A Naming Rights sponsorship deal sounds like a great solution for many of us.
Change the name of our venue, programme, event, or whatever it might be, and sell it as a premium offering to a brand for wads of cash. We get a big cash injection simply by putting a brand’s name next to ours. Easy, right?
Unfortunately, for many first time Naming Rights sellers, these deals aren’t always as lucrative as we first think. There can often be some hidden traps that are often overlooked when it comes to sponsorship. If not accounted for, they can result in your Naming Rights sponsorship deal being worth a whole lot less than you think.
This post is going to outline one of the pitfalls of Naming Rights sponsorships, how to manage it and also how to ensure more of the moolah (money) from the ‘sponsorship fee’ stays in your hot little pocket.
What’s the first thing that typically happens when a sponsor hands over money for a Naming Rights sponsorship, or any sponsorship for that manner?
You probably start including and putting their logo onto assets you own, right?
Have you ever thought in depth about who actually pays for these logo placements?
If you’ve ever undertaken a new brand development, or gone through a rebrand, you’ll know that these things can become pretty expensive pretty quickly.
If you sell a Naming Rights sponsorship e.g., the brand’s name now becomes part of your name, then you’re essentially going to have to undertake a partial, if not a complete rebrand.
Yip, that means every single piece of marketing material you’ve previously created will need to be updated or changed completely (especially if you change your brand colours to match the new sponsor’s brand). From email signatures, websites, vehicles, posters, flyers, through to the logo itself, registration forms, advertising campaigns, pull up banners and everything in between.
You have to pay for the graphic designer to create all of the updated material, you’ll have to set up new billboards, get the sign writing on the vehicles updated, not to mention the labour costs of auditing all of your marketing material and resending it to all of the locations or other organisations where it might be in use. It’s a big undertaking.
Depending on how much material you have to change, your ‘sponsorship fee’ will start dwindling pretty quickly. Let’s say you charged a new Naming Rights sponsor $100,000. The $100,000 fee quickly becomes $70,000 just to pay for the new marketing assets you’ve had to create and distribute.
On top of that, if you follow best practice sponsorship, you should be spending at least 10% of the fee on servicing the sponsor, now we’re down to $60,000.
Then you’ll have to take into account the hard costs of delivering this sponsorship. Did you promise them tickets, access to staff, hospitality packages and other opportunities as part of their package? After taking this into consideration, your $100,000 sponsorship is now looking more like $40,000. Probably the same amount of money you’re charging for other sponsors, who don’t get Naming Rights.
To manage this, you could always propose including the branding costs into the contract for the sponsor to pay on top of the sponsorship fee. Or, if you’re nervous about asking for additional money, you could perhaps offer a 50/50 split on costs. At least you’d be accounting for some of the costs associated with rebranding to accommodate the sponsor’s branding.
This isn’t uncommon and it’s also something I’ve previously paid for when I’ve been in a sponsor position of a new Naming Rights sponsorship.
It might simply be a one-time $10,000 rebranding cost that you ask for in year one of the contract.
After reading this post, you may simply choose to increase the cost of your Naming Rights sponsorship to accommodate it, or consider whether Naming Rights is even worth selling if you can land sponsors at a lower price point anyway.
Either way, it is a cost that someone has to pay for, and, if the sponsor isn’t paying for it, then you are. If you’re paying for it, then it will quickly dwindle down the value you thought you were receiving.
You can position it as a benefit and also allow the brand some creative control (not easy for the control freaks out there). By allowing the brand to use their own marketing agency, or an in-house graphic design team to develop the new logo, or include their brand colours with the new Naming Rights brand identity.
By charging extra to give the brand some creative control over what the new brand identity looks like, you’ll not only be saving on graphic design costs, but you’re also just as likely to get a higher quality finished product due to their higher budgets, or access to quality brand agencies.
Naming Rights can definitely be a big cash injection, but make sure you’re smart enough to know the additional costs of implementing the renaming or rebranding of the sponsored initiative.
If you want help with sponsorship, we help people like you to earn 3 x more sponsorship revenue on average. Book a call with us today to see how we can help.
