Reference no: EM133764302
Case: As newly appointed Assistant General Manager of the South Colorado Sports Network, you have been directed by the General Manager to sell the naming rights to the (fictional) University of South Colorado's football stadium. The University of South Colorado is a NCAA Division I FBS athletic department and is committed to operating as a financially self-supporting enterprise. Given the substantial debt service and operational costs of the new basketball arena on campus, the director of athletics is faced with the need to generate as much new revenue as possible. The director of athletics believes that selling the naming rights to the football stadium presents the Athletic Department with an excellent opportunity to create both a stable and significant new income stream. In fact, the director of athletics believes that due to the unprecedented success of the football team over the past several seasons, this may be the very best time to pursue a naming rights partner.
The football stadium opened in 1967. It was built for $2.5 million. Jonathan Taylor, a Denver businessman contributed $250,000 to the original stadium project and, as a result, the stadium has borne his name since its opening. In 2002, a $90 million renovation of the stadium was completed, which added 12,000 new seats, 32 luxury suites, a 10,000-square-foot entertainment center, and 2200 premium club seats. The official seating capacity is listed as 54,000, but attendance routinely exceeds 59,000. In fact, through the 2023 season, the stadium has experienced 100 consecutive sellouts. It is consistently ranked as one of the top ten venues for watching college football.
Your Task:
You have been charged with the responsibility of signing a major corporation to a long-term naming rights agreement.
Before going into the marketplace, it is important that you give thought to some issues that must be addressed. For example, how do you deal with the fact that the stadium has carried the name of Patrick Allen since its inception? What concerns should you expect prospective naming rights partners to have about replacing such a well-established name for the venue? How would you address these concerns?
Identify a company you believe would be an ideal prospect for purchasing the naming rights to Taylor Stadium. Provide an explanation for why this particular company should/would be willing to invest significant financial resources in partnering with the University of South Colorado. (Note: in answering this question, you should consider how the naming rights agreement would help the company achieve key strategic objectives and whether aligning with South Colorado's football program would be a good fit). Research on the company will be necessary - financial capacity, other sport sponsorships they are involved in, etc.
Identify the specific benefits/rights you would be willing to extend and for each, indicate the value proposition (how does it contribute to meeting the company's strategic goals and objectives?) Recognize that companies today are buying more than the right to simply place their name on a stadium. Most view naming rights partnerships as an opportunity to sell product and/or form a meaningful connection with fans.
Once you have developed an inventory of rights you would offer your targeted company, place a dollar value on the agreement. How much is the deal worth, and why? How would you structure the payment schedule (amount of annual payments, number of years?)
Provide a justification for the price you believe would be most reasonable to charge. Why would a company be willing to meet the terms you plan to offer?