Stadium naming deals: why clubs and sponsors should always consider their termination rights

Match-day at sports’ clubs stadiums is big business with the potential to generate large amounts of revenue from various streams including tickets, merchandise, concessions and sponsors. In addition, the proliferation of global connectivity and the distribution over several different types of media (broadcast, digital, streaming) means that high-profile sports clubs have the ability to attract tens of thousands of spectators from domestic and international markets.

Therefore, increasing stadium capacity and stadium design, either by an expansion and redevelopment of a current stadium or the development of a new stadium, optimises these valuable revenue streams.

A stadium also provides an opportunity for a club to monetise its stadium’s name by entering into a naming rights sponsorship deal, with big international companies and brands - already alive to the demographic appeal of the sports sector - keen to affiliate themselves with a high-profile sports team.

Under these sponsorship arrangements, the club is contractually obliged to name its stadium with the title sponsor’s name, for example, in the English Premier League (EPL), Arsenal Football Club’s stadium is called the Emirates and Manchester City F.C. play at the Etihad stadium. In the media and market, the title sponsor becomes synonymous with the club and recognised as part of the club’s fabric.

Stadium naming rights partners are extremely attractive for a club (and venue) to supplement revenues needed to cover increasing expenses such as players’ high salaries, transfer fees and to service commercial loans and other construction costs and expenses. And for the title sponsor, a close affiliation with a globally supported high-profile club (or venue) creates valuable brand awareness, and the arrangements are typically long-term (and high-value) in order for the sponsor’s relationship and association with the stadium and club to become entrenched to gain maximum value and exposure in the global market.