New Sponsorship Math for New (or Renovated) Venues

The Athletics’ new venue on the Las Vegas strip is expected to stand as a globally significant work of sculptural architecture.

On the inside, the ballpark will look and feel more like to a museum than what fans are accustomed to. There won’t be advertising and signage everywhere.

Just a handful of partners will have fixed visibility within the main bowl. The balance of the brand marketing within the state-of-the-art stadium will be digital.

The A’s decision to take a more refined sponsorship approach than what has historically been seen across sport was intentional. The organization seeks to deliver a premium experience on par with the high-end resorts in Sin City and to tap into Las Vegas’ robust corporate hospitality business. 

But look for rights owners across the country, at least those with similarly clean slates, to follow the team’s lead in the years ahead.

“Between cornerstone or founding level partnerships and naming rights you're probably accounting for 75%-80% of a venue’s total sponsorship revenue,” Nick Kelly (CEO, Encore Sports and Entertainment) said. The juice simply isn’t “worth the squeeze to add 40 additional six-figure partnerships if you can get 10 in the seven-figure range. It's a cleaner environment for fans, the partnerships activation team, the club in general, and provides a bit more exclusivity for sponsors.”

In a perfect world, every club would implement some version of the Athletics’ ‘less-is-more’ approach. 

Rights owners like the model because it allows them to hit the same, if not larger, revenue numbers while managing fewer relationships. It also tends to result in a more visually appealing stadium environment and lead to increased sponsor retention.

“The likelihood of a brand renewing to stay exclusive in a category is so much higher than the likelihood of that same company renewing as one of many,” Kelly said.

Of course, the longer the partnership, the more effective a brand should become in deriving value from the club and its IP.

Brands like the model because prominent placement and greater exposure allow them to stand out.

“When you have fewer messages being delivered to fans, less marketing being driven to them, it's just a lot easier to break through and develop an emotional connection,” Kelly said.

Some organizations already have.

“The Golden State Warriors did a great job with their transition from Oracle Arena to Chase Center. The club went from close to one hundred partners to having a handful with greater prominence inside the venue," Kelly said. “The remainder of the club’s partners get access to team IP and other elements, but there appears to be a clear delineation in value and investment.”

And others are preparing to move in a similar direction.

The Carolina Panthers are working to arrange for most of their existing sponsorship contracts to expire just prior to the team's stadium renovation project being finished in 2030. It’s part of a deliberate strategy to use this ‘fresh start’ at the venue to reset the team’s partnership approach.

However, many more clubs are stuck with legacy agreements in dated venues. Those rights owners likely aren’t going to be able to limit, let alone reduce, the number of partners they rely on to generate sponsorship income.

“Unless there are significant escalators built within their existing deals, the growth of revenue year-over-year needed to keep up with the rest of the league is dependent on net new partners continuing to come in,” Kelly said.

Few ownership groups seem likely to be comfortable with club sponsorship revenues slowing at a time when local media rights dollars have also declined (or are under pressure).

Sure, those teams could offer existing partners in widely shared categories a level of exclusivity in exchange for more money.

“That’s the fastest and simplest way to increase deal values,” Kelly. 

But there is a ceiling as to how much more an organization can command.

And it probably needs to capture all of that upside just to “break even with cutting their bottom 30 sponsors,” Kelly said (think: 15-20%).

The math doesn’t really work.

Rights owners need a new offering to dramatically alter the revenue that comes in from individual sponsors and/or their sponsorship model.

“If you have a new or renovated building, regardless of what's going on with the team on the field, you have the ability to sell hope, higher ticket prices, and the organizational commitment that allows you to do a reset,” Kelly said.

Venue construction also provides the timing window clubs need to clean up crowded sponsorship categories and recalibrate what each partner pays.

Major “renovations take three to five years. New stadium builds take five to seven years. That is enough time to start setting up the sequential contracts that enable the club to have a big jump in revenue when the stadium opens,” Kelly said.

Sponsors have shown time and again a willingness to grow their investment in a team when there is modern venue, regardless of what it may have paid for assets in the past.

As new buildings continue to come online in the decade ahead, expect nearly all to have a similarly refined sponsorship approach. While few will resemble Augusta National, the ultimate version of this model, the direction of travel is clear: fewer partners, deeper relationships, materially higher deal values, and a more premium experience for fans and sponsors alike.