Teams generate revenue in myriad ways. The big driver, and one of the main causes for skyrocketing team valuations, has been media rights deals. The revenues from those deals are spread evenly throughout the leagues. One of the main ways a franchise can maximize revenue is by squeezing every last dollar out of its venue. That comes in many forms, including: signage, naming rights and fan purchases. In theory, this could mean a team may have to deal with separate companies that specialize in sponsorships, naming rights and venue design. Firms specializing in naming rights are offering fully integrated services to assist teams in all of the areas mentioned above.
It may seem odd, but naming rights weren’t always a part of sports. There was a time where Fenway Park, Paul Brown Stadium and Lambeau Field were the norm. Now it’s American Airlines Arena and Target Field.
“Naming rights today is part of the contractually obligated structure, it’s part of the financing scheme, and the way buildings are built now is different than 1995,” says Jeff Knapple, CEO of Van Wagner Sports and Entertainment (VWSE). “If we’re just going to be a naming rights broker, we are missing what’s going on in the marketplace, specifically improving the fan experience.”
The goal is to address as many issues as possible from the start of design until the building is completed. Van Wagner worked closely with the Atlanta Braves on their stadium as well as with the Minnesota Vikings on their $1 billion new stadium project. Deals may start as naming rights, but grow into premier seating, technology and content development.
“We moved from a brokerage model to a consultative model,” said Chris Allphin, senior vice president VWSE Team & Venue Services. “In the case of the Minnesota Vikings, we wanted to provide them further services. We wanted to make sure naming rights were there, but we also wanted to make sure they had the right mix of founding partners, the right sponsorships.”
It is Van Wagner’s belief that the fan experience drives a lot of the revenue, so the firm also offered the Vikings assistance with content creation and other services, including bringing in an expert on stadium construction and design.
The truth is the fan experience encompasses the entire venue. Fans don’t want to feel bombarded with ads. They want to feel comfortable moving around the stadium, and the experience needs to be amazing. Teams also want to be able to monetize every aspect of the fan experience. Companies, like Van Wagner, that can specialize in all aspects of the process, are indispensable to teams building these new stadiums.
Michael Colangelo is Assistant Director at the USC Sports Business Institute and Senior Editor of The Fields of Green.