pros and cons of naming rightsThe Wall Street Journal reported that the first major sports naming rights deal took place in 1973 to the tune of $37.5 million. The locally based Rich Products bought the right to put their name on the stadium used by the Buffalo Bills. The deal took 13 months to iron out. Naming rights didn’t become popular until the 1990s and the cost of naming rights has increased considerably since the 1970s. According to the Atlanta Journal Constitution, the Atlanta Falcons named Mercedes-Benz as its partner for $1.4 billion. Naming rights have become a popular way for big corporations to raise brand awareness.

Gather Elite Status

Mega-billion dollar corporations and sport franchises aren’t the only ones who benefit from naming rights. Reuters reported that music mogul David Geffen gifted the New York Philharmonic $100 million to help with a renovation slated to begin in 2019. However, it will be named the David Geffen Hall to mark the 2015-2016 season. Geffen is no stranger to generous gifts and also gave $200 million to the UCLA School of Medicine that was renamed the David Geffen School of Medicine at UCLA. According to The New York Times, the gift and naming rights to the Philharmonic catapults Geffen into power broker status.

Ongoing Advertising

It’s difficult to pinpoint the ROI of putting your company name on a stadium and how that trickles down to profits. But brands do benefit in the continuous advertising and prestige. Stadium names are mentioned in press releases, on ads, in the newspaper and on the radio without the company spending an additional dime. Consider that a Super Bowl ad costs as much as $45 million. Meanwhile, the stadium hosting the Super Bowl has its name and logo prominently displayed while commentators continuously reference the name of the stadium. The same goes for annual race names for NASCAR, ranging from the serious Coca-Cola 600 and Ford EcoBoost 400 to the ridiculously named Duck Commander 500 and Spongebob Squarepants 400.

Keep in mind the astronomical fees of naming rights sometimes mean high turnover. When the Enron scandal made front-page headlines, Enron Field in Houston turned into Minute Maid Park instead. High turnover means fans can turn apathetic about calling it by the right name and instead resort to the nostalgia of its original name.

Associate with Victory

Aside from brand awareness and ongoing advertising, companies are also poised to rub shoulders with victory. The more a team wins and reaches epic highs, the more the stadium’s namesake benefits from those happy fans. On the flip side, there’s also a risk that negative news will also impact the brand name. Remember when the half-hour blackout at Super Bowl XLVII at the Mercedes-Benz Superdome? The chaos was ridiculed in the press and complaints were rampant across social media.

Sponsor or Name a Local Event

It may be out of reach for a small business, or even a successful one, to pony up a billion dollars to see its name illuminated at a local stadium. But there are ways to raise your brand’s public awareness without breaking the bank. Sponsor a little league team or an adult soccer club by purchasing uniforms or other fees to help the team. In return, ask that your name be put on their shirts or displayed at the stadium during a game.

Align your naming or sponsorship investment with opportunities to connect with your audience. For example, wine companies can look into opportunities to name a local horse race or sponsor classical music concerts. A landscaping business can sponsor a park bench near a garden to connect with outdoor enthusiasts. Wherever your name lands, remember to promote your new status as a naming benefactor.