If You Liked It, Then You Should’ve Put Your Name On It

bmofieldStadium naming rights are an impressively large revenue stream for teams in the “big four” sports in the United States as well as for soccer teams overseas. The teams benefit from these agreements by receiving aid to pay off construction costs of stadiums, hefty player salaries, and any other expense that their hearts desire.  In exchange, the companies that plaster their names on sports properties benefit from media exposure and a greater association with the team and its fan base. The lucrative nature of these naming rights over the years has grown enormous and more recently, Major League Soccer has seen an influx of shirt sponsorship and stadium sponsorship deals that has increased the corporate presence throughout the league.  From a positive perspective, the league is growing more European in its resemblance thanks to this new business activity.

Of the 20 franchises in Major League Soccer, 11 of them are benefiting from naming rights deals for their stadiums. Some teams are in stadiums with corporate names, but do not see any significant profit due to different circumstances (i.e. The New York Red Bulls in Red Bull Arena or the New England Revolution as tenants in Gillette Stadium).  Here are the available details regarding each of the current MLS stadium naming rights deals:

Sources: http://www.mercurynews.com/bay-area-news/ci_26964867/san-jose-earthquakes-sign-naming-rights-deal-stadium http://www.mlssoccer.com/news/article/2015/03/03/columbus-crew-sc-announce-new-stadium-naming-rights-partnership-mapfre-insur http://www.oregonlive.com/playbooks-profits/index.ssf/2014/02/providence_park_--_timbers_new.html http://www.sportsbusinessdaily.com/Journal/Issues/2013/03/04/Facilities/StubHub.aspx http://prosoccertalk.nbcsports.com/2013/09/10/fc-dallas-and-toyota-agree-on-stadium-naming-rights/ http://m.sportsbusinessdaily.com/Daily/Issues/2011/12/14/Facilities/Dynamo.aspx http://www.forbes.com/pictures/emdm45efhif/ppl-park/ http://www.forbes.com/pictures/emdm45efhif/toyota-park/

A general pattern seems to be deals where the naming company pays around $2 million per year to have their name on the stadium.  While this figure definitely helps with costs, it is nothing compared to NFL stadiums.

The most colossal naming rights agreement in NFL history occurred in 2010 with the naming of MetLife Stadium in New Jersey.  Under the deal, MetLife pays the New York Giants and the New York Jets $400 million over 25 years.  Out of the 32 teams in the NFL, 25 teams play in branded stadiums, possibly 26 with the new Minnesota Vikings stadium set to open soon.  One of the least profitable naming rights deals in the NFL is  the agreement between the Jacksonville Jaguars to name EverBank Stadium for $16.5 million over 5 years (starting in 2010) averaging $3.3 million per year.   Considering the age and scope of the league,  MLS is not expected to rival the NFL in terms of corporate sponsorship.  However, these figures are a good measuring stick for the MLS to strive towards in the future.

REFERENCES

http://www.bloomberg.com/bw/slideshows/20110822/nfl-stadiums-with-the-most-expensive-naming-rights#slide3

http://www.sbnation.com/nfl/2013/5/8/4313344/49ers-levis-stadium-biggest-naming-rights-contracts

http://www.mercurynews.com/bay-area-news/ci_26964867/san-jose-earthquakes-sign-naming-rights-deal-stadium

Continue reading “If You Liked It, Then You Should’ve Put Your Name On It”

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TV Ratings Status Update

rslA recent interview with Amy Rosenfeld of ESPN by reporters from Philly.com highlighted some key updates to the status of Major League Soccer’s TV ratings in 2015.  One of the most striking statistics was the average of 283,000 viewers per game.  This is an increase of 18% from the 2014 season that amassed 240,000 viewers across all ESPN networks.  While its figures were skewed by outliers such as the NYCFC vs. Orlando City inaugural match that drew 539,000 viewers, there are match-ups on the other end of the spectrum as well like the March 29th game between the Philadelphia Union and Chicago Fire (two teams arguably without any tremendous star power and limited marketability at the moment)  drawing just 152,000 viewers on national TV.

