to corporate value. This paper examines the impact that naming rights programs have had on the stock values of the corporate sponsors. Using event study analysis, it is found that there are mixed responses to these types of programs. A discussion is provided which helps to explain the mixed results and provides communications managers with some suggestions on creating more effective naming rights programs.


Every year thousands of people attend sporting, music and other special events at named arenas while millions more watch these events on network television where broadcasters often refer to the stadium by its corporate name. These deals, which cost companies an average of $2 million annually are meant to promote the company and provide valuable financing for the teams (Friedman 1997). There are even those that would argue that this method of promotion, known as corporate naming rights, provides one of the most effective marketing communication options in the market place today (Friedman 1997; Hornaday 2003). In fact, a poll by Performance Research shows that on average, 60% of the population in a given market could recall the corporate sponsor of the local stadium ("Arena Stadium Naming Rights Seem to Work" 1997), but does that translate to tangible benefits?

Like other sponsorship programs, naming rights programs are meant to develop brand equity via increased exposure, heightened brand awareness and stronger more positive brand associations. Other benefits, which have been linked to naming rights programs include: market efficiencies, incremental sales, more positive employee relations, various hospitality options, co-marketing opportunities and a means for developing strong customer relations ("Sponsorship Decision Maker's Survey" 2002). When Enron Corp, purchased the naming rights to the new baseball stadium of the Houston Astros, it became the sole supplier of electricity to Enron Field and the surrounding offices (Barlow 2001). Pepsi, Coors, Phillips and Target all believe that they have benefited from their naming rights programs (Moore 2001). Additionally, when Continental airlines was trying to increase its customer base in its Newark hub it purchased the naming rights to the area's National Basketball Association stadium, and the company reports that traffic from the area did increase.

However, not all of the anecdotal accountings are success stories. There are some that would argue that naming rights have been the kiss of death for many companies (Berenson 2001). When PSINet bought the naming rights for the Baltimore Ravens National Football League stadium, the stock was trading at $17 a share, and subsequently fell to under twenty cents. Although there is no evidence that the loss in value was the direct result of the naming rights program, it is obvious it didn't prevent the loss in value. Further, against fans outcries, Reliant Energy bought the naming rights to the former Astrodome. Shortly thereafter, deregulation allowed Houston residents to choose their electricity supplier and the number of customers that signed up for a competitor was double that from other parts of Texas (Barlow, 2001).

Given the tremendous expenditures and mixed anecdotal reports, it is important for managers to know if these programs are valued and how they can best be used within the communications mix. Previous sponsorship research would lead us to expect stadium naming rights programs to be valuable to the firms that sponsor them and thus valued by the marketplace (Becker-Olsen and Simmons 2002; Crimmins and Horn 1996; Fisher and Wakefield 1998; Gwinner and Eaton 1999; Gwinner 1997; Madrigal 2000; Speed and Thompson 2000). Consistent with this belief is the work by Morgan and Miyazaki (2000), which suggests that Olympic sponsorship programs' can add financial value to a brand/company. …

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