Why a stadium naming agreement?

Now that the football season is drawing to a close, some clubs will consider their stadium naming rights. Contracts naturally come to an end, some extend, and other clubs may wish to contract with a new naming partner. The majority of stadia were simply named by the road in which the main grandstand was situated or the local area. This obviously created a psychological nexus between the club and the community. Some clubs such as Everton are building new stadia .This presents the club with the opportunity of a blank canvas in naming the stadium. The biggest objection to the naming of a stadium is that the existing name is interwoven in the psyche of the fans and the initial perception to the first naming rights deals was that naming the stadium after a commercial partner somehow trod on the history of the club and somehow ‘cheapened’ the club’s heritage. Such was the general reaction to Newcastle naming St James Park as the Sports Direct Arena Those perceptions have now largely disappeared. Many fans recite the Emirates or the Etihad without consciously probably even registering they are describing the brand.

What are the benefits of stadium naming?

The stadium naming rights are the jewel in the crown of the club’s commercial rights and the club would wish to secure a long term deal so as to give the name the ability to embed itself in the fans consciousness. Change can naturally potentially devalue the asset. The Football League Cup has had many naming rights partners over the years and some fans still refer to the competition by the name of previous commercial sponsors, particularly if their club won it under a particular sponsor.

Naturally a more valuable commercial asset would be the naming rights to the club itself for example in Germany several corporations such as Red Bull have such rights however this practice has not (yet) reached the UK.

Commercial rights are normally arranged in tiers so as to determine their value and the benefits they attract.

A stadium naming right is a ‘sole’ right which means that the brand is not sharing the rights with any other brand in the same tier . As you would expect with any commercial sponsorship activity, the benefits are that the club (or whoever owns the stadium / venue), is able to charge the sponsor a fee in return for the sole naming right.

For the entity who has bought the naming rights, they would receive a suite of ‘sponsorship rights’ such as exclusive naming of the stadium, signage and / or branding around the stadium, to benefit from the goodwill that supporters show towards the club, to be linked with that club / venue in a positive light, the opportunity to reward customers with exclusive access and / or pre-sale tickets and other rights that can’t be guaranteed such as mentions of their business in broadcast and print media. The actual rights granted and the fee are naturally a matter of commercial negotiation depending on the competition for the rights.

What is contained in a sponsorship agreement?

The club lawyer’s role is to make sure only the rights the club intends to grant are included and to ensure safeguards are put in place to protect the value of the assets granted, the assets granted elsewhere and the reputation of the club. The sponsor’s lawyers likewise will look to ensure the scope of the rights are clear and not diluted by other commercial deals the club do. The sponsor will be particularly concerned to seek to restrict deals the club do with sponsors in the same sector such as an airline, bank or retailers, mentioned above, the starting point for any sponsorship agreement is a description of what the sponsorship property is, and where it is to be performed, such as the name of the venue. The agreement will also outline what rights are being granted such as branding and hospitality rights (tickets).

The sponsorship fee, schedule of payments and duration of the sponsorship would be specified.

So that each party to the agreement is aware of its obligations, the sponsor’s obligations will be outlined such as not to exploit commercial rights other than those granted, not to produce advertising, including social media campaigns or promotional merchandise without ‘sponsored party’ (club or venue) permission. The sponsored party would be under an obligation to deliver high quality branding, not to dilute sponsorship rights and not to tarnish the sponsor’s reputation.

There are other provisions to include such as termination, in the event of bankruptcy for example or a breach of the sponsorship agreement. The agreement would also deal with other important factors such as who owns the intellectual property rights, tax, insurance, data protection and force majeure (when it is not possible for either party to perform its obligations because of an event outside of their control such as Covid 19).

What happens when things go wrong?

Being linked to a club / venue can be a double-edged sword – if there is some negative publicity around that club or venue intrinsically your brand is linked. After all no business wants to be in the media for something that is out of its control. A change in the name of the rights holder can also create confusion in public perception possibly with negative connotations. Even when fans are seeking to locate the venue on sat-nav and not aware of a name change. That is why rights holders are keen to tie down long term deals. The flip side is that new sponsors will be wary of stepping into the shoes of previous long term rights holders.

Co-op Live

The £365 million Co-op Live is the biggest indoor arena in the UK which has been built by City Football Group and Oakview Music Group co-founded by Irving Azoff, Irving is best known as the manager of the Eagles and his son Jeff manages U2 and Harry Styles.

The Co-op were announced some time ago as the naming rights partner.

The arena opened recently with a gig by Elbow, however, it wasn’t without its problems. The comedian Peter Kay was forced to postpone shows and the pop group Take That moved their gigs to a nearby venue because Co-op Live was not ready on time.

In that scenario, the naming rights partner is the retail business the Co-op, it is unlikely that the Co-op will have had any input into the construction of the Co-op live venue but unfortunately their good name was linked with the venue.

The Co-op plans to donate at least £1m a year to the Co-op Foundation to help various projects and now the venue is open, it’s likely that millions of people will watch their favourite acts so we’re sure any delays will be long forgotten.