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Duff & Phelps, the global advisor that protects, restores and maximizes value for clients, has released its latest Stadium Naming Rights Study, revealing that the value of Premier League sponsorship deals increased by nearly 5% from €154.3 million in 2018 to €161.7 million in 2019. The report found that clubs are not utilizing 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.
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 €30.5 million per season. In second place, Manchester City closed the gap to less than €5.7 million from c. €8 million in 2018, with their potential value reaching €25 million.
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.
Despite Manchester City’s efforts to catch Manchester United, the biggest gainers are Liverpool, whose naming rights estimate has risen over 50 % to €19.2 million. This can be attributed to their Champions League final efforts last season and strong league performance this season. Huddersfield’s confirmed relegation has caused their future naming rights value to fall by more than 30% to €228,000, whilst Wolverhampton Wanderers’ impressive performance this season has proved valuable. In total, Manchester United, Manchester City, Tottenham Hotspur, Liverpool, Chelsea and Arsenal cemented their dominance with 82% of the total value, an increase of 5 percentage points from 77% in 2018.
In comparison, 26 of the 32 teams in the NFL are capitalizing on their branding potential, with the finance industry the largest industry sponsor, sponsoring 25% of named stadiums. The average stadium naming rights agreement measures €6.8 million per season whilst the NFL’s most valuable contract is between the Dallas Cowboys and AT&T, which is worth €16.3 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 realized 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.”
Niall Cribben, Head of Duff & Phelps Ireland’s Valuation Advisory practice said: “While Irish corporates take advantage of branding opportunities through pitch-side advertising and jersey sponsorship, stadium naming rights as a commercial strategy is still very much in its infancy in Ireland. While there are a few notable exceptions, such as the AVIVA stadium, Kingspan stadium and Irish Independent Park, businesses in Ireland have yet to tap into high-level sponsorship agreements that can add real value to their investment. There is a real opportunity for Irish corporates to explore stronger commercial agreements and realize the potential returns of a strong partnership that reaches beyond branding.”
Notes to Editors
The research was conducted in Q1 2019. The valuation metric includes shirt sponsor and technical partner values, social media followers, tv rights and current naming values in addition to transfer spend and team performance over the past three seasons to calculate Premier League naming rights valuations.
Limitations of the Study
The analysis and estimates presented in this study are based on extensive research on secondary sources of information. We have not undertaken any independent verification or carried out any due diligence on the data used or considered, nor have we verified its factual accuracy in the current context.
The conclusions provided in this study shall not be construed as marketing advice and the valuations provided in the study shall not be used for any other purpose other than general research and media consumption. Duff & Phelps and its affiliates expressly disclaim all liability for any loss or damage of whatever kind which may arise from any person acting on any information and opinions or analyses relating to the valuations contained in this study.
The valuation of intangible assets is not a precise science and the conclusions arrived at in many cases will of necessity be subjective and dependent on the exercise of individual judgment. There is therefore no indisputable single value and we normally express our opinion on the value as falling within a likely range. Others may place a different value on the various rights.
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Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, investigations, disputes, cyber security, compliance and regulatory matters, and other governance-related issues. We work with clients across diverse sectors, mitigating risk to assets, operations and people. With Kroll, a division of Duff & Phelps since 2018, our firm has nearly 3,500 professionals in 28 countries around the world. For more information, visit www.duffandphelps.com