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Inside Naming Rights Deals

By Rich Brand and Christina L. Campbell
September 02, 2017

Barclays Center, Levi's Stadium, Golden 1 Center, Mercedes-Benz Stadium, Hard Rock Stadium — any sports fan or concert-goer can rattle off these names as venues of spectacular games and top-notch musical performances. What is behind those names? Naming rights transactions, which are increasingly popular thanks to their unique intersection of advertising, promotional opportunities, and headline-grabbing financial terms.

Each naming rights agreement can be thought of as a sponsorship transaction, with the added element of naming. Depending on the magnitude of the transaction, a naming rights agreement will include a wide variety of marketing elements, including sponsorships, ads, television spots, integrated technology and other promotions. All of these elements have brought naming rights transactions back into vogue for sports leagues and franchises after the market cooled down following the economic recession in 2008.

Naming rights agreements are usually the result of complex negotiation, and the number of issues discussed are plentiful. One of the most heavily discussed terms in a naming rights agreement is exclusivity. The partner (i.e., the party who is advertising) wants to expand its exclusivity rights as much as possible. Any dilution, confusion or presence of competitors reduces the value of their investment. However, the rights holder (i.e., the recipient of the advertising) wants to narrow the partner's exclusivity rights so as not to curtail other significant sponsorship opportunities and reduce their overall income. Additionally, both parties desire flexibility within the concept of exclusivity: the partner wants the ability to expand the scope of its exclusivity should its business change or expand and the rights holder wants to include exceptions that will allow it to take advantage of unique opportunities such as the Olympics, All-Star Games, sponsored teams, etc.

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