The real reason to be optimistic about this season were the figures from Fox Sports 1 that report an average of 219,000 viewers per game watching the customary 7 pm Sunday national TV slot.  According to the article, this figure was up 54% from the average viewers per game of NBC Sports Network’s MLS programming in all 3 years of their agreement with the league. The highest average number of viewers per game during the past three years on NBCSN was just 142,000.

According to Rosenfeld, these figures are good signs for MLS heading into the summer, because this is the time period where MLS teams face less competition from other sports programming as the Stanley Cup Playoffs and the NBA Playoffs will come to an end in June.  Since this is just the first year of an 8 year contract, this season will act as a good gauge to see if the system can remain as it is or be tweaked for more success and relevance in the future.

In addition to national TV success, there was also positive news from Salt Lake City regarding the new local TV agreement between the Real Salt Lake franchise and KMYU.   Despite KMYU being harder to find on TV than Real Salt Lake’s previous TV network partners, the lowest rated of 3 locally televised games so far this season have drawn more viewers than than the highest rated games on last year’s networks.  One example of this success was the March 14th game that drew a 4.6 rating in the region equipped with 897,390 TVs  that Nielsen uses for estimates in the Salt Lake TV market.

If MLS sees future successes like these new findings from national TV stations and local TV stations, the positive image of the league can only grow larger.  Potential sponsors typically invest in a product with great promise of results, and seeing full stadiums on easily accessible TV stations could reasonably be the push MLS needs to finally stand tall next to the “Big Four” sports in America.

REFERENCES

http://www.sltrib.com/sports/2399591-155/scott-d-pierce-real-salt-lakes

http://www.philly.com/philly/blogs/thegoalkeeper/MLS-national-TV-ratings-rising-so-far-in-2015.html

An In-Depth Look at Soccer Specific Stadiums

red-bull-arena

This season marked the grand opening of Major League Soccer’s latest venue, Avaya Stadium, built specifically for soccer in San Jose, California.  According to NBC Bay Area, the global tech firm Avaya agreed to pay $20 million over 10 years for the naming rights to the stadium and the construction of the stadium cost close to $100 million. In addition to the excitement around a having a new field to call home, Avaya Stadium is home to the largest outdoor bar in North America that will require 30 bartenders, and plans to test the limits of fan engagement by being the first ever cloud enabled stadium. These technological enhancements will make the stadium a testing ground for the future of sports.

This stadium is the latest in a line of “soccer specific stadiums” that have been built by MLS franchises to increase revenue.  Currently 15 of the 20 teams have one of these stadiums, with 2 more stadium plans approved and planned to open by 2017.  The teams make their money through increased profits in ticket sales, merchandise, food and beverage sales, and parking that they might not have achieved as tenants in another entity’s venue.  The success of these new stadiums has been apparent enough for MLS to require potential new franchisees to have a plan in place for their own soccer specific stadium in order to be considered as a serious candidate for expansion.

According to Business Of Soccer,  attendance for Sporting Kansas City and for the New York Red Bulls spiked significantly after moving into their new stadiums.  In Kansas City, attendance rose from an average of approximately 11,000 to an average near 19,000 between 2011-2013.  In the case of New York, when Red Bull Arena was built in Harrison, New Jersey, attendance rose from an average near 12,500 in 2009 to anywhere from 18,000-20,000 between 2010-2013.  The San Jose Earthquakes hope to find similar success in their new stadium that has a capacity of 18,000 seats.  Below is a video from CBS San Francisco showing the features of Avaya Stadium.

These stadiums are not always a recipe for success.  According to Forbes, the Red Bulls owe the local government $3.6 million in back taxes due to a dispute over ownership of the property.  In the case of Chicago, it cost $98 million to build the team’s stadium Toyota Park, and the bill was funded by taxpayer dollars.  The stadium has yet to repay this initial cost, and in 2013, Forbes estimated that the Chicago Fire see $5 million in revenue a year as a combination of only 17 guaranteed home games, hosting the FCS National Championship, as well as hosting other events such as concerts.  While some experts and politicians might argue that the problem lies in the stadiums suburban location 12 miles outside of Chicago, other stadiums are experiencing similar challenges.  As stadiums not just in MLS but across all sports are evolving to generate more revenue from amenities and enhancing the atmosphere for fans, older stadiums suffer as they become obsolete.

