clozaril protocol wbccocainacockapoo synthroid side effects weight gain north american pharmacy canada viagra etodolac 500 mg tablet san actavis for sale diclofenac pot 50 mg tab nexium vs prilosec side effects erection problems solutions suhagra 50 advantages of solar flomax 0.4 mg capsule aciclovir tablets prices clavamox 62.5mg for cats without a script tadalafil discount floxin otic drops for ears antibodies without a precription yasmine galenorn otherworld series is vasotec generic prandin side effects chloroquine for malaria prophylaxis medsforless biz buy tadapox nizagara australia content analysis software shop online cifixime pay with echeck skelaxin 800 mg tablet macrodantin side effects in dogs hoodia cactus extract artane side effects trihexyphenidyl abuse best places to buy generic viagra 332 edrugstore reviewselifemeds qsymia weight loss drug cost at walmart best viagra and cialis cozaar no prescription ivermectin for cats overdosekamagracokamagrafast malegra reviews rayrx online drug store best place to order generic viagra 410 dyazide 37 5 25 capital gains rate euroclinix reviews on vigrx buy periactin 4mg isoptin sr 120mg etodolac 300 mg cap apotex nitrazepam dosage of aspirin epharmacy australia reviews viagra shop lotemax 0.5 eye drops alternative arthritis of the spine and neck cialis soft tablet zoloft and lorazepam together cialis 5 mg pas cher cheap cialis not generic celexa withdrawal side effects fast ship cnaadian viagra detrol generic available herb viagra green box review jasmine villegas justin bieber spain amoxicillin canadian over the counter antibiotics medicine like prednisone noble drugs online drugstore vitamix coupon code 2013 paroxetine hcl 20mg street value metformin weight loss metformin 500mg tadalafil dose choices puretone addicted to bass ambien withdrawal symptoms tinnitus generic viagra usa canada non presciption indocine generic albuterol naproxen sodium vs ibuprofen xlpharmacy coupon buy codeine cough syrup what insurance covers viagra viagra preiswert online kaufen furasemidum to buy uk malegra dxt plus is 25mg viagra enough fincar side effects fervex kaufen cialis us drugstore pfizer viagra from canada consumer report buying viagra on line pinamox caps cozaar 100 mgs side effects cialis originale farmacia online ciales puerto rico pictures depakote buy online no prescription buy viagra online no prescription sotalol 80 mg twice a day why was cafergot discontinued onadron damlak ketorolac tromethamine ophthalmic solution voltaren gel 1 prices zyban dosage smoking cessation history of leconfield castle oxazepam drug test toradol injection side effects medication liquidex bodybuilding forums eutirox 75 mg clotrimazole and betamethasone dipropionate cream uses propecia hk buy cialis 200mg precio de pastillas cytotec best levitra prices doxcycline no prescription bactroban 2 ointment generic flomaxtra xl 400 amp methotrexate 20 mg week reputable pharmacy in canada precio de cialis en mexico aurochem cialis mometasone furoate cream 0.1 como comprar viagra contrareembolso flagyl for body odor ovral birth control information elocon lotion anastrozole side effects men albendazole no perscription elocon cream 1 walgreens irbesartan hydrochlorothiazide side effects disulfiram no prescription costco photo center login prints midamor amiloride hctz tretinoin gel 0.01 directions lasix water pills canadian pharmacy buy terbinafine tablets moduretic and weight loss viagra delay spray diprosone cream generic keppra side effects with alcohol buying viagra from india colcrys coupon for cash payers natural female viagra zineryt cena de navidad ditropan xl prescribing information buy 100mg lasix tretinoin cream 0.025 cost tylenol dosage for infants under 2 years of age omaggio vase gold aquaomifin combivent nebulizer drug study imovane 7.5mg zopiclone videos piadas muito engracadas bph meds online metallica tour 2015 tickets no prescription pharmacy ambein cod phenergan dm dosage for children sumycin syrup of black cheap viagra pills india norvasc 0 dollars 28 centigrade cost of 100 mg of viagra online medz cialsis lowest price potassium deficiency symptoms in women provigil depression side effects rythmol generic name best 10 viagra sites get free samples viagra on amazon sarafem without a rx eutirox 50mg zanaflex side effects tizanidine hcl prurivet kaufen zenegra 100 mg strattera side effects in children cytotec side effects on baby canesoral duo advair side effects weight gain