Sunday, December 22, 2024

Financial benefits of naming rights deals increasingly appeal to UK sports – Sportcal

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The recent naming rights deal between the Rugby Football Union (RFU) and insurance group Allianz has highlighted how many sports properties are happy to sell prestigious sponsorship rights to secure long-term financial commitments from brands to help balance the books, even if they are met with criticism.

The agreement is worth $100 million across the 10-year length of the contract. The decision to rename the iconic Twickenham Stadium, the home of English Rugby was announced after the RFU had reported a loss of $8.2 million in their accounts for the 2022-23 financial year.

The RFU has followed the same pathway that many sports properties have in seeking out new ways of generating income, outside of ticket and hospitality sales.

This commercial move by the RFU to secure a potentially game changing partnership was greeted with disapproval from many English rugby fans and commentators.

The former England Rugby World Cup winning head coach, Sir Clive Woodward, stated that the RFU has “sold its soul” by selling the naming rights of Twickenham to Allianz.

The RFU strongly countered this claim by stating that the financial injection will be essential to revolutionize grassroots rugby across England and provide some much-desired long-term financial stability.

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The English Rugby federation is not the only Northern Hemisphere body to decide to sell its naming rights. The other home nations – Scotland, Wales and Ireland – are all currently involved in multi-year naming rights agreements – with BT, Principality and Aviva respectively.

With the financial uncertainty of professional rugby, all four federations have felt it necessary to have their national rugby stadiums renamed for financial gains.

Between 2022 and 2023 there was a 38.6% rise in naming rights partnerships signed across the UK, showcasing a significant jump in agreements. In 2024, GlobalData can report that 60 deals have been signed with UK sports properties, with many more expected to be signed as the year progresses.

Around 18 of these agreements are with horse racing properties. The most annually lucrative horse racing agreement this year has been Betfred’s one-year deal to serve as the title sponsor of the Epsom Derby and the Epsom Derby festival, worth $4 million.

As well as the RFU’s deal with Allianz, Birmingham City FC, the English FA Cup and Racing at Goodwood Racecourse have all signed new naming rights deals in 2024, each worth $6.5 million or more annually.

Across the UK, there are 68 active naming rights partnerships with sports venues, worth a collective $199.9 million per year. Currently, the most lucrative deal is O2’s 10-year deal with London’s North Greenwich Arena worth $155.9 million.

The telecoms operator has been a long-standing partner of the arena since 2007 which continues to host numerous high profile sport events every year.

Many UK-based sport properties are still reluctant to cash in on naming rights opportunities as teams competing in various sports such as soccer and cricket have a longer and deeper sports history compared to most teams across the globe, especially US-based franchises.

Sports venues such as Anfield and Lord’s Cricket Ground have become synonymous with the teams they represent, resulting in commercial decision-makers being wary of offending fans by messing with the long-standing traditions of their club.

However, more teams and federations are weighing up selling naming rights to brands to help bring in some much-needed finances as they are still paying the price of the impact of the Covid-19 pandemic.

For years it has been rumoured that Tottenham Hotspur’s owner, Daniel Levy, has been searching for a naming rights partner for the world-class Tottenham Hotspur Stadium, as the club has incurred substantial debt since moving to its newly built stadium.

With no historical attachment to the stadium, Levy has been in discussions over agreeing a multi-million dollar naming rights partnership. It has been reported that the club owner is seeking a world-record figure of around $32.8 million a year.

Globally recognized brands such as Google, Uber, FedEx and Amazon have all held talks with the club about attaining the rights to the stadium. Tottenham feel they can receive a world record sum for their naming rights as the stadium can not only host soccer matches but also major concerts and other sports including yearly NFL matches.

Other major English Premier League teams without a naming rights partner include Manchester United and Liverpool. With both clubs being valued so highly, they are currently missing out on tens of millions of dollars a year from a naming rights partner.

In early August, it was reported that Manchester United’s front-of-shirt sponsor Snapdragon is interested in capturing the naming rights to the club’s famous Old Trafford stadium or any new stadium that is constructed to replace it.

Worldwide, US sports properties lead the way in generating the most income from venue naming rights deals. At present, there are 188 active deals worth a total of $823.83 million annually.

Across major sports leagues, various naming rights partnerships highlight the commercialization of many of the biggest sports venues in the country. The way US teams operate as franchises means the decision makers within sports properties are quick to seek new ways of generating income, which includes signing long-term and highly lucrative naming rights deals.

On the other hand, in the UK, the way sports teams and federations are run remains very different, with fan nostalgia being more prominent, especially with stadium names. Decision makers must weigh up the financial benefits of securing a naming rights deal but also the negatives which include receiving powerful backlash from loyal long-term supporters.  

With sports properties having to find ways of developing new revenue streams, naming rights agreements in the UK, especially in soccer, could well increase in the future, especially if clubs the size of Manchester United and Liverpool make the decision to go ahead and rename their historic stadiums, despite the negativity that would come from such a move.

Commercial teams are always looking at new ways to drive growth and naming rights is certainly one of the biggest drivers in boosting annual income.


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