Scotiabank Buys Maple Leafs Naming Rights For Record $800M
Rich MLSE Empire Gets Richer
Anheuser-Busch was looking to raise awareness of beer when they tried to rename Sportsman’s Park to Budweiser Stadium in 1953. The president of the National League, Ford Frick, didn’t want a baseball venue named after an alcoholic beverage, so the brewery pulled an end around. President Frick let the company change the name to Busch Stadium, and Anheuser-Busch immediately developed a new beer product: Busch Bavarian Beer.
Since then, naming rights have focused on established products and services, and few major professional North American sports venues remain untouched by advertising dollars. Notable examples include Lambeau Field, Yankee Stadium and Fenway Park. Otherwise, stadiums and arenas earn revenue through venue name sales, collecting millions of dollars per year.
There was a brief lull in naming rights deals during the 2008 recession, and an explosion in new deals as the economy recovered. Air Canada paid $4 million per year since 1999, a fantastic deal considering the explosion in price. Scotiabank is pleased to pay $40 million per year, reflecting the sharp rise in perceived value of sports sponsorships.
Stadium And Arena Sponsorships Continue To Boom
MLSE now owns the record for this type of sponsorship, but new construction in Los Angeles and San Francisco could lead to bigger deals. Chase and the Golden State Warriors agreed to a 20-year deal, but haven’t announced the financial details.
The Los Angeles Rams are developing the world’s most expensive stadium, spending an estimated $2.6 billion to develop 300 acres into “NFL Disney World”. As these expensive new projects inch closer to completion, there’s a chance that companies will splash record amounts of advertising dollars on naming these modern marvels. If MLSE receives $40 million per year for their arena, it’s easy to imagine $50 million or more for sponsoring the newest stadium and arena in California.
Companies Want Millennial Attention
More than 70% of NBA, NFL, MLB and NHL teams play in venues sponsored by companies, a number that will continue to increase over the years. Businesses like Scotiabank, who want to differentiate themselves from the other major banks in Canada, have been snapping up high-profile sport rights to expose their brand to as many eyeballs as possible.
Sports demographics tend to skew towards younger crowds, including millennials, who will become customers in upcoming decades. For Scotiabank, scooping Maple Leafs naming rights fits into their hockey-heavy portfolio, which includes the Calgary Flames arena and 8,000 community teams across the country. Blanketing Canadian hockey with their brand will increase the odds of fans visiting branches or purchasing financial products.
A study at the University of Connecticut tracked stock prices and sports sponsorships, showing an increase of 0.51 percent for Monday night wins in the NFL. Losses didn’t result in a significant shift, showing a definite return for the average football sponsorship arrangement. Combined with the marketing value of naming a popular sports venue, it appears that Scotiabank and other large companies benefit more often from the millions they invest in naming rights.
Scotiabank’s Timing Couldn’t Be Better
The Toronto Maple Leafs have rebounded as a franchise, in position to compete for Toronto’s first Stanley Cup in five decades. The Toronto Raptors have earned new-found respect as an NBA franchise, uniting Canadian basketball fans under the “We The North” movement. Scotiabank will be the name on the arena as Toronto’s hockey and basketball teams peak. The ACC is the premiere entertainment venue in Toronto, making it the most valuable arena to name in Canada. No Canadian arena and city attracts as much attention as the Air Canada Centre.
Everybody loves a winner, and Scotiabank may become the sponsor for a Stanley Cup winning team in Toronto – the thirstiest sports city in North America. The Raptors have an outside chance to win too, another historic event which would increase the bank’s prestige. Scotiabank won’t reap the rewards immediately, but over the next two decades, there’s a good chance that hockey sponsorship will measurably improve the riches of this gigantic financial institution.
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