United States: Sports Sponsorship, Naming Rights - Takeaways For Getting A Name In Lights

Last Updated: August 15 2019
Article by Matthew E. Eisler, Kathryn L. Raffensperger and Ryan M. Adrian

Potential sponsors of major sports events and venues want to maintain their brand value and invest wisely in marketing associations. Hogan Lovells attorneys examine legal and business issues to watch, like defining, measuring and protecting value; exclusivity and prominence provisions; remedies; and monetizing stadium naming rights.

The Olympics, other major sports and cultural events, and high-profile TV shows attract fans and marketing executives alike. Without sponsorship, many elite events and major broadcasts simply could not happen. But with these unrivaled attractions comes considerable risk.

Sponsors must maintain their brand value and invest wisely in marketing associations. At the same time, they must fend off any ambush marketing. Sports teams and personalities must be able to exploit their image rights. As such, options for parties to quickly distance themselves from each other should the association turn sour can feature prominent.

Legal trends to watch and help clients understand include business considerations like defining, measuring and protecting value; exclusivity and prominence provisions; remedies; and monetizing stadium naming rights.

Defining, Measuring, Protecting Value

A large part of what a sponsor is buying in a naming rights or sponsorship transaction is the power of association. Accordingly, naming rights and sponsorship transactions, and the attendant value proposition, have increasingly become more about community involvement, content creation, retail partnerships and sponsor integration with the team, rather than just payment in exchange for a name on a venue.

Successful execution of this strategy has driven substantial value to sponsors and has in turn increased the value to arena/stadium owners and teams from selling sponsorships and naming rights.

It has also led to an increased need for arena/stadium operators and teams to develop new ways to demonstrate how these associations are driving value for the sponsor so the sponsor can justify its increasing spend.

One interesting outcome of this need is the recent rise in incentive-based sponsorship arrangements, which use performance-based metrics as a new way of defining and measuring value for the sponsor.

In these arrangements, a corporate sponsor pays a base sponsorship fee and agrees to make incremental fee payments contingent on the stadium/arena and/or the team achieving metrics such as exceeding specified turnstile attendance baselines, a threshold number of social media mentions, the team tenant qualifying for the playoffs, etc.

Legal Considerations

We have also seen a trend towards more complex protections of the sponsor’s investment and the arena/stadium and team’s revenue streams through legal provisions in the naming rights or sponsorship contract, such as exclusivity and sponsor prominence/dominance protections and a robust remedies package.

Exclusivity and prominence/dominance provisions

Exclusivity provisions refer to protection for the sponsor against the presence of advertising and sponsorship in an arena/stadium by the sponsor’s competitors and can come in a variety of flavors ranging from ensuring the sponsor is the only brand in its industry that can have such a sponsorship presence to prohibiting a sponsorship presence from only a limited, defined set of competitors.

Prominence/dominance provisions ensure that a sponsor’s signage and advertising will be placed in frequent and visible locations throughout the stadium/arena and that such signage and advertising will be larger, brighter and, with respect to digital signage, more frequently displayed than that of other sponsors.


Finally, the remedies package for breaches provides important protections for both parties given the high dollar value and long-term nature of many naming rights and sponsorship transactions. Stadiums/arenas and teams are highly resistant to any flat termination rights, which interfere with their ability to monetize the sponsorship or naming rights (which is discussed further below).

Although it is difficult to obtain a flat termination right in favor of a sponsor in all but the most extreme circumstances, sponsors can protect themselves and their investments through negotiation of (1) make-whole rights in the event of “changed circumstances” (e.g., the ability to receive substitute advertising or sponsorship rights, to recover a refund of sponsorship fees or, in certain circumstances, to terminate in the event the sponsor is not being provided with the core rights and benefits that it negotiated for) and (2) an abatement of fees and the ability to terminate after a certain time period in the event of a force majeure occurrence (e.g., damage or destruction of the stadium/arena, work stoppages, etc.).

Monetizing Stadium/Arena Naming Rights

Although corporate sponsors purchase naming rights for high dollar values (with the top 15 naming rights deals as of April 30, 2018, having aggregate dollar values ranging from $178 million to $639 million), payment for those rights is accomplished through installment payments of sponsorship fees that are stretched over the entire term of the naming rights deal (those same top 15 naming rights deals having terms ranging from 20-32 years).

As a result, stadium/arena owners have searched for ways in which naming rights can be monetized up-front. This is especially important for arenas/stadiums that are in the construction phase, as the up-front monetization of the stadium/arena’s naming rights can provide a significant source of funding for the construction project.

One method by which this immediate monetization can be accomplished is through asset backed securitization arrangements, pursuant to which the arena/stadium owner will, through a special purpose entity, issue bonds to investors that are backed solely by the naming rights receivables.

Purchase of the bonds provides immediate liquid funds to the arena/stadium owner, and the bonds are repaid to the investors through the future payments of the sponsorship fees by the corporate sponsor. In addition to making an otherwise relatively illiquid asset liquid, this arrangement also transfers some of the risk of payment default by the corporate sponsor to the investors.

However, the risk to the investor is potentially relatively low if the corporate sponsor has a high credit rating, which for most corporate naming rights sponsors is generally the case. This generally high credit rating has the added benefit of allowing the arena/stadium to issue the bonds at a relatively low interest rate, resulting in a lower cost of capital than might otherwise be available through more traditional bank financing.

However, these asset-backed securitization arrangements are not without their challenges. Many corporate sponsors enter into naming rights deals through newly formed shell companies and are unwilling to provide a parent-level guarantee for payment of the sponsorship fees. This results in a lower credit quality rating for the bond issuer, thus requiring payment of a higher interest rate on the bonds.

Additionally, as discussed above, naming rights deals typically involve at least some termination rights that can be exercised by the corporate sponsor under specified circumstances (including for certain things that are outside the arena/stadium’s control), as well as other remedies that could impact the cash flow stream from the naming rights deal.

If the corporate sponsor were to exercise one of these rights, the arena/stadium (or the team) would become responsible for the repayment of the bonds and would lose the benefit of the high credit rating of the corporate sponsor.

Thus, the drafting and negotiation of the naming rights agreement must be carefully undertaken to ensure, to the extent possible, that the agreement is “bankable.”

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Originally published by The Bureau of National Affairs, Inc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions