Stadiums now just big-ass billboards and public subsidy generating machines, face it

Today in sports teams sell ad rights for lots and lots of money:

The [Atlanta] Falcons organization has sold corporate sponsorships at Mercedes-Benz Stadium totaling more than $900 million in contractually obligated long-term revenue, SportsBusiness Journal reports in this week’s edition.

That’s $900 million over several decades, so not really worth $900 million toward today’s construction costs. Still, it should go a long way toward helping pay off the Falcons$1.6 billion stadium, especially when the team is already getting tax money worth nearly $700 million.

Also today in sports teams sell ad rights for lots and lots of money:

The Minnesota Timberwolves and Lynx named five new “founding partners” on Monday who will help pay for the $130 million renovation of Target Center now underway…

In exchange for its sponsorship, each founding partner will receive a customized package with the two teams. Each package will offer a yet-to-be disclosed “physical presence” inside the arena, plus outdoor and indoor digital signage and category exclusivity.

That Minneapolis Star Tribune article doesn’t mention it, but the Target Center renovation also got $48 million in public funds.

These are only two data points, obviously, but they do help explain why team owners are so eager to build new facilities despite tons of evidence that they don’t bring in all that much more money in actual arena revenues. New sports venues aren’t just new sports venues — they’re also new billboards, and corporations are more willing to throw money at slapping their names on a fresh canvas than on one that’s been written on already a bunch of times, even if it’s dubious whether there’s any real business value.

Plus, of course, it’s way easier to ask for public money for new (or renovated) buildings than it is to just ask for straight taxpayer handouts because you want to boost your profits. When future alien anthropologists try to puzzle out why we spent so much of our time building and then tearing down places to watch mass sporting spectacles, it’ll be fun to see how many tries it takes before they arrive at “it was the best way to separate people from their wallets.”

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8 comments on “Stadiums now just big-ass billboards and public subsidy generating machines, face it

  1. And I am alright with them being essentially billboards (after all, the “Jewel Box” baseball parks that everyone gets all misty eyed over (and which were build with private funds) were big billboards too.

    The issue is that of public funds. I would not care what a bazzillionaire does with his or her money, provided they are not asking me for my tax money.

  2. The advertising inside Golden 1 Center is extremely distracting. I already find myself watching the enormous sign instead of the live game. I even forget I’m doing it. I’m not sure it’s a good thing to remind people they just spent $100/person to watch ads.

  3. The picture inside this article illustrates what I mean, along with a point about dynamic pricing.

    Ugh. I hate dynamic pricing.

  4. Is there any academic work on the effectiveness of naming rights?

    Recently Consol Energy gave up the rights to the arena in Pittsburgh to “refocus”. Sports Authority stadium in Denver just lost their name because of bankruptcy. PSINET and Enron in Baltimore and Houston bankrupt. And a lot name changes because of acquisitions. I think Philadelphia’s arena went through three names in the span of less than a year as the banks holding the rights got bought out.

    1. It’s too hard to separate out correlation from causality. Do companies go bankrupt because they buy naming rights, or do they buy naming rights because they’re desperate for attention thanks to being on the brink of bankruptcy?

  5. Its the main reason the NFL with a tax payer subsidized development system is now contemplating starting a minor league. MLB has raced to buy their minor league affiliates just for the free money political clowns throw at them for contributions.

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