A Valuation is Good Business

I was once in negotiations with a potential Naming Right sponsor. I had completed a formal Valuation, so I knew what the opportunity was worth.  The amount of money the sponsor had offered was significantly below what the Valuation indicated. So, I asked “How did you come up with that figure? He responded that the amount he had offered “matched the total amount that another sponsor up the road had paid for their particular Naming opportunity.” In his mind, the Valuation I completed was irrelevant ; he was more concerned with losing face in the eyes of the other sponsor (a competitor).

Now, I am in the Valuation business. I make my living conducting Valuations on programs and properties. So, this came as quite a shock to me. The point is that the Valuation mean’t nothing to him – him and his company were using a totally different model and rationale for what the property might be worth. He saw the market value, not my Valuation as the true value of the property.

Even though he had a different model for establishing a value, I’m glad that I had completed  the Valuation, because it told me what the property was worth from a commercial perspective. If I hadn’t done the Valuation, how would I have known the true value of the property? Armed with this knowledge, we were able to negotiate another $20,000 a year for the property or almost $400,000 over the life of the agreement. In this  case, the valuation was used to get “fair market value” for the property.

The bottom line is that sometimes a sponsor uses some other method (other than yours) to determine the value of a property or program and it’s up for us to call them on it, if it’s warranted. Otherwise, we could be leaving money on the table or vise versa. It’s important to be consistent in how we place values on properties and know their value in a market. By knowing and understanding the value of our assets in a particular market, we are telling sponsors we know what we are doing and this strengthens our bargaining power. Thus, even though market conditions might want you to “guess” the value, a true Valuation will help you “understand” the value and provide a consistent method for putting a value on properties.

Later, BC

 

 

Strike While The Fire Is Hot

I have just finished doing some work for a nutrition association and I think they are in a good place right now. Nutrition is at the top of people’s minds these days, especially with the new Canada Food Guide coming out. Companies are vying to have their food group included in the Guide and have their food group considered as essential to a healthy body. All of these companies know what it means in terms of sales to have their food group included in the Guide.

In short, this association can’t be at a better time when it comes to seeking sponsors. For companies, this association is the strategic leader when it comes to food nutrition, they put the science behind food.  Any corporation that wants to cozy up to the food bunch, knows that a relationship with this association is more the strategic way to go vs. becoming involved in a more more direct sales environment. For the association, the media is doing your job by shining a light on the food industry (overall) and positioning your association as the expert.

In sponsorship sales, as in most sales, timing is everything. When someone wants your product, it is time to stoke the fire. It is a lot more difficult to get anyone excited about an opportunity when it is the last thing on their mind; for example, an Olympic sport, in the second year of four years in between competitions. Conversely, you want to make the pitch when fever is running high, there is more to lose from not being involved and the event experience is memorable. In the case of this association, the media are are making food an Olympic year and the timing for a close relationship is right, especially an association with an organization who is viewed as a trusted leader in the industry.

Sales is difficult enough. You might as well have everything working in your favour to increase your odds for success. This includes timing your requests, so that the company motivation for making a deal is high.

Later, BC

What’s in a Naming Rights Name?

I have been working on a number of Naming Rights strategies this year, from municipalities to sports fields and I can’t tell how effective a good name is from both  a “fit” and a memorability perspective. A good name makes good common sense to everyone, especially the user. A poor name can have you remembering for all the wrong reasons.

Here are a few names that made me laugh and I thought they would inject some humor into your day.

  • Automated Group Technology Stadium – West Midlands, England
  • Bojangles Coliseum – Charlotte, NC
  • Smoothie King Centre – New Orleans, Louisiana
  • Pirelli Stadium – Staffordshire, England
  • Curly Wurly Arena- Birmingham, England
  • Star Bar Stadium – Manchester, England
  • Kit Kat Crescent – North Yorkshire, England
  • Dick’s Sporting Goods Park – Commerce City, Colorado
  • Paul’s Pizza Stadium – New York, NY
  • Totally Wicked Stadium – St. Helene’s, Wash.
  • Neuroscience Group Field – Fox Cities, Wisconsin
  • KFC Yum Centre – Louisville, KY

You can see why the name is so important. One can also see why different companies are jumping on the bandwagon – naming rights are a great way to increase your profile in a marketplace, among other reasons for investing in naming rights in the first place.

The bottom line is that naming rights have evolved into a legitimate vehicle  for achieving multiple objectives.

Enjoy!

Later, BC