The league plans to see future soccer specific stadiums in D.C. and Orlando by 2017.  The goals behind these stadiums seems to be too improve the game day experience for fans, increasing the amount of fans that come to their stadiums and hopefully creating a chain reaction of buzz around the team that will boost the team’s presence both in the community and on television.  These soccer specific stadiums can be a burden when it comes to financing and construction costs, but they can also be a genius marketing mechanism that builds the team’s brand with a more concrete identity.

REFERENCES

http://www.businessofsoccer.com/2014/08/27/soccer-specific-stadiums-prove-important-investment-for-mls-success-contd/

MLS 3.0: Evolution of the Soccer-Specific Stadium

http://www.forbes.com/sites/chrissmith/2013/11/20/major-league-soccers-stadium-revolution/

http://www.mlssoccer.com/news/article/2014/12/17/newly-approved-dc-united-stadium-set-be-17th-soccer-specific-stadium-mls

http://www.nbcbayarea.com/news/sports/Avaya-Stadium-San-Jose-Earthquakes-Announce-Naming-Deal-As-Cost-Of-New-Stadium-Skyrockets-283278811.html

Coca-Cola Sponsors Major League Soccer

coke mlsThis weekend, MLS, as well as U.S. Soccer, and the Coca-Cola Company announced a new sponsorship agreement  that will last four years.  This new agreement will allow Coca-Cola to use MLS and U.S. soccer player appearances at hospitality events, gives the company the right to use MLS and U.S. soccer marks in its original media content, as well as in-stadium signage.

This deal marks the end of the original agreement between MLS and PepsiCo Inc. that lasted from the birth of the league in 1996 to December of last year.  PepsiCo. recently announced a monster deal with the NBA, ending a partnership that Coca-Cola held since 1986.

The Coca-Cola Company is the largest beverage company in the  world with over 500 brands under its portfolio. The company has 20 brands that make over $1 billion annually in retail sales and a reputation as one of the most recognized brands in the world.  According to MLSSoccer.com, this agreement will make Coca-Cola the official beverage partner in the carbonated and water beverage categories of MLS and the official non-alcoholic beverage of U.S. Soccer. Coca-Cola is already a regular sponsor of the World Cup, and has been working with FIFA since 1974, giving the company plenty of experience in terms of sponsoring soccer events. Here is an example from Coca-Cola’s powerful “One World, One Game” ad campaign during last year’s FIFA World Cup in Brazil that promoted inclusiveness.

This agreement serves as another example of how Major League Soccer’s growing popularity is enticing greater investment by large companies.  Combined with the league’s agreements with Mondelez, Johnson & Johnson, and Audi, MLS is quickly building an impressive portfolio of corporate sponsors.  Coca-Cola clearly sees how it can reach its target market of millennials through partnering with the league and how it can attract the rising Latino population in the United States through greater exposure by way of soccer entities.

REFERENCES

http://www.bloomberg.com/news/articles/2015-04-13/mls-u-s-soccer-sign-four-year-sponsorship-deal-with-coca-cola

PepsiCo nabs NBA sponsorship rights from Coca-Cola

http://www.mlssoccer.com/news/article/2015/04/13/mls-us-soccer-federation-announce-new-partnership-coca-cola-company

Are Local TV Deals Helping MLS?

martins-1024x576In sports, exposure for a franchise at its most basic level is achieved through advertising and television.   A recent article by the Sports Business Journal reported that many Major League Soccer teams are operating under new local television deals to broadcast their games.  Of the 20 teams in the league, 8 of them established new local agreements in accordance with the new national TV rights deal with ESPN, Fox Sports 1 and UniMas that all began this season. While the financial details weren’t disclosed, these new deals show a trend of increased production value of the broadcast and increased exposure of the teams in their surrounding regions.