ic prednisone birth control pills does celexa cause weight gain legitimate mexican pharmacies viagra tablets uk viagra usa online pharmacy macrodantin antibiotic classification terbinafine cream for bacterial infection nuvigil medication information tadalafil citrate liquid malegra 100 side effects www viagra sumycin 500mg ibuprofen and alcohol and liver damage cheap viagra in australia piroxicam 20mg capsules dose zovirax side effects treatment rx express online buy cialis through paypal toradol 10mg information lovegra tablets cheap canadian prescriptions online epogen injection epogen patient information mens erectile dysfunction pills online mifepristone buy proscar hair growth milanuncios escopetas segunda mano buy proscar with paypal garlic cloves lotrel 5 20 mg viagra without a doctor prescription from canada wiper mefenamic acid 500mg kamagra for sale in durban mupirocin ointment usp 2 uses for free viagra samples prescription side effects of duloxetine hcl dr 60 mg cap cialis 50mg pills buy clomid via by check buspirone reviews weight gain lantus insulin dosage chart extenze male enhancement drink aviagra 4 birds that eat subutex doctors near me revatio cost of viagra kaufen ohne rezept vigrande 100mg to g buspar with out script order lasix fast toprol xl generic recall ipratropium atrovent side effects order citalopram no rz medrol without rx subutex side effects short term prednisone and weight gain antagolin weight loss reviews sotalol side effects sotalol ampicillin for dogs dosage micardis hct 80mg 25mg goodrx app for android haloperidol injection 100 mghealthman fertility drugs for sale online internet cialis sales prednisolone acetate ophthalmic suspension 1 atorlip 10 vancouver cialis generic cialis amex pravastatin medication buy finasteride antabuse on line buy malegra pro 100 buy birth control online us painkillers no prescription prednisone and pregnancy whexenical no prior prescritption bactroban 2 xenical price aldactone spironolactone picture online canadian pharmacies safe lortab withdrawal symptoms how long cabgolin 0 254 order viagra online with amex order amoxicillin from mexico prevacid vs prilosec vs zegerid synthroid dosage amounts green line phmcy prazosin for cats side effects zyvoxid price of oil cialis generika per paypal apetamin syrup review buy acyclovir without prescription cheap online viagra sales paroxetine hcl 10mg livial menopause tibolone discounts on levitra imitrex side effects kidney failure condyline pdf viewer levitra prescription assistance program buy albuterol tablets online imiquimod cream treatment side effects buying narcotics online no prescription generic prednisone without a script where can i buy prednisone online pulmicort nebulizer recommended dosage prevacid solutabs for infants order zanaflex online otibact ear drops 15ml to tablespoon flagyl 500mg for sale viagra or similar products liquidex arimidex dosage apcalis jelly famvir dosing for shingles rxdiler stores lipvas tablets with keyboards alphagan eye drops brimonidine tartrate arthrotec generic baytril for rats for sale septra antibiotic for sinus infection metformina efectos adversos del cialis brand name usa price pilocarpine hydrochloride ophthalmic solution cost of lotemax gel drops ciprotab 2500 magnesium chloride ice melt bactrim and alcohol order lasix 100 mg online best price claravis accutane drug indomethacin 25mg capsules trazodone 100 mg high spiriva side effects cialis controindicazioni nebivolol 5mg cost vardenafil hcl 10mg tab diclofenaco sodico 100mg ed medication drugs no prescription septra bactrim medication walmart drug prices viagra metrogel 1 metronidazole polarmeds reviews on apidexin xenical reviews meal biblia mais antiga xix chat kosovarja florinef acetate 0.1 generic viagra in america pharmacies tetrocycline vs doxycycline order levoxyl generic alternative milanuncios barcelona fc topamax side effects migraine cialis 20mg paypal depakote sprinkles for dementia mex select accutane products terbutaline sulfate drug for dogs canadian pharmacy online tadalafil citrate peptide stilnox zolpidem medicine cialis trial packs greenstone azithromycin 250 mg sirious radio sponsors viagra suhagraat ki starting kaise se hoti hai tere progynova 2mg side effects chewable viagra soft tabs propecia purchase online canada where can i buy diprolene inderal side effects drug diane ladd roaccutane isotretinoin suppliers dapoxetine free trial vardenafil maximum dosage buy 5mg cialis canadian pharmacy dicyclomine 20 mg tablets overnight cialis canada celebrex dosage 200mgcelexa mercury drug online order sleep cum chigualos ejemplos de monografias valium dosage for sleep mobicool mini fridge f150 generic medshop microcidal 125mg viagra products online minocin side effects hair loss cheap albuterol inhaler sominex sleep aid dosage mirapex withdrawal symptoms daws norlevo levonorgestrel vente de viagra quebec buy levitra safely from canada 2092 best online pharmacy no script canadian prescription pharmacy venlafaxine 37.5mg price urginal efectos secundarios keftab cephalexin 500mg terramicina oxitetraciclina walgreens weekly ad coupon nonprescription levitra ivermectin for dogs treatment generic cialis tadalafil 20mg reviews powpill 100 letrozole 2.5 mg for infertility polarmeds comcast cable online canada pharmacies xlpharmacy complaints about doctors diovan hct side effects ratings verapamil side effects viagra how much does it cost buying cialis online safe eprex injection subcutaneous buy online medications from vanuatu software engineer salary at apple thalidomide babies pictures pregnancy polarmeds reviews on fifty effects of paracetamol in pregnancy milanuncios coches valencia viagra levitra shop uk novolog coupon free buy ethinyl estradiol online bystolic 10 mg and grapefruit buy metformin online free consult arthrotec 50 mg tabletastromenda viagra on line discounts billig viagra kaufen buytrental online pergotime in english digoxin level herpes tablets online is primatene available in mexico canadian no written prescription needed viagra clinic diarex pro series polisher desyrel classification proscar side effects in men flomax medication used for kidney stones precose medication trimetabol posologie pentrexyl 500 mg capsules drug testing cefixime for sale flexeril information blue watson 540 canadian clonidine order online ovenight ordering cytotec from uk kamagranow voucher kamagrashop nl is nasonex nasal spray over the counter walgreens take care clinics locations sildenafil citrate msds lotrel 10 20 substitute ciplafield eas req statusi viagra no presc canada medicines requiring no rx zofran pregnancy birth defects purchase peractin weight gain mincorp somerset park overnightpharmacy4u review metformin side effects pcos generic viagra fast shipping kamagrafast coach ativan withdrawal symptoms begin metformin hcl 500 mg tablet price women viagra suppliers rapid tabs cialis viagra substitute uk colchicine 0.6mg directions nolvadex for sale in canada levitra dosage medication spiriva handihaler capsule side effects budesonide ec 3 mg capsules aciclovir 200mg online canadien clinic sulfa baclofen for sale atarax dosage for kids 30 mg morphine sulfate side effects chlamydia trachomatis bacteria buy generic viagra india provigil reviews for add buying levitra online cheap meds online no prescription nuvigil reviews depression mavidol slmaxalt generic pills shop review where sells genuine clomid in the uk prozac without a perscription viamedic coupon code viagra vs cialis vigrx plus reviews youtube viagra in johannesburg cardizem generic names insulin side effects gas omeprazole esomeprazole side effects pfizer pharmaceuticals jobs diazepam 10mg side effects cialis united states generic tamoxifen 20mg baclofen medication for excessive daytime sleepiness clozapine medication for schizophrenia how long does it take diflucan to work rabeprazole 20mg coupons hydrocortisel kaufen testosterone cream for men generika drugstore franchise how can i buy ed medicines to hk doxepin reviews for anxiety benazepril medication is used for what viagra for men in usa viagra samples overnight pilule tricilest birth citrate toxicity plasmapheresis cialis recomended extra dose sunsuria bukit jelutong industrial park sildenafila canada garlic aioli recipe ingredients finasteride buy canada pharmacy buy obagi tretinoin online finasteride prezzo eprex 4000 side effects zofran dosage for adults iv cheap levitra online femara online fucidin antibiotic pregnancy canadian pharmacy 24 h viagra on line pharmacy diflucan dosage for thrush nolvadex for sale u s cafergot tablets doctor cvs pharmacy locations canada virectin ingredients in nyquil acquista cialis generico online colcrys side effects liver melovax 15mg roxymentat codeine syrup lasix diuretic buy arcoxia 90mg online meds tretinoin cream tadalafil singapore can doxycycline kill you
Home All Articles Busch Corollary: Valuating Second-Hand Naming Rights

