Factors Affecting the Value of Naming Rights

I was speaking to a City Council in a major municipality recently about their sponsorship program and one Councilor asked if there were examples of what naming rights sold for in other towns/cities. My response was that it’s difficult to compare one municipality to another because there are so many factors that must be considered when establishing the value of naming rights fees.

photo_municipal_articspasWhile we do have a good handle on average pricing fees for various facilities across Canada, our research shows that there is no set standard on who pays how much for how long and under what terms. A further analysis of naming rights deals across the country over the past 3 years would indicate that fee structures, payment terms and sponsor benefits programs vary greatly.

Beyond the visibility elements associated with the facility, here are some of the factors affecting naming rights pricing:

  • Newness of the Facility – New facilities represent the best opportunities for naming because they are usually surrounded by a lot of hype, are attractive and carry little baggage. Conversely, companies usually don’t want to associate their brand with a tired, worn down venue;
  • Importance in the Community – Is it a community landmark with lots of history?
  • Uniqueness – Is the facility one of many naming opportunities in a community or is it truly a unique opportunity?
  • Location – Is it located along a main traffic artery where it will be visible to a lot of vehicle traffic? Does it mainly serve a community or the entire municipality?
  • Annual Attendance – How many people does it serve year-round? What’s the opportunity for year-round visibility? Are there premiere opportunities for unique visibility?
  • Diversity of Programming – Does the facility appeal to a wide range of audiences year-round? How many of those in attendance are the sponsor’s target market? Can the sponsor interact with them year-round?
  • Potential for Media Coverage – Will the facility be mentioned frequently in media such as newscasts and sportscasts? Is the facility Home Venue for a recognizable sports franchise?
  • Potential for Activation – Is there a sales opportunity associated with the naming opportunity? Is there an opportunity for activation elements such as hospitality suites, complimentary use of rooms or the sale of sponsor products?
  • Economic Factors – Is the municipality in a depressed state or a bustling economy? Is there a lot of competition among companies?
  • Additional Visibility – Are there other vehicles within the municipality that will provide additional visibility such as publications, web site and signage?

As one can see, there are many factors that need to be considered. These are the elements that make each naming right opportunity unique. This is why a $50,000 per year naming opportunity may seem reasonable in one municipality and too high in another.

I will be discussing these and other concepts at the Municipal Forum on Sponsorship, October 27 at the Grand Hotel and Suites in Toronto. Now in its 6th year, the Municipal Forum on Sponsorship provides municipalities of all sizes, the strategies and tools to implement a successful sponsorship program. Join me on October 27 to discuss the challenges municipalities face in getting their programs off the ground.

Later, BC

Leave a Reply

Your email address will not be published. Required fields are marked *