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What's in a Name: Three Scenarios Brands face in Facility Naming Rights Deals

What's in a Name: Three Scenarios Brands face in Facility Naming Rights Deals

When a brand assumes the naming rights for a facility, they are entering into a significant sponsorship agreement. For a brand, a naming rights deal is a long-term commitment and can be a considerable financial investment. With that in mind a brand must carefully consider what exactly to name the facility.

Brands must understand that while a they own the rights to the name, they cannot ensure that the public will refer to the facility by its official name. The reality is that consumers may call a venue by something other than its formal name, whether it be acronyms (ACC), legacy names (Skydome), or nicknames (The “Joe”, referring to Joe Louis Arena in Detroit). In turn, how this can impact the value or attribution a brand derives from its significant investment.

Brands invest in naming rights for a variety of important strategic reasons:

• Support the community- Naming rights sponsors can position their investment as one in local infrastructure, a gesture that can be appreciated by local consumers.

• Provides Authenticity and Hosting Opportunities- Attending a sponsored arena can be a source of pride for current customers, high-value clients or staff. While other brands can certainly host in a facility, they don’t have naming rights. There is an unrivaled authenticity that comes with having an ownership position of the facility.

• Build an Emotional Connection with Fans- Many sports fans hold an emotional connection with their teams, a naming rights deal can allow a brand to gain a similar connection. Having a brand name front and centre where a favourite team plays allows the brand take on some of those attributes

So while the benefits of naming rights transcend brand recognition, once it comes time for sponsors and properties to align over a precise venue name, key stakeholders must plan for any potential risks and opportunities that lie in a name adaptation. MKTG outlines some of these scenarios below:

1. Will the Venue Be Nicknamed?- Parents may have the responsibility of naming their child but their friends will give them a nickname, this can also occur with facilities as demonstrated in San Jose. Local Shark fans have been calling their home arena “The Shark Tank” long before B2B technology brand SAP took over the naming rights from HP. SAP’s naming rights deal is worth $8.38 million over 5 years. And while the official name is usually contractually obligated to be used on broadcasts and in publications, this does not stop the public from using a non-branded nickname.

2. Will the Venue Name Be Turned into an Acronym? - When the Air Canada Centre opened in 1999, Air Canada agreed to pay $30.4 million over 20 years for the naming rights of the new facility. Since its opening, the Air Canada Centre has been commonly referred to by its initials, “ACC”. In an attempt to monitor just how prevalent this phrasing is in the marketplace, MKTG leveraged Google Consumer surveys to ask Ontarians who identified themselves as Toronto Maple Leafs fans to name their home arena in an open ended question.

18% of respondents, when prompted, refer to it as the “ACC”. While the majority of respondents who refer to the arena in its abridged name would likely also be able to correctly identify Air Canada as the facility sponsor, the use of acronyms may over time limit attribution for a sponsor. Outside of sponsorship, brands experience a similar risk with acronyms. As a sponsor of the Pan Am Games, the Ontario Lottery and Gaming Corporation (who is commonly referred to as the OLG) created activations during the Pan Am Games specifically demonstrating their investments in Ontario and Ontarians. The OLG stated in a recent Marketing Magazine article that being referred to by their initials has led to the brand “KFC’ing” themselves and thus losing recognition as a brand invested in the province. This dynamic is likely an unavoidable one for sponsors whose corporate name is already an acronym. However, activating the partnership around key themes and brand values can hedge any limitation in attribution received as the result of name shortening.

3. Will the Public Adopt a New Namesake? - When a new sponsor takes over the naming rights to a facility, there will be an adjustment period for the public to become accustomed to the new name. Past sponsors may have built up significant equity over time, impacting the attribution a new naming rights partner receives. Rogers faced this when they assumed the naming rights to the SkyDome and renamed it the Rogers Centre in 2005. A decade later, using Google Consumer surveys, MKTG discovered that of 100 surveyed Ontarians that consider themselves Blue Jays fans, 74% refer to the facility as the Roger Centre.

While Rogers may want 100% of the public to refer to the Rogers Centre by its branded name, that is an unlikely reality which Rogers probably understands. Anytime something undergoes a name change there will always be a percentage of people who use the old name. There is still a large amount of Blue Jays fans that grew up watching the team play at the SkyDome. However there is a new generation of fans that are spending their youth going to see the Blue Jays at the Rogers Centre. Long-term naming rights deals allow for attribution to be gained over time by a corporate sponsor. 

Taking into consideration the points mentioned above, it is important to realize that naming a facility is not an exact science. Whether or not a facility is referred to differently by the general public does not mean it is a positive or negative, it is a fact that a brand must understand. With that in mind a brand can take certain measures to put itself in the best possible position to succeed.

• Embrace the Fans- Ultimately the public will refer to the facility how they want to. In San Jose, if SAP was to take a hard stance against the nickname it could risk negative backlash. Instead SAP has the opportunity to embrace the nickname and position SAP as a supporter of the nickname. SAP could create multiple activations around the name by creating Shark Tank merchandise or other promotions which will keep the SAP brand positive in the minds of Sharks fans. If the brand goal is to be part of the fan culture, than embrace it.

• Demonstrate the Investment- A brand needs to do more than just have their name on the facility. Much like OLG when they demonstrated how they are invested in Ontario, a brand must show their support of the facility and team.

• Commit Long Term- As mentioned before, when changing the name of a facility there will be an adjustment period. The transition could take some time so it is important for a brand to make a long term commitment to see their investment pay off. A slow adoption process does not mean there is opposition against the name.

Naming a facility can be a difficult task, brands must be aware of all possible outcomes that occur with a name. However, with a proper strategy a naming rights deal can provide great value to a brand. 

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