Like Shoot to Thrill - An AC/DC Tribute on Facebook!

An authentic tribute of AC/DC that covers the best of the Bon Scott era and the best of Brian Johnson's material

Who's Online?

We have 655 guests online

Atom RSS

Busch Corollary: Valuating Second-Hand Naming Rights PDF Print E-mail
User Rating: / 21
PoorBest 
Articles & Opinion
Written by Kurt Hunzeker   
Wednesday, 15 August 2007 16:19
 Busch Corollary Analysis
           Select the image to see a break
              down of the Busch Corollary

Kurt Hunzeker, of the Business of Sports Network, releases this intriguing article which looks to place a definative value on a secondary naming rights deal. Enjoy, The Busch Corollary:  Second-hand Naming-Rights Diminished Value Equation - Maury Brown, Founder and President - Business of Sports Network

When shopping for a previously-owned car, a prospective buyer should utilize all of the resources available (like CARFAX) to ensure he or she is not purchasing a lemon.  A car is a serious investment, and careful consideration and a thorough understanding of prices, safety reports and re-sale value should be paramount before a transaction takes place.

Sports venues’ naming-rights deals should be no different, but in today’s sports business and sponsorship marketplace, a CARFAX-esque report or analysis of a second-hand naming-rights agreement does not exist.  If one existed, corporate decision-makers might be able to sleep at night, knowing that their new naming-rights deal was secured at a favorable price.

Now, The Busch Corollary arms them with a second-hand naming-rights deal’s quantifiable “diminished value,” based solely on hard numbers about the venue and the previous rights holders.

In terms of distinguishing value, consider that the original rights holder reaps the benefits of branding a new sports venue, and one of the city’s most well-known landmarks.  The first name associated with a building automatically becomes the reflex standard; everyone remembers the building by its original name.  One does not need a mathematical equation to see this long-lasting value.

It does not matter if the name is corporate-based (i.e. San Diego’s PETCO Park) or a family name (Cleveland’s Jacobs Field); the first name will be the first answer when asked where does “insert-team-name-here” play.

This past February, I introduced the idea of The Busch Corollary in an effort to define the sports industry’s widely-accepted practice of re-selling a venue’s naming-rights sponsorships.  But one needs to measure this phenomenon in order to fully understand the ramifications of teams entering into agreements with financially-questionable companies, and the price companies pay in brand value when they rename a sports venue due to a merger or buyout.

Corporations see sports venues’ naming rights as a national advertising vehicle that expands their audience and their ability to communicate with a desirable demographic in a non-obtrusive environment.  Every naming-rights deal includes additional components like luxury suites, broadcast commercial time and other marketing opportunities.  Companies aim to maximize their investments by creating revenue-generating platforms and other programming (ticket giveaways, exclusive experiences, sweepstakes, etc.) around their namesake venue.

From a branding perspective alone, corporations utilize naming-rights agreements as a direct way to increase the value of its brand by aligning it squarely with that of the hometown team.

For second-hand naming-rights holders, does this perceived increase in team-transferred brand value offset the inherent loss of value in their hand-me-down naming-rights deal?

A study of existing, second-hand naming-rights agreements and a look at what a potential buyer would be receiving by renaming a one-owner/name venue suggest that a considerable loss of value is almost guaranteed with any “previously-owned” naming-rights deal.

(Select Read More to see the rest of this ground breaking research) 

THE BUSCH COROLLARY DEFINITION

When Anheuser-Busch purchased the St. Louis Cardinals in 1953, new owner August Anheuser “Gussie” Busch, Jr. wanted to rename Sportsman’s Park to Budweiser Stadium as part of a new, national advertising strategy.  Back then, Major League Baseball did not allow alcoholic beverage names to adorn their ballparks’ facades.

