In 1999 Royal Philips Electronics paid 180 million to buy...

In 1999 Royal Philips Electronics paid $$\$ 180$$ million to buy 20-year naming rights of the Atlanta, Georgia, stadium, home of NBA's Atlanta Hawks. University of Massachusetts Professor Timothy D. DeSchriver and Drexel University Professor Paul E. Jensen analyzed naming rights. In their study, what was the likely impact of each of the following on a corporation's willingness to pay to name a stadium? (Difficult) a. An existing team is relocating to the stadium. b. The stadium is in a highly populated area. c. The stadium's current name is the Staples Center and has had that name for 20 years. LO3

In 1999 Royal Philips Electronics paid $$\$ 180$$ million to buy 20-year naming rights of the Atlanta, Georgia, stadium, home of NBA's Atlanta Hawks. University of Massachusetts Professor Timothy D. DeSchriver and Drexel University Professor Paul E. Jensen analyzed naming rights. In their study, what was the likely impact of each of the following on a corporation's willingness to pay to name a stadium? (Difficult)
a. An existing team is relocating to the stadium.
b. The stadium is in a highly populated area.
c. The stadium's current name is the Staples Center and has had that name for 20 years. LO3

Key Concepts

Naming Rights Sponsorship

This concept involves a corporation paying to have its name attached to a venue, such as a stadium. It represents an investment in marketing and branding, where the sponsor gains public exposure, association with sports and entertainment, and potential increases in brand equity through association with the venue's image and events.

Team Relocation Impact

When an existing team relocates to a stadium, it affects the facility’s overall value. The team’s fan base, media attention, and game-day attendance may change dramatically, influencing the sponsorship's reach and effectiveness. A strong, well-supported team can increase the perceived value of naming rights by ensuring greater public interest and consistent usage of the facility.

Market Exposure

Market exposure refers to the potential reach and audience impact based on the location of the stadium. A facility in a highly populated area offers greater visibility and higher chances for consumer interactions with the sponsored brand. This elevated exposure can justify a higher investment in naming rights because of the enhanced marketing outcomes.

Established Brand Legacy

An established and longstanding stadium name carries significant heritage and customer recognition. When a stadium has been known by a particular name for a long time, switching it can involve risks such as loss of existing brand associations and fan attachment. This legacy effect can reduce a corporation’s willingness to pay for new naming rights since it may require overcoming entrenched consumer perceptions.

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