$700 million sale of Staples Center name shows there's still money in naming rights deals, for some

It's been almost two years since the LA Lakers played a home game without any pandemic-related restrictions.

The virus and related restrictions decimated attendance for sporting events, leaving many teams still waiting to see how many fans will ultimately return. But the pandemic has apparently done little to diminish the value businesses see in naming rights deals.

Crypto.com, a Singapore-based cryptocurrency exchange, bought the naming rights to the former Staples Center last week in what is estimated to be a $700 million, record-breaking deal.

But observers say there's an overabundance of stadiums, some of which are aging and quickly losing viability, that could keep prices in check. Emerging businesses, including crypto companies, could help reverse that trend.

Though the arena deals are still dominated by companies in a few select sectors – finance, airlines and communication chief among them – that group has started to diversify in recent years. 

FTX was the first cryptocurrency company to complete a naming rights deal. In March, it signed a 19-year partnership with the Miami Heat arena worth $125 million. And the Footprint Center, home to the Phoenix Suns, got its name through a 15-year partnership with a company that aims to “create a healthier planet by reducing dependency on single- and short-term use plastics." 

Building brand affinity

Companies have used these deals to boost their names, but profit isn't the strongest outcome a study shows. 

Naming rights deals are a way for companies to attach themselves to a sports team to build fan affinity, said senior lecturer Darrin Duber-Smith at the Metropolitan State University of Denver.

"When they end up doing this over time, fans end up liking the brand the same way they like the team." Duber-Smith continued, "They want the love for the team to transfer over to their brand."

Although it's rare, it's not unheard of for the name to be in place before a product hits the market. 

After he purchased the St. Louis Cardinals, owner August Busch wanted to change the name of the team's Sportsman's Park to something associated with his Budweiser brewery.  National League President Ford C. Frick was hesitant to name the stadium after a beer so the ballpark took on the family's last name instead. Anheuser-Busch then took advantage of the stadium naming deal to introduce a new product: Busch Bavarian Beer, which we know as Busch and Busch Light.

In recent years, the NFL Raiders were set to move to Las Vegas, and as naming rights deals rolled in, Allegiant Airlines secured the deal.

That made sense for the discount airline, said Gemini Sports Group President Rob Yowell. 

“Fans travel everywhere to watch their team play. These are all opportunities to build an affinity and brand loyalty for these fan bases,” Yowell said. "(Airlines) put themselves right at the front of the line."

Even after the deal has ended, companies will see fans stick with their brand due to familiarity, hence why people are attached to the former name of a stadium or arena, Duber-Smith said.

Trends of naming rights deals

The trajectory of the deals has changed in recent years, specifically for older stadiums and arenas, Duber-Smith told Paste BN. 

"We have too many stadiums,” Duber-Smith said. “Old stadiums aren’t fetching the amount of money they used to on renewals, and we’re not building a lot of new stadiums."

Along with their name attached to the team, companies are going to promote their brand through commercials, billboards and other forms of marketing, which can start to add up.

Sports Authority had the rights over the Denver Broncos stadium, but filed for bankruptcy in 2016, four years before the end of the retailer's 21-year contract at Mile High. 

"Only the most powerful brands can afford sports marketing at this level," Duber-Smith told Paste BN. Most of these companies are already tied to a team, so there are fewer new deals and extensions.

For those companies that make it to the end of their contract, which can last decades, some feel they've gotten their money's worth in building their brand with a particular fan base and decide to put those marketing dollars elsewhere. 

Recent name changes

The Yankees, Dodgers, Bears and Packers are among the shortlist of teams that play in stadiums without naming rights attached. For just about any other fanbase, brand names in front of arenas are a way of life; the revenue boost is too lucrative for owners to pass up, especially with public support for taxpayer-funded stadiums declining. Here's a look at some of the recent changes:

• The Miami Heat arena was formerly the American Airlines Arena (1999-2021) and changed to FTX Arena (2021-2040).
• The Denver Nuggets arena was formerly Pepsi Center (1999-2021) and changed to Ball Arena (2021-2041).
• The Milwaukee Brewers stadium was formerly Miller Park (2001-2021) and changed to American Family Field (2021-2036).
• The Miami Dolphins stadium changed to Hard Rock Stadium (2016-2034).
• The Kansas City Chiefs had played in Arrowhead Stadium since 1972, until March, when their home became known as GEHA Field at Arrowhead Stadium. 

Naming rights at US arenas