Naming rights for sports stadiums may generate millions in the US, but in Swansea, a town in Wales, a new stadium recently opened under the name Swansea New Stadium. The unimaginative name is meant only as a placeholder until a naming rights sponsor can be found, but the local consortium has been trying to find one for nearly a year. Fans will not be seeing David Beckham play there, but it is a state-of-the-art facility, touted as a venue able to reach 500,000 consumers each year. The asking price is £250,000 ($441,000) per year – a relative bargain compared with other naming rights agreements.

Naming rights have come of age in recent years. The first company to pay for stadium naming rights was the Schaefer Brewing Company of Foxboro, Massachusetts. In 1971, it paid $150,000 to name the city's new football stadium Schaefer Field. Two years later, Rich Products paid $1.5 million to name a new football stadium in Buffalo, New York. But it wasn't until the mid-1990s that the phenomenon really took off in the US. By the late 1990s and early 2000s, naming rights agreements involved staggering figures. At least 15 agreements – 13 in the US and two in Europe – exceed $100 million.

The US market alone is estimated at around $4 billion. The phenomenon appears to be gaining momentum on the international stage, not just with newly built stadiums, but also with sports facilities facing modernization – particularly in cities where there is not a lot of available space to build new facilities, such as London. With these re-builds comes the inevitable issue of financing. Naming rights are an obvious direction. Likewise, naming rights of stadiums give rise to naming rights of seating sections, hospitality suites, lobbies and entrance gates, all with increasingly complex means of ensuring brand exposure.

Competing interests

The number of stadiums that have attracted naming rights sponsors is particularly astonishing considering the competing interests involved.

A city may have, or be considering (as Vancouver is) a naming rights policy. Likewise, a city government may own the land on which the stadium is located, which it has leased to the team (club) or teams that play there, or perhaps to a company with an affiliation or other contractual agreement with the teams. The teams in turn belong to a sports league. More than one team means more than one league, with rules and regulations that often require league approval of a naming rights agreement prior to execution. The corporate sponsor of the naming rights may itself be a licensee or sublicensee of the brand at issue, which means that a company not party to the naming rights agreement may be the owner of the new stadium name and logo.

Each interested party has lawyers – some skilled in intellectual property law, others with land or real estate expertise and still others with corporate expertise. In addition to the lawyers, there are the sports marketers – those that are marketing the naming rights and found the proposed purchaser.

Public approval is essential and should not be underestimated. In one of the best-known naming rights debacles, a San Francisco city council member introduced a public referendum in 2004 – which the voters passed – precluding the city from selling or renewing the naming rights of the city's baseball stadium, historically known as Candlestick Park. The current naming rights to the ballpark expire in 2008. After Enron unexpectedly collapsed, leaving thousands of Houstonians unemployed, there was a public furore over the highly visible name, Enron Field, above the ballpark.

If the media – intentionally or out of habit – refer to the stadium by a name other than that of the sponsor, the brand exposure may be limited. Some naming rights agreements try to avoid this by requiring the team to encourage the media to refer to the stadium by its official name, or to condition the receipt of press passes on the same. The enforceability and wisdom of this is questionable. In Europe, the media purchases sports data that is provided for free in the US. Is it conceivable that a subtle form of media retaliation may exist when the media forgets the sponsor's name repeatedly?

Sentimental connection

Public and media buy-in is difficult when the stadium being named is not a new construction, but one already adored in the community or with historical significance, as was the case in San Francisco. In Swansea, some people are launching a crusade to rename the Swansea New Stadium as the White Rock Stadium, in reference to the copper works of the same name that historically existed on the site. As one website predicts: "All the time that passes [without a sponsor] means that the name of White Rock Stadium sticks more and more with the fans until such time that everyone will just call it that no matter who buys the naming rights. Which in turn could mean what most of us want – a sponsor's name with the words 'White Rock' remaining in the title."

Sponsors attempting to add their brand to an existing name to assuage public concerns have generally not fared well – hence Swansea's reluctance to adopt anything other than the generic Swansea New Stadium. Invesco Field at Mile High in Denver is known as Mile High to fans and the media. Friend's Provident St Mary's Stadium in the UK is known as St Mary's. In South Africa, a rugby football union sold the rights to Newlands Stadium to a company called Norwich, which renamed the stadium Norwich Park Newlands. Norwich was subsequently bought by Fedsure, which renamed the stadium Fedsure Stadium. When yet another company took over, it recognized the inevitable and let the name revert to what everyone had called it all along, Newlands.

This does not mean that the revenue streams associated with naming rights are not available for older stadiums. Fenway Park in Boston was constructed in 1912 and is the oldest ballpark still in active use in Major League Baseball in the US. Rather than selling the rights to re-name such a historic landmark, sponsors instead purchased rights to name prominent sections within the grounds. Fenway Park boasts the Crown Royal Club and the Volvo Hall of Fame Club. Budweiser has a big sign on top of the newly added right field roof section. CVS recently bought the naming rights to a family section in the left field stands, and high-tech giant EMC Corporation is paying to put its name on an exclusive new club planned as part of Fenway's expansion and renovation. Other stadiums with sentimental or historic names have followed suit.

More than a big sign

As the price of naming rights has grown over the years, so has the scope of what they cover. In Swansea, the city council is eager to advertise that the naming rights for sale include signage on the outside of the stadium, as well as advertising on the playing field, access to stadium hospitality and conference suites, a corporate box, complimentary tickets, billboard advertising and roadside signage.

What is offered in some deals though goes beyond that and appears limited only by the creativity of marketing departments. The agreement might allow for lighted roof signage for nighttime viewing by airplane passengers flying overhead; backdrops to press conferences; stage structure and curtains used in concerts or other events; uniforms of ushers, food service and other vendors; cups, plates, and napkins; team stationery, business cards, and press releases; the facility's website; and tickets for the events.

