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Stadium Naming Rights

A case study of the objectives for sponsoring a stadium and the impact on brand awareness

Written by Vicktor Andersson, Jens Karlsson

Paper category

Master Thesis

Subject

Sport and Nutrition

Year

2014

Abstract

Thesis: Stadium Naming Rights According to McCarthy and Irwin (2000), purchasing stadium naming rights as a form of sponsorship is the most cost-effective form. Generally speaking, sponsors pay an annual fee of US$2 million for naming rights. In addition, McCarthy and Irving (2000) pointed out that the main reason why companies buy facility naming rights is direct marketing opportunities and the generation of corporate goodwill from society. This is supported by research that claims that the purchase of facility naming rights is to provide public services and improve the market position of the sponsoring company. This is called a community citizen, and they mentioned that this is one of the five goals of why the company decided to purchase stadium naming rights. McCarthy and Irwin (2000) gave an example of Pepsi, which sponsored a stadium in Denver, Colorado. Pepsi's funds helped Denver obtain the franchise rights of the National Hockey League and later won the Stanley Cup. Pepsi's funding also helped Denver retain the National Basketball Association's franchise for the Denver Nuggets. Although Pepsi obtained the right to pour soft drinks in the arena through funding, the company also helped improve the quality of life in Denver by introducing the Colorado avalanche and keeping the Denver Nuggets behind, while ensuring their other companies such as Taco Bell, Pizza Hut and KFC have obtained exclusive service rights in the arena, which has generated more brand awareness (McCarthy and Owen, 2000). According to McCarthy and Irving (2000), one of the main advantages of buying stadium naming rights is the repeated use of the company name in all events held in the stadium. This can provide companies with marketing opportunities that they would not otherwise have. One example is the use of products on stage (ibid.). In addition, McCarthy and Irving (2000) presented Air Canada as an example of a company using its naming rights. Calgary SaddledomeArenato creates new business opportunities with the team currently renting the arena for the Calgary Flames. Both the team and its minor alliance affiliates use Air Canada as their transportation option. Another example is Enron, which signed an exclusive service and power contract with the Houston Astros, which brought the company more than $200 million in sponsorship revenue (ibid.). According to McCarthy and Irwin (2000), these examples prove that naming rights transactions provide sponsors with the best opportunities and a way of incremental business development, also known as extended sales opportunities. 2.6 Word of mouth According to Kimmel & Kitchen (2013) Word of mouth is the behavior of consumers generating or distributing marketing-related information to other consumers. As long as people participate in the conversation, word of mouth has always been part of the human conversation, and from previous research, it can be seen that positive word of mouth only occurs when the customer thinks he or she will get something out of it (ibid. ). There is a negative and a positive reputation. Although different studies have different conclusions on which ones have the greatest impact on customers, one belief is that if negative word of mouth comes from dissatisfied customers, it will attract more attention than positive word of mouth (Kimmel & Kitchen, 2013). 2.7 The first part of the conceptual framework is used to describe our research field and to better understand how and why sponsorship is used. In addition, the company can choose which activities to invest funds in. This is a review of the relevant literature we found in the field and will serve as the basis for our frame of reference. Not all documents will be used to answer our research questions. Some of the literature mentioned in the previous section is included to better understand the field of sponsorship and provide information about our decision to study this field. The most suitable literature for our research questions will be introduced below one by one, with sources, definitions and operational definitions. This shows the way we plan to use the literature to answer research questions. RQ1: What is the goal of sponsoring the stadium? The literature most suitable for answering research question 1 is Irwin and Asimakopoulos (1992) and their motion model sponsored proposal evaluation. As described in the theoretical chapter, this model is used for the company’s goal of evaluating sponsored content and reasons. This model was chosen because it has been used frequently in the past and has proven to be effective for this purpose (Greenhalgh and Greenwell, 2013). The table on the next page describes the differences from the model. Read Less