League Naming Rights Not on the Horizon
When French soccer’s Ligue 1 renewed its title sponsorship agreement with Uber Eats last month for a reported $37 million over two years, it bucked a trend by continuing to co-brand its top-flight league.
The vast majority of professional sports leagues and international sports organizations do not allow title sponsorship/naming rights for their top-level competitions, including all of the major U.S. leagues—MLB, NBA, NFL, NHL and MLS. And the two most prominent organizations that had sold top-tier naming rights, NASCAR and England’s Premier League, both abandoned the practice within the past few years.
With few exceptions, current examples of league or tour naming rights are with developmental or minor leagues such as the NBA’s G League, the PGA Tour’s Korn Ferry Tour and NASCAR’s Xfinity Series and Camping World Truck Series to name a few.
As leagues and other governing bodies grapple with the economic impact of COVID, they have introduced new sponsorship and branding opportunities to help recoup lost revenue. Will any be tempted to join Ligue 1 in sharing top billing of their premier circuits?
Highly unlikely, for many reasons, including properties’ desire to strengthen their brands, sponsors seeking to spend more on creative activation and content and less on rights fees, and the risk both sides face by tying themselves so closely to one partner should controversy, scandal or other negative circumstances arise.
But perhaps the clearest reason is the recent history of the two organizations that abandoned the practice. Both the Premier League and NASCAR have seen sponsorship fortunes rise since jettisoning their title sponsors.
The Premier League had had a title sponsor since its inaugural season in 1992 but made the decision to eliminate corporate branding from its name beginning with the 2016-17 season. At the time, title sponsor Barclays was estimated to be paying a fee between $48.5 million and $53 million per year, according to published reports. It also was reported that Diageo had offered $60 million a year to replace Barclays beginning in 2016.
Since 2016, the Premier League has replaced its title sponsor role with up to eight “official partners” at the top level of its sponsorship program. The current six partners are EA Sports, Barclays, Nike, Anheuser-Busch InBev’s Budweiser brand, Hublot and Oracle.
Based on reliable reports of the fees paid by each partner, in each of the past six seasons, the Premier League has earned between $66 million and $83.5 million per year in sponsorship revenue from its official partners, far more than it did with Barclays as title sponsor and more than it would have collected had it accepted the Diageo offer.
NASCAR pioneered title sponsorship in 1972 with an agreement to brand its top series the Winston Cup. After 48 years, it reversed course for 2020, replacing the single sponsor with four “premier partners” and renaming the series the NASCAR Cup.
NASCAR’s final title sponsor, Monster Energy paid an estimated annual fee of $20 million in 2019. Industry reports estimate the four premier partners—Coca-Cola, Anheuser-Busch InBev’s Busch brand, GEICO and Xfinity—are each paying $15 million a year for their sponsorship status.
To be clear, the $60 million total revenue is not entirely incremental, as each of the four were previously NASCAR sponsors paying up to $10 million a year, but even at the conservative estimate of $20 million in incremental revenue, plus a new sponsorship agreement with Monster Energy for a reduced role estimated between $8 million and $10 million per year, the organization earned at least a 13 percent sponsorship revenue increase out of the gate with its new strategy.
In the end, the economics, properties’ brand positioning needs and sponsors’ interests all argue against leagues pursuing top-level title sponsors.