If a stadium requires a sponsor's services, it is often incorporated into the naming rights agreement, with the services agreement attached as a schedule. The SBC Center, named by SBC Communications in San Antonio, Texas, receives its telecommunication services from SBC, not from AT&T. Minute Maid (a subsidiary of Coca-Cola) has pouring rights at the Minute Maid Stadium – if you prefer Pepsi, you will be better served at the Pepsi Center in Denver. Fleet Bank handled the financing for the Fleet Center in Boston – its naming rights payments contributed towards reducing the facility's debt. New stadiums may become shared office space – as will be the case at Ricoh Stadium in the UK, which is intended to double as Ricoh's headquarters for strategic IT services.

Naming rights agreements often provide a retail component for the sponsor, whether through space in an on-site team shop, a complete retail space of its own, kiosks around the facility, or merchandise strategically placed around the facility's common areas. At the Toyota Center in Houston, fans have access to the latest Toyota models. At the Philips Arena in Atlanta, the consumer products display area is dubbed the Philips Experience, showcasing Philips' state-of-the-art products. If short on cash, fans at the Bank One Ballpark in Phoenix will find Bank One teller machines conveniently located throughout the facility. Many sponsors view these sorts of agreements as an integral part of their naming rights package.

However, to ensure that their brand is not lost in a sea of other sponsors' marks inside a stadium, naming rights sponsors often insist on language such as "prominent placement" or "dominant commercial impression" of their brand in the agreement. As teams throw more and more opportunities for interior brand exposure into the overall package, many of these opportunities are non-exclusive – which as a practical matter means that the definition of what constitutes an excluded competitor for the term of the agreement (often 20-30 years) is often the subject of intense negotiations. Would Apple Computer be deemed a competitor to Philips? Language specifying the parties' precise expectations is essential to avoid future disputes.

Location, location, location

Often a naming rights sponsor has ties to the city or region where the stadium is located. This is common in the US (Reliant in Houston, Heinz in Pittsburgh, Fleet in Boston, Coors in Denver) and other parts of the world. Volkswagen named the arena in Wolfsburg where its headquarters and largest manufacturing plant are based. Ajinomoto (a Japanese food and pharmaceuticals company) has an international presence in 23 countries, but it acquired naming rights for the stadium in Tokyo, where it has its headquarters. The Indian vehicle manufacturer Mahindra & Mahindra has its roots in Bombay, which is where you will find the Mahindra Stadium. Australia's leading telecommunications company, Telstra, has named two premier Australian stadiums. Even Nissan's agreement to rename the International Stadium in Yokohama, Japan, is presumably in anticipation of the Nissan headquarters moving from Tokyo to Yokohama in 2010. Companies see the acquisition of naming rights of local stadiums as a means of increasing local credibility and support from within a community.

The local affiliation may not be evident when the naming rights sponsor is not the owner of the mark to be exploited, but a licensee or sublicensee. If the term of the naming rights agreement is short, a representation and indemnity in the agreement might be sufficient, in particular if a copy of the licence agreement between the trade mark owner and the licensee sponsor is available. For longer terms, the better practice is to insist on a representation from the trade mark owner, and then condition the naming rights agreement on receipt of such a representation. However, the trade mark owner's interest is in controlling and protecting the corporate identity – which is occasionally at odds with the naming rights sponsor's goal of getting its money's worth from brand exposure.

Companies that are not based locally also use naming rights as a means of entering a market and gaining name recognition. Kyocera Mita, a leading Japanese document imaging company, has sponsored the Kyocera Arena, the first corporate sponsored stadium in Brazil. Before naming a stadium in North Carolina, the Swedish company Ericsson was hardly known in the southern US. After the agreement, its name recognition grew exponentially. Dubai-based airline, Emirates, recently sponsored Arsenal's new stadium in London. Foreign companies may be willing to pay higher fees in exchange for the instant name recognition provided by the naming rights of a high profile stadium.

Fields of dreams

International momentum has been helped along by the worldwide popularity of the World Cup and the Olympics, even though both are so-called no-signage events, meaning that much of the facility's signage will be covered or removed, sometimes to make way for signage of event sponsors.

The new construction and modernization of previously constructed facilities, and the incredible media exposure before, during and after the event could explain this. Since the 2000 Sydney Olympics, Australia has become rife with stadiums named for corporate sponsors. Telstra, Toyota and Vodafone have stadiums named by them. Japan, home of the World Cup in 2002 has seen three of its high profile stadiums named for corporate sponsors since then, by Nissan, Ajinomoto, and Yahoo!. Germany, which holds the 2006 World Cup, has few football stadiums without a sponsor name. AOL Arena in Hamburg and Allianz Arena in Munich are two of the newest, though the initial term of AOL's agreement is only six years in contrast to the 20-year term Allianz reportedly secured for €88 million ($105,000,000) – differences that highlight the wide spectrum of possibilities, even in the same country.

Swansea's efforts to secure a local company to sponsor the stadium may still meet with success, as many companies around the world have found. If the local crusade for naming the stadium White Rock grows, perhaps the best win-win solution would be for one of America's oldest beverage companies, White Rock Products, to secure not only the naming, but also the pouring, rights. Far- fetched? As the naming rights phenomena continues to grow internationally, the issues, the conflicts and the possibilities do too – along with the demand for good intellectual property lawyers.

Robin Lightner Maisashvili

Nina Smith

© Olswang 2005. Robin Lightner Maisashvili is a partner and Nina Smith a solicitor in the intellectual property department of Olswang. Although Robin was directly involved with some of the naming rights agreements referred to in the article, all information upon which the authors rely is widely available from public sources