Hawks Sign NBA’s 5th Richest Arena Naming Rights Deals

Hawks

State Farm will be the new naming rights sponsor of the venue formerly known as Phillips Arena (to be known as State Farm Arena) after agreeing to a 20-year $175 million pact with the Atlanta Hawks. While the building is 20 years old, it’s undergone nearly $200 million in renovations over the last 2 years. News of the deal comes just a month after the Bucks announced a 25-year $100 million agreement with Wisconsin-headquartered Fiserv for their new downtown arena (Fiserv Forum) set to open this fall. The Toronto Maple Leafs and Raptors maintain the largest naming rights deal in all of sports, Scotiabank is paying +/-$640 million over 20 years to put their name on Scotiabank Arena.

Howie Long-Short: Considering that Phillips Arena is among the busiest arenas in the country and State Farm paid less than $9 million/year for the rights, some will argue the insurance company made a great deal. Those opposed to the deal will point out that just 3 companies (not including Scotiabank) pay more to put their name on an NBA building; Chase (Warriors), Barclays (Nets) and American Airlines (Heat).

It’s worth noting that Phillips, the electronics company, agreed to pay $185 million for the right to put their name on the Hawks facility back in 1999; the expiring pact would also rank as the 5th largest deal in the league… 2 decades later!

State Farm is mutal company owned by the policy-holders. Fiserv (FISV) on the other hand is publicly traded. The B2B company has a $32.7 billion market cap, so a $100 million investment in consumer awareness certainly won’t put a dent into their books. The fin-tech company has expanded its product portfolio and enhanced its digital offerings on the back of series of strategic acquisitions. Shares are up +21% YTD compared to the S&P, which is +8%.

Fan Marino: When stadium naming rights deals come up those opposed will point to failed partnerships like the Astros and Enron, but Nick Fullerton, a financial trader and the president of SportsETFs (ProSports Sponsors Index) says those are exceptions to the rule.

Nick: Historically, companies who enter into stadium naming rights deals have seen strong stock performance which can partially be attributed to the brand recognition and benefit system a company receives from these deals. People erroneously remember some of the irrational exuberance of the dot come era deals when it comes to naming rights which is definitely not the case. Naming rights work.”

For those who missed it, we recently wrote about the dramatic rise in the value of naming rights deals across the college football landscape. You can read the piece here, or watch the video version here!

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Fiserv Acquires Naming Rights to Bucks New Arena, Deal Worth $200 Million+

Bucks

SportsBusiness Journal is reporting that Fiserv has agreed to pay $120 million over 20 years for the naming rights to the Milwaukee Bucks’ new downtown stadium, despite VP of Corporate Communications Britt Zarling defiantly saying “we are not the naming rights sponsor.” The Bucks had initially passed on the offer, seeking between $7 million – $10 million annually, but chose to reconsider after no other serious bids arose. It’s unclear what the 17,500-seat building – currently referred to as the Wisconsin Entertainment and Sports Center – will be called; Fiserv Arena and Fiserv Center are both under consideration.

Howie Long-Short: When we spoke to Bucks President Peter Feigin back in late March, he said the team wanted a sponsor that would be able to expand its international footprint. Fiserv has more than 12,000 clients in 80 countries, so the team accomplished its goal on that front.

As for Fiserv, the company is a component of the S&P 500 (and NASDAQ 100) and trades under the symbol FISVFISV posted “solid financial results” (adjusted EPS +23% YoY to $.76) in Q1 ’18. Sales increased 12% YoY and the company generated $470 million in proceeds from the sale of two businesses (55% of Lending Solutions business, MyVoucherCodes). The company also returned $398 million to shareholders in the form of share repurchases during the most recent quarter. FISV shares are up 21.5% over the last 12 months, closing at $76.06 on Wednesday.

Fan Marino: BMO Harris is believed to be paying roughly $1 million annually for the naming rights to Milwaukee’s existing building, so the new naming rights deal should add +/- $5 million annually to the team’s bottom line. Their new local television pact (with Fox Sports Wisconsin) – worth more than $200 million over 7 years – will also boost team coffers. The expiring contract paid the team +/- $20 million this past season. The new deal starts at $26 million in 2018-2019, rises 4% annually and averages nearly $30 million/year. It must be noted that in 2017-2018 the Bucks posted their highest local TV ratings in 12 years.

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