Duff & Phelps, the global advisor that protects, restores and maximises value, has released its latest Stadium Naming Rights study, revealing that the value of Premier League sponsorship deals increased by 5% from £135.5 million in 2018 to £142.0 million in 2019.
Calculating the potential value of the Premier League teams’ naming rights, Duff & Phelps found Manchester United’s Old Trafford stadium remains the most valuable proposition with a potential value of £26.75 million per season. In second place, Manchester City closed the gap to less than £5 million from c. £7 million in 2018, with their potential value reaching almost £22 million.
The report found that Manchester United was one of many premier league clubs not utilising naming rights revenue to their full potential, with only 30% of Premier League teams having a stadium sponsor compared to over 80% in the United States’ NFL. With most revenue generating metrics between the NFL and Premier League now broadly comparable, it seems Premier League clubs are missing an opportunity when it comes to stadium naming rights.
Currently only six Premier League teams have a stadium sponsor: AFC Bournemouth, Arsenal, Brighton & Hove Albion, Huddersfield Town, Leicester City and Manchester City. Of these, only Bournemouth and Huddersfield have stadium sponsors that are independent of their shirt sponsor and owner.
In comparison, 26 of the 32 teams in the NFL are capitalising on their branding potential, with the finance industry the largest industry sponsor, sponsoring 25% of named stadiums. The average stadium naming rights agreement measures £6.0 million per season whilst the NFL’s most valuable contract is between the Dallas Cowboys and AT&T, which is worth £14.3 million per season.
Michael Weaver, Managing Director and Head of UK Valuation Advisory at Duff & Phelps, said:
“Multimillion-pound Premier League shirt sponsorships have been signed, multimillion-pound sleeve sponsorships are being signed, and it is only a matter of time until multimillion-pound stadium sponsorship follows. Brands just have to be courageous enough to take the first step which will bring the market alive.
Few would have expected the level of growth we have seen in shirt sponsorship deals which is why there is a huge opportunity for sponsors to capture value in the stadium naming rights market in Europe. If a sponsor were to take out a long-term, fixed value naming rights contract with a good team this could shield them from paying significantly higher prices in the future as the market matures. An example of this can be seen with the NFL’s Los Angeles Chargers and Buffalo Bills. LA’s 20-year 1997 agreement was worth less than $1 million per season whilst Buffalo’s more recent 2016 agreement is worth $5 million per season. This has proven to be value accretive for the LA franchise.
Financial institutions have long realised the benefits that come with sponsorship which is more than a simple branding exercise. These sponsors have been able to become financial partners with the teams and can sell forecasting, player and stadium financing as well as gain access to supporters.
With the influencer market set to reach £7.5bn in 2020 and 67% of marketers planning to increase their influencer budgets over the next 12 months, brands could save significant sums of money if they can negotiate access to clubs and players’ social media platforms which are some of the most followed in the world. Not only would a brand have direct access to millions of potential consumers, but they could also get exposure to jurisdictions which may have previously been hard to access.”