Premier League reluctant to cash in on stadium naming rights

24 May 2019 Consultancy.uk

The renaming of football stadiums to cash in on corporate sponsors remains a contentious issue, and while it could enable clubs to post record revenues, it could also alienate the hordes of fans football relies upon to attract sponsors in the first place. A new study argues that the benefits are becoming hard for club owners to ignore, however, with millions of pounds up for grabs.

English football is home to some of the most iconic stadiums in the world of sport. Having housed some of the beautiful game’s most successful teams, legendary players and die-hard supporters for generations, just the mention of venues like Old Trafford, Anfield or Stamford Bridge can instantly raise the pulses of soccer fans. Now compare that to the Premier League’s cousins on the other side of the Atlantic.

MLS facilities include such hallowed names as the MAPFRE Stadium, Audi Field, and Dick’s Sporting Goods Park. Admittedly, the mention of these grounds, sponsored by automotive manufacturers, insurance providers or sports emporiums, does not command the same respect. In the cold, harsh reality of commercial competition, however, it commands something else, which may motivate the high and mighty of England’s elite teams to contemplate renaming: cash. And lots of it.

Premier League and NFL Revenue Distribution

According to a new study by consulting firm Duff & Phelps, football clubs are likely to increasingly court commercial partners for the rebranding of their stadiums, especially as they begin to run out of room on their players' shirts to cram on one more sponsor. In order to illustrate the potential of stadium naming rights, the consultancy drew on evidence from the far less popular, but far more financially successful world of American football.

Beyond the shores of the US, tossing a pig-skin about remains a distant second to going for a kick-about. Whether it likes it or not, the American brand of ‘football’ is unlikely to change the opinions of grassroots fans any time soon. What the National Football League fails to provide by way of global engagement, however, it more than makes up for in commercial viability.

A different league

Football boasts broadcasting rights in 212 territories across the world and over 5 billion people tuning into a live football match at least once per season, while a staggering 1.12 billion people watched the World Cup Final in 2018, the most ever recorded. These metrics make stark comparison with the meagre 100.7 million people who bothered to watch the Super Bowl in 2019, the lowest in a decade. Despite this waning popularity, however, the NFL’s franchises generated an average revenue of £310 million per team, the highest per team of any sport, which is higher than the Premier League’s average revenue of £238 million per team.

A significant portion of this difference is due to broadcasting rights – as the NFL has a monopoly over American football broadcasting. This means that while the English Premier League is seen in football as the sport’s most lucrative league in terms of televisual stakes, it pales in comparison to the NFL’s annual revenues totalling £6 billion in 2018. As a result, each NFL team receives £193 million per season from broadcasting rights. In comparison, total football revenues are shared amongst multiple leagues, both international and domestic, with the Premier League generating £2.4 billion of television revenue from Sky Sports, BT Sport and other agreements in 2018. Each Premier League team on average earned £121 million.

However, while there is a significant gap between the incomes of the Premier League and NFL with television revenues, Duff & Phelps found that this is not the sole source of the difference. When adjusted to take out broadcasting revenues, the researchers found the gap remained. In fact, the report determined the real difference is that American football is far more willing to commercialise its stadiums.

While Premier League teams are more than happy to plaster corporate messaging around their grounds, many stop short of renaming their homes to suit a single advertiser. Only 30% of Premier League teams have 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, the study claimed that Premier League clubs are missing an opportunity when it comes to stadium naming rights.

There does seem to be a trend toward changing this; however, it is most popular among teams willing to relocate to new home venues. Having been ‘at home’ under a single name will do a lot to dissuade clubs from rebranding their historic stadium. This was perhaps most vociferously illustrated by the fury with which Newcastle United fans reacted to plans from owner Mike Ashley to rename their beloved St. James’ Park as the ‘Sports Direct Arena’.

Eventually, payday loan company Wonga.com became Newcastle United's main commercial sponsor and purchased the stadium naming rights, restoring the ground to its original moniker. While this enabled Ashley and his executive team to avoid an embarrassing climb-down in the face of continued indignation, it should be noted that it was by no means a victory for those looking to ‘modernise’ English football with the valuing of commercialism over a club's history. Wonga.com is no longer the sponsor, and has in fact gone bust in the years since, yet the name has not been placed on the market anymore.

Total Premier League Stadium Naming Rights

Even as naming rights offer up a lucrative opportunity then, the St. James’ Park debacle has evidently made a number of owners wary of such a project. Bournemouth and Huddersfield are the only two teams in the research to have stadium sponsors for grounds from the last century. As a comparatively smaller club determined to move to a larger ground in the near future, the emotional pull of Bournemouth’s Vitality Stadium may have diminished enough to get away with it, while Huddersfield’s ground, established in 1994, is still relatively new, while John Smiths is a noted Yorkshire company, so is less of an ‘outsider’ to the club’s support.

Elsewhere, progress is slow in terms of naming rights. Still, the value of Premier League sponsorship deals has increased by 5% from £135.5 million in 2018 to £142 million in 2019. This change will largely come from the first two so-called Big Six Premier League teams to have relocated in the new Millennium: Manchester City and Arsenal. With Tottenham Hotspur having finally completed their rehousing operation late this season, it may well become the next club to do so.

Brighton & Hove Albion also added £1.3 million to club revenues by cashing in on its newly built ground, branding it the American Express Community Stadium, or colloquially, the Amex. Leicester City also reside in a recently built stadium, having relocated from Filbert Street in 2002. The club now brings in an additional £3.2 million with its naming deal for the King Power Stadium.

Slow growth

West Ham moved into the former Olympic Stadium from the Boleyn Ground in August 2016, and stand to make the most of any club beyond the Big Six from a naming rights deal. The club is understood to be keen to tap into the £5.55 million per year Duff & Phelps believes it could make; however, a succession of expensive courtships led nowhere, and for fear of splurging further funds on professional services firms to secure a sponsor, no discussions are currently taking place.

In terms of further potential growth, Duff & Phelps found Manchester United’s Old Trafford stadium remains the most valuable proposition with a potential value of £26.75 million per season. However, the club’s storied history in the self-styled Theatre of Dreams means renaming Old Trafford would be met with fierce resistance, and while the club’s other commercial outfits are in such rude health, this is likely to be seen by the club’s leadership as an entirely unnecessary scrap that is best avoided.

Similarly, Liverpool’s naming rights estimate has risen over 50 % to £16.90 million. While the value of the rights will again largely be determined by Anfield’s status as home to one of the world’s most successful teams, its rising stock must also be attributed to the club’s reaching two consecutive Champions League finals. Once again, however, this impressive performance means the Reds are doing well in their other financial wings, meaning a naming rights fiasco is something the club could gladly do without. Despite this, Michael Weaver, Managing Director and Head of UK Valuation Advisory at Duff & Phelps, remains confident things will change.

Weaver stated, “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… With the influencer market set to reach £7.5 billion in 2020 and 67% of marketers planning to increase their influencer budgets over the next 12 months, brands could also 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.”


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