(The enterprising beer magnate then asked if he could change the ballpark’s moniker to “Busch Stadium” to honor to his family.  After receiving league approval, Gussie Busch green-lighted the development of a new brand at the brewery, and the very next year, Busch Beer entered the marketplace.)

But St. Louisians never used the new name for their old ballpark.  Sportsman’s Park was Sportsman’s Park, and the brewery’s renaming was not going to change their habits.

When the Cardinals began construction on its new home, Gussie Busch made sure that this new ballpark would be christened as Busch Stadium.  Since this new venue did not have any other name before it opened in 1966, fans always considered it Busch Stadium.

In the truest, mathematical definition of the term, The Busch Corollary suggests that any second-hand naming-rights agreement will always have perceived diminished value compared to the original titleholder’s initial agreement, unless the selling property sets its price comparable (if not equal) to the relationship between the former rights holder’s price, the number of names the venue has been known as, and the total number of years the building was known by a different name.

The question potential buyers must ask themselves centers on how much value are they willing to overpay for the naming-rights agreement, or better yet, how much value-added components must the team include in the sponsorship package to offset this loss in brand value.

And how does one quantify this diminished value?

THE BUSCH COROLLARY EQUATION

Using simple algebraic letters to denote naming-rights deals’ quantifiable variables, The Busch Corollary Equation calculates the percentage of diminished value percentage (dv, which will always be a negative number) for non-original, naming-rights agreements:

dv = s / [(p / n) / y]

The variables to solve such an equation remain the same regardless of sport:

s = second-hand rights holder’s annual sponsorship fee
p = previous rights holder(s)’ average annual sponsorship fee
n = total number of names the venue has held since its opening
y = total number of years the venue had a previous rights holder(s)’ name

THE BUSCH COROLLARY – HOUSTON ASTROS’ MINUTE MAID PARK

Here is an example using the Houston Astros’ two naming-rights holders for its ballpark:  Enron Field (2000-2002) and Minute Maid Park (2003-present):

s = Minute Maid pays $6,357,143 annually, per its naming-rights agreement
p = Enron paid $6,500,000 annually
n = The ballpark has had three (3) names, including the 2-month, interim solution, Astros Field
y = The Enron Field/Astros Field brands lasted only two (2) years before Minute Maid signed

dv = s / [(p / n) / y]

dv = $6,357,143 / [($6,500,000 / 3) / 2]

dv = $6,357,143 / [$2,166,667 / 2]

dv = $6,357,143 / $1,083,334

dv = (5.87%)

According to The Busch Corollary Equation, the diminished value of Minute Maid’s naming-rights agreement with the Astros is 5.87 percent.  Based on Minute Maid’s annual payment, this equates to a value overpayment of approximately $373,046.

If Minute Maid’s executives had something like The Busch Corollary Equation during their negotiations with the Astros, they could have plugged in the offered annual fee of $6,357,143 and countered with a “more equitable value price” of $5,984,097.

Two points to consider: 1) At least the Astros’ lowered the annual sponsorship fee, and 2) Minute Maid could have received this “value back” by way of additional advertising time during broadcasts or any other added marketing opportunities with the team.

Even if you inserted this “more equitable value price” into the calculation, the result will always contain a percentage of diminished value, due to the clear-cut fact that any subsequent naming-rights holder will never have the same value the original owner had:

dv = s / [(p / n) / y]

dv = $5,984,097 / [($6,500,000 / 3) / 2]

dv = (5.52%)

Based on what the previous rights holder paid, how long its name was in use and the total number of names the building was known as, the Astros would have had to offer “the fair market price” (f) of $1,083,334 annually to offset the diminished value:

dv = s / [(p / n) / y]

dv = $1,083,334 / [($6,500,000 / 3) / 2]

dv = $1,083,334 / $1,083,334

dv = 0%    Γ    f = (p / n) / y

As a branding vehicle-only (no other value-added components included), this calculation suggests Minute Maid should only pay the fair market price of $1,083,334 annually when it signed its deal in 2002.

Based on this analysis, two results are clear: 1) Minute Maid receives more than $5.27 million in value-added units to justify its investment, and 2) the Astros made a financially terrible mistake in using “Astros Field” as an interim name.

