Is the Smart Money Betting on Success of FTX and Caesars Naming Rights?
Last week saw two blockbuster naming rights partnerships revealed. Miami-Dade County landed a 19-year, $135-million deal with cryptocurrency exchange FTX to succeed American Airlines as the title sponsor of the Miami Heat’s waterfront home, followed by Caesars Entertainment agreeing in principle with the New Orleans Saints to replace Mercedes-Benz as the naming rights sponsor of the Superdome in a deal reportedly worth about $11 million a year for the next 20 years.
Both deals have a lot going for them from the sponsors’ perspectives.
Although naming rights come at a high price and critics can rightfully point to some questionable “edifice complex” examples, FTX and Caesars are both in positions to take advantage of the benefits offered.
FTX is relatively unknown and is in an industry that needs to establish credibility and respect among the general public. The exposure generated by a marquee building associated with a storied franchise in a destination city fits perfectly with the company’s goal to build awareness.
The status conveyed by the deal is arguably even more important than the eyeballs. As notable sponsorship researcher T. Bettina Cornwell of the University of Oregon has written about her research on naming rights, “The deals signal to the marketplace about being concrete, real and substantial.” It’s not hard to imagine that those three attributes are exactly what anybody involved in cryptocurrency wants to convey.
Although its deal is by far the largest, FTX is in the recent company of other until-now obscure companies seeking the brand- and reputation-building benefits of a major sponsorship. MTX Group’s front-of-jersey deal with FC Dallas fits the mold, as do two fintech deals with Austin FC—Q2 as stadium naming rights partner and Netspend as sleeve sponsor.
All four of those companies appear to be following the “Who?” strategy of ROKiT, which began signing sponsorships a few years ago and inked its most recent deal with IndyCar’s AJ Foyt Racing last week.
The bigger speculation surrounding the Miami deal is whether FTX will be around to fulfill all of its contractual obligations or is it a bubble baby that will go the way of PSINet, the Internet service provider that went bust in 2001 and left the Baltimore Ravens holding the bag less than three years into a 20-year, $105.5 million deal for what is now M&T Bank Stadium.
One hopes the people who negotiated the deal for Miami-Dade County are students of sponsorship history and included plenty of protections in the agreement. It would be a real shame if it were to collapse, given that the county has earmarked its share of the revenue—approximately $90 million—for combating gun violence and poverty.
No such financial concerns exist in New Orleans, where a deep-pocketed gaming giant stepped up to offer more than double what Mercedes-Benz—which chose not to renew—was paying.
At a time when the NFL is embracing the juggernaut that is sports gambling and Caesars has planted its flag in the Big Easy with a planned $325 million renovation of its Harrah’s New Orleans casino (including a rebrand to Caesars), the stars were clearly aligned behind the naming of the iconic Superdome.
But if bottles are popping over the deal at Caesars HQ in Las Vegas, plenty more toasts are likely being raised in Daimler AG’s office in Stuttgart, where marketers have long waited for the day their brand would come off the building.
The inside story was conveyed to me by a still seething German exec a few years after the deal was signed in 2011.
Not surprisingly, the parent company known for fealty to precision engineering had a detailed sponsorship strategy that included a formal process for evaluating opportunities based on ability to meet specific objectives. Those steps were allegedly ignored by officials at the company’s U.S. operations, who did the deal as a favor to late Saints owner Tom Benson, a prominent Mercedes dealer in Louisiana and Texas.
“That sponsorship meets none of our criteria and would never have been approved if it had gone through proper channels,” the Daimler marketer said.
In contrast, the proper vetting was done as part of the decision to name Mercedes-Benz Stadium in Atlanta.