Dolphins Stadium Naming Deal Bad for Market

The stadium naming rights market has receded from guaranteed long-term, 8-figure deals only a few years ago to this – a one-season contract with a musician’s niche beer brand. When the Dolphins agreed to a sponsorship with Jimmy Buffett licensed LandShark Lager, an In-Bev product, they showed that teams are willing to do anything for revenue in this recessionary market. They also set the stadium rights market back, potentially hurting future deals.

A recent opinion article in SBJ touts the agreement as the future of stadium sponsorships, teams affiliating with individual brands (http://tinyurl.com/qmal6n) thus mitigating the risk associated with large corporations. The author makes a case for the shared values of the football team and the brand. I buy the latter argument, however the former does not hold much clout, and overall the deal devalues what stadium naming rights brings to the table.

Start with the length – one season. Stadium deals are built on impressions and long-term associations between the team and company brand, plus an ability to integrate products or obtain leads through the sponsorship. One season is not enough to establish that connection. In the long run, annual deals will devalue naming rights. Fans will struggle with recall, media will mock the name and probably misstate it, and brand affiliation will be weak. Yes, what about the constant name changes spurred by mergers and acquisitions in the past. While the inconsistency is not preferred, I’ll argue that it’s still achieving goals or the brand. Take the former Pac Bell Park in San Francisco, which has since been SBC and AT&T Park. While the name took on many forms, the company was constant. The product was constant. In fact, one could argue the stadium name change helped reinforce to fans that the company name had changed. Fans in the Bay Area could make the connection with the fact their phone bill had a new company logo. Further, the activation around the stadium, and the promotions AT&T leveraged the sponsorship for did not have to change, so in many ways the deal remained beneficial.

I submit that the brands have shared values and it’s easy to find common ground between the two. However, I argue that better sponsorship packages exist to extract this value. Building a sponsorship around the tailgating before the game, or a particular section of the stadium – as many teams have started to do, where the Dolphins can create some entertainment or bar/beach atmosphere make more sense. A sponsorship akin to the partying and entertainment aspect of a football game would directly drive beer sales for LandShark, and create a package that fits the size of this brand better.

To address the point on mitigating risk – I simply don’t see it. If anything individuals are higher risk than corporations. Yes, Citi took TARP money and Enron went bankrupt due to corruption, but do we need to review all the public humiliations that individuals have. With individuals you can’t sweep it under the rug, with a large company that is constantly in the news for good and bad it usually becomes a footnote – for instance, Citi Field debate has subsided after strong sentiment over the winter. Buffett may not create a problem, but as a general statement, individual brands are far riskier than corporations are.

The stadium naming rights market was overpriced for the better part of the last decade, and is undergoing a major correction as marketers seek better ROI measures and make smarter investments. That correction is taking place across the entire advertising and sponsorship market, not just in sports. It does not mean that stadium naming rights no longer have value. It’s just identifying what value they have. That said, teams only have one stadium asset to sell against, probably their biggest revenue source outside of tickets and television. Making short-term decisions to earn any revenue they can, as it appears the Dolphins have done, will diminish the long-term value of the asset. On the other hand, the Cowboys are holding out. Recessions can lead to irrational behavior. I think the Dolphins acted in this manner, and will suffer in the long-term.

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