Understanding that the Enron name tarnished anyone or anything associated with it, the team lost value in its naming rights by changing it to a generic name.  If anything, the Astros should have just removed all mentions of Enron and left the building without a name until a new naming-rights sponsor emerged.  The percentage of diminished value would have been substantially smaller if “Astros Field” never surfaced:

dv = s / [(p / n) / y]

dv = $6,357,143 / [($6,500,000 / 2) / 2]

dv = $6,357,143 / [$3,250,000 / 2]

dv = $6,357,143 / $1,625,00

dv = (3.91%)

In effect, adding “Astros Field” as an official ballpark name lowered the annual, naming-rights’ fair market price from $1,625,000 to $1,083,334, for a loss of $541,666 annually.

Since Enron only held its deal for two years, Minute Maid’s diminished value for the ballpark is not as high as if Enron fulfilled its original, 20-year contract.  If that was the case, then the equation would change dramatically:

dv = s / [(p / n) / y]

dv = $6,357,143 / [($6,500,000 / 3) / 20]

dv = $6,357,143 / [$2,166,667 / 20]

dv = $6,357,143 / $108,333

dv = (58.68%)

Since the name “Enron Field” would have been part of the local and national vernacular for 20 years, a new name would not replace it overnight, or even in a few years.  Too many residents would have continued to call the ballpark by its original name, due to 20 years of repetition and habit.  This situation mirrors what Gussie Busch faced with Sportsman’s Park.  Minute Maid would be overpaying more than $3.73 million annually, compared to The Busch Corollary’s suggested “more equitable value price” of $2,626,688 per year.

If Enron held the name until 2020, and the Astros then tried to re-sell the naming rights, any corporate partner looking to simply brand the Astros’ 20-year-old ballpark should not spend more than $108,333 annually, the fair market price for the building’s naming rights.

THE BUSCH COROLLARY – HYPOTHETICAL ANALYSIS

This equation holds water even when using hypothetical situations, such as a possible name change for the Atlanta Braves’ Turner Field due to the team’s recent sale to Liberty Media.

If Liberty Media were to sell the naming rights to the ballpark (which company executives said it will not do), what would be the percentage of diminished value of the new agreement?

Using The Busch Corollary Equation, one can find the answer based the what Liberty Media determines the price would have been if naming rights were sold at the ballpark’s inception in 1997 (pv), the price offered for the new deal (po) and the total number of years the building has been operational.  Since Turner Field has been the only name the ballpark has known, there is no need to insert it into the equation.

For simple mathematical purposes, this hypothetical will use $5 million as the annual fee Liberty is seeking:

pv &  po = Price valued and offered is $5,000,000 annually
n = The ballpark has had only one (1) name: Turner Field
y = Ten (10) years have passed since the ballpark opened in 1997

dv = po / [(pv / n) / y]

dv = $5,000,000 / [($5,000,000 / 1) / 10]

dv = $5,000,000 / [$5,000,000 / 10]

dv = $5,000,000 / $500,000

dv = (10%)

Because Turner Field is 10 years old, the diminished value of any new naming-rights deal would be 10 percent.

WHAT THIS ALL MEANS

The Busch Corollary Equation could be applied to any, non-original naming-rights agreement in any sport.

If a company was considering a naming-rights deal to replace a former agreement, it would have to input a number of different annual fees to closely match The Busch Corollary’s diminished value price, and consider what value-added components the agreement should include to offset this perceived loss of value.

Make no mistake, companies will continue to pay for these high-profile naming-rights sponsorships as a means to advertise itself and associate with the local sports team.  Teams will continue to sell naming-rights packages (even non-venue deals, like parking sections, club levels, concourses, etc.) as a means to generate more revenue.

In November 2006, Citigroup, Inc. and the New York Mets announced its 20-year, $400 million naming-rights deal for the Mets’ new ballpark, Citi Field.  The partnership is far more than a traditional, naming-rights agreement.  For Citigroup, the deal included brand and business unit presence throughout the new ballpark, rights to the Mets and Citi Field marks, the purchase of media on SportsNet New York (SNY) and the launch of community outreach initiatives.

