Among the notable news stories in recent weeks, Major League Soccer (MLS) franchise Los Angeles FC (LAFC) ended a two-year wait for a new stadium naming rights partner. The team had been on the hunt since losing its previous sponsor, Banc of California, which terminated its deal early due to financial struggles caused by the COVID-19 pandemic.
The new partnership is somewhat indicative of the North American market, with the Bank of Montreal (BMO) signing on with the newly crowned MLS champions in a 10-year deal worth $100 million over its duration.
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BMO has been a prominent sponsor of sports in the region, most notably serving as the front-of-shirt and stadium naming rights partner of Toronto FC. With plans to expand, the company agreed the partnership with LAFC after securing regulatory approval for a reported $16.3 billion deal to take over San Francisco-based Bank of the West. BMO’s big money moves underpin its ambitions to further expand its operations, as it now has a presence in nine US states.
Three other major stadium naming rights signed in 2023 include deals between MLS’ Houston Dynamo and Shell, TD Bank’s renewal with the NBA’s Boston Celtics, and Utah Jazz’s deal with Delta to replace Vivint.
In 2022, there were 91 naming rights deals announced on the GlobalData sponsorship database, 42 of which (46.15% of all deals) were located in the US. In comparison to the North American market, other major sports leagues around the world are far less affiliated with naming rights deals.
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English Premier League outfit Tottenham Hotspur’s struggles in the market is one example that highlights the difficulties English soccer faces in this space. The London-based team have been searching for an official named partner since the opening of their new stadium in 2019 in an effort to generate additional annual revenue to offset building costs. The club have looked to host additional events outside of soccer matches, staging concerts, boxing, NFL, and rugby league games.
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By GlobalDataDespite this, the stadium remains without a partner with the high asking price undoubtedly a turn-off for most brands. Stadiums in North America conversely appear to undergo far easier negotiations for these rights, as proven by the large number of high-value deals signed across the major sports leagues. The commercialization of venues in North American sports is clear when analyzing the overall landscape in each of the top sports leagues.
In the NFL and NBA, 97% of the teams have naming rights deals, while that figure is 94% in the NHL, 90% in MLS, and 77% in MLB. The high numbers are spread across the sporting landscape in the region, giving an overall 91% coverage across all stadiums combined over the five competitions.
When compared to numbers in the ‘big five’ leagues in European soccer, the numbers clearly highlight a difference. English Premier League teams hold naming rights deals across 30% of their stadiums, with similar figures in Spain’s LaLiga (25%), Italian Serie A (25%), and France’s Ligue 1 (20%). The outlier is the German Bundesliga where deals are held by 83% of its teams.
The contrasting landscape in North America has been the norm for several years and for a number of reasons. Firstly, the idea of history and fan nostalgia is more prominent in competitions like the Premier League and LaLiga. European soccer teams are older sporting properties and their home grounds are even older.
North American franchises shift more frequently into new markets and modern stadia, whilst European clubs remain rooted in history and are often more determined to improve their existing homes than build new ones.
Among the 153 teams competing across the five aforementioned US sports leagues, only 20 active stadiums were officially opened before 1990. Furthermore, 84 play in stadiums opened in the 21st century. Using the Premier League as a comparison, the English top-flight houses nine active stadiums whose beginnings date back before 1900.
Without the same level of history attached, fans are open to stadium name changes, whereas a name such as Old Trafford is synonymous with Manchester United’s history meaning fans would strongly disapprove of a change for additional revenue.
As a result, brands are less interested in deals of this kind to avoid a public backlash. In North America, however, it is an easier sell to add a commercial partner’s name to a stadium as brands are not fighting for name recognition amongst fans who would still refer to it as the previous name. They are associating themselves with bigger, newer, and more attractive bits of retail space.
Historically, there are fewer premium sponsorship packages offered to brands in North American sports. Whilst European soccer teams have plastered multiple kit partners on jerseys, shorts, and socks, apparel in US sports leagues have generally offered a cleaner image. MLB, for example, only allowed its centralized league kit supplier, NIKE, to add its famous swoosh logo to team kits from the 2020 season.
The US leagues have been slow to allow such major sponsorship inventory space for individual teams but have in recent seasons permitted jersey and helmet logo sponsors to combat the financial losses caused by the pandemic. Attaching a brand’s name to a team’s home venue had previously been the biggest and only opportunity to promote partnerships to fans.
The additional commercial revenue that is generated from naming rights deals is a huge incentive for all teams, while the longer-term nature of these agreements is also appealing. Where a shirt or helmet partner may be signed up for a couple of seasons, naming rights deals are often much longer in length, with many in North America running between 10 and 20 years.
This ensures a continued source of revenue for the team while also offering the sponsor fan engagement opportunities. It takes time to cement such a name in the eyes of fans and visitors to the stadium, making long-term deals a necessity.
Major US sports franchises which could announce naming rights deals over the next 24 months include:
- Houston Rockets (Toyota deal ends in 2023)
- Memphis Grizzlies (FedEx deal ends in 2024)
- New Orleans Pelicans (Smoothie King deal ends in 2023)
- Portland Trail Blazers (Moda Health deal ends in 2023)
- Cleveland Indians (Progressive Financial deal ends in 2023)
- Tampa Bay Lightning (Amalie Oil deal ends in 2024)
Image: LAFC
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