As one example, the Real Salt Lake franchise plans to increase its footprint to 5.5 million homes across the surrounding region of Salt Lake City that includes Las Vegas and Reno, Nevada, Idaho, and parts of Arizona thanks to its new deal with Sinclair Broadcasting.  The team currently reaches all 1.6 million homes across Utah, but this new deal will make games available in high definition and hopefully boost TV ratings.

This kind of exposure shows huge improvements for the league’s image not just nationally but in local communities.  According to an article by Grantland, shortly after the Sporting Kansas City franchise re-branded, the team reported an average local TV rating of 1.1 in 2012 in a Kansas City market of just over 1,000,000 homes which equates to 10,000 viewers.  That same season, the New York Red Bulls, who boasted star power with players such as Thierry Henry and Tim Cahill, averaged a measly 0.3 rating on their local TV network, MSG, in a market where the broadcast was accessible to almost 8 million viewers, equating to about 30,000 viewers on average who watched the games on television.

The gold standard for MLS, as it has been in stadium attendance as well, appears to be the Seattle Sounders.  Around 2012, the team accrued a 2.5 rating for 5 games which adds up to almost 45,000 viewers per game.  For this current season, the team just announced a new TV deal that would air games on local Spanish language TV in addition to its already successful English language broadcasts.  The team’s games can be seen in Washington, Oregon, Idaho, Montana, and Alaska, proving the extent of the team’s reach.

If more Major League Soccer teams can not only find successful exposure as the Seattle Sounders have done, but also generate television audiences that compare to other teams in their market, more lucrative local TV deals could follow, which would foster more sponsorship and advertising revenue for these franchises.  Time will tell if Major League Soccer’s age old TV dilemma can finally be solved.

REFERENCES

http://www.sportsbusinessdaily.com/Journal/Issues/2015/04/06/Leagues-and-Governing-Bodies/MLS-local.aspx

http://grantland.com/the-triangle/are-more-people-watching-mls-in-person-or-on-television/

http://www.sounderatheart.com/2015/4/3/8341655/sounders-announce-local-spanish-language-tv-deal

Oh The Irony: MLS Gaining Popularity in Global Markets

robbiekeanevtorontoOver the past few weeks, MLS has announced multi-year deals with media outlets across the globe to have games be broadcasted outside of the United States and Canada.  While this was expected to happen as a result of Major League Soccer’s partnership with IMG, the entertainment and media licensing agency, the immediacy of these deals has been compelling.

First, the MLS signed a 4 year deal with Sky Sports and an additional deal with Eurosport, giving both European media companies the right to show MLS games every week, and expanding MLS’s reach into 52 European countries. Eurosport’s agreement allows for up to four games to be shown each weekend on their network. Below is the video from Sky Sports announcing the deal. Sky Sports Announcement

The league also agreed to a deal with Abu Dhabi Sports Channels based in the United Arab Emirates to show at least two MLS games a week, not including the All-Star Game and MLS Playoffs. The immediate effect of this deal will be MLS reaching 25 new countries throughout the Middle East and North Africa.

Major League Soccer’s presence is clearly growing, and according to Sports Business Journal, the league has even more plans with media companies in Brazil, Latin and South America, and Asia to announce in the future.  Considering that MLS’s current TV deal with ESPN, Fox Sports 1 and UniMas calls for just 3 nationally televised games a week, these global deals shed light on how much work the league needs to do before it can match the fever and passion for the sport in other countries.

REFERENCES

http://www.sportsbusinessdaily.com/Journal/Issues/2015/03/30/Media/MLS-international.aspx

http://www.mlssoccer.com/news/article/2015/03/30/mls-partners-abu-dhabi-sports-channel-broadcast-league-middle-east-north-afr

http://www1.skysports.com/football/news/12096/9730519/sky-sports-wins-rights-to-broadcast-major-league-soccer