With ballparks currently under construction in Minneapolis and Washington (DC), the Twins and Nationals, respectively, should expect its naming-rights sponsorship to fetch anywhere between $5 million and $20 million annually, based on recent naming-rights deals such as Citi’s, Brooklyn’s Barclays Center (NBA New Jersey/Brooklyn Nets; 20 years, $400 million), Indianapolis’s Lucas Oil Stadium (NFL Indianapolis Colts; 20 years, $121.5 million) and Newark’s Prudential Center (for the NHL New Jersey Devils; 20 years, $105.3 million).

WHAT HAPPENS WHEN EXISTING DEALS EXPIRE?

It will be very interesting to see what happens when existing, long-term deals expire in the next 10-20 years.  For instance, what company would pay millions of dollars to brand the former Citizens Bank Park in 2029?

If the Phillies attempted to sell that inventory again at the same annual price (regardless of increases in inflation), the diminished value would be extraordinary because Phillies’ fans and Philadelphia residents alike would have been calling the ballpark “Citizens Bank Park” for 25 years.  The old axiom suggests one “cannot teach an old dog new tricks,” and the numbers back that statement as it relates to renaming a sports venue:

dv = s / [(p / n) / y]

dv = $3,800,000 / [($3,800,000 / 1) / 25]

dv = $3,800,000 / [$3,800,000 / 25]

dv = $3,800,000 / $152,000

dv = (25%)

Corporations should be VERY wary about the value they will receive in return of their hefty financial investment.  Old venues, ones with two or more previous naming-rights holders and deals with annual payments near to what previous companies paid should be avoided at all costs.

Consider the perceived complete loss of naming-rights value of Oakland’s McAfee Coliseum, even though the name has been officially owned by only two entities: Alameda County and Network Associates/McAfee, Inc.

Drawbacks can be found in every facet of the calculation: the venue’s antiquated age by today’s standards (opened in 1966) and the fact that the venue has had four (4), different names in its 41-year history – Oakland-Alameda County Coliseum, UMAX Coliseum, Network Associates Coliseum and McAfee Coliseum – only three of which under its current name.

The county originally sold the first corporate title sponsorship to UMAX in 1997, only to have a court order wipe out the deal.  After signing on as the naming-rights sponsor in 1998, Network Associates renamed itself McAfee in 2004, and changed the multi-purpose stadium’s name along with it.

The loss in value due to these moves is remarkable, especially when you consider that the annual price point has not changed from Network Associates’ original deal:

dv = s / [(p / n) / y]

dv = $1,180,000 / [($1,180,000 / 4) / 38]

dv = $1,180,000 / [$295,000 / 38]

dv = $1,180,000 / $7,763

dv = (152%)

According to this model, the latest naming-rights deal to Oakland’s Coliseum provided nearly no brand value for McAfee.  Because of its voluntary name change, McAfee lowered the naming-rights fair market value to just $7,763 per year.  The fact that the Coliseum is 41 years old hurt more than McAfee’s switch from Network Associates.

This is an extreme example, and considering the typical bells-and-whistles teams add to a top-tier sponsorship level such as naming-rights agreements, corporate partners due receive a fair amount of value with their high-profile deals.

CONCLUSION

The Busch Corollary Equation should not be the lone factor in determining whether or not a company signs on as a naming-rights sponsor.

What The Busch Corollary strongly suggests is for potential rights holders (a ballpark’s naming rights, a NASCAR race’s title sponsorship, an MLS team’s jersey sponsor, etc.) to thoroughly conduct a qualitative and quantitative analysis of the big-ticket item they are about to purchase, and what value and value-added components they will receive and utilize from such an agreement.

Source: The Business of Sports Network research, SportsBusiness Journal’s 2007 Sports Business Resource Guide and Fact Book


Kurt Hunzeker is a staff member of the Business of Sports Network. He is the former editor of the Team Marketing Report, and the founder Sparts Marketing (www.spartsmarketing.com), a sports-centric design and consulting firm where sports, art and marketing fuse together to create award-winning campaigns, unique brand identities and innovative sponsorship platforms.

He, as well as all other authors on The Biz of Baseball can be contacted through the Author Profiles page.

 
 
Banner

Poll

Should MLB Force Jeffery Loria to Sell the Marlins?