State Farm will be the new naming rights sponsor of the venue formerly known as Phillips Arena (to be known as State Farm Arena) after agreeing to a 20-year $175 million pact with the Atlanta Hawks. While the building is 20 years old, it’s undergone nearly $200 million in renovations over the last 2 years. News of the deal comes just a month after the Bucks announced a 25-year $100 million agreement with Wisconsin-headquartered Fiserv for their new downtown arena (Fiserv Forum) set to open this fall. The Toronto Maple Leafs and Raptors maintain the largest naming rights deal in all of sports, Scotiabank is paying +/-$640 million over 20 years to put their name on Scotiabank Arena.
Howie Long-Short: Considering that Phillips Arena is among the busiest arenas in the country and State Farm paid less than $9 million/year for the rights, some will argue the insurance company made a great deal. Those opposed to the deal will point out that just 3 companies (not including Scotiabank) pay more to put their name on an NBA building; Chase (Warriors), Barclays (Nets) and American Airlines (Heat).
It’s worth noting that Phillips, the electronics company, agreed to pay $185 million for the right to put their name on the Hawks facility back in 1999; the expiring pact would also rank as the 5th largest deal in the league… 2 decades later!
State Farm is mutal company owned by the policy-holders. Fiserv (FISV) on the other hand is publicly traded. The B2B company has a $32.7 billion market cap, so a $100 million investment in consumer awareness certainly won’t put a dent into their books. The fin-tech company has expanded its product portfolio and enhanced its digital offerings on the back of series of strategic acquisitions. Shares are up +21% YTD compared to the S&P, which is +8%.
Fan Marino: When stadium naming rights deals come up those opposed will point to failed partnerships like the Astros and Enron, but Nick Fullerton, a financial trader and the president of SportsETFs (ProSports Sponsors Index) says those are exceptions to the rule.
Nick: Historically, companies who enter into stadium naming rights deals have seen strong stock performance which can partially be attributed to the brand recognition and benefit system a company receives from these deals. People erroneously remember some of the irrational exuberance of the dot come era deals when it comes to naming rights which is definitely not the case. Naming rights work.”
For those who missed it, we recently wrote about the dramatic rise in the value of naming rights deals across the college football landscape. You can read the piece here, or watch the video version here!
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