Stadium rights deals in Africa: Telecoms companies outspend everyone else
VENTURES AFRICA – One of the ways through which sports entities increase their profit margin and generate revenue is through the sale of naming rights to the stadiums and arenas. According to a report by Repucom, the growth in that sector of the sports business has been driven, in the last few years, by telecommunications companies who have spent more than any other company on such sponsorship deals.
In the United States and in Europe, across sports such as football, basketball, baseball and hockey, stadium naming rights have evolved to be become lucrative revenue generation streams for sports teams with companies spending as much as $550 million on stadium rights deals. In the last three years, the investment in naming rights of sports arenas and stadiums has grown by 21 percent globally.
However, telecommunications companies, who have outspent everyone else, have increased their investment by 68% in the United States and by 266 percent in Europe over the last three years.
At the start of 2012, telecommunications firms spent only $29.2 million on stadium rights deals but have increased that spend to $49.2 million by 2015.
Owing to the sustained monetization of and multiplicity of sports in America, the United States still enjoys more investment in stadium rights deals than Europe where the $22.3 million spent by telecommunications firms on stadium rights deals in 2015 is less than the amount spent on such deals in America in 2012. One of the big players in the United States is AT&T with a naming rights deal for Dallas Cowboys’ home stadium which will see the telecom giants pay $400 million over 20 years with an option to extend for a further ten years.
In total, of the total $552 million invested in stadium sponsorship in the last three years, telecom firms account for about $64 million.
Strategically, it makes excellent marketing and business sense for telecoms companies to strike such deals and then attempt to leverage them by providing solutions to fans’ perennial complaints of poor phone signals and lack of connectivity in stadiums and sports arenas.
Glenn Lovett, President of Global Strategy at Repucom echoed these sentiments. “More and more telecommunication service providers are using naming rights partnerships with venues to secure their mobile connection solutions as a technology showcase,” he said. “As the demand grows from fans to be connected to ever quicker networks, so too will the investment from telecommunication companies as they work to ensure they’re in front of this audience. Something stadium owners and specifically telecommunication companies should be looking at even more closely in the coming years,” he added.
One of such examples has seen telecommunications company EE and Wembley strike a deal which will ‘make Wembley the most connected stadium in the world’ by establishing Wi-Fi and creating a mobile app. Since 2014, Wembley has been referred to as ‘Wembley Stadium connected by EE’.
Stadium rights deals have also begun to grow in Africa as Lions Rugby Union signed a five naming rights deal with Emirates Airlines last year while Lafarge recently agreed a naming rights deal for Orlando Stadium- home to Orlando Pirates.