Is Putting Your Name on a Stadium Worth the Investment? SoFi Thinks So

The financial startup sees new Rams and Chargers home as an efficient way to market

SoFi Stadium
SoFi Stadium will open next September for the 2020-21 season.
SoFi

At some point between the nachos, the second round of beer and the fourth order of chicken wings, football fans will hear about SoFi. Soon, some will even call SoFi Stadium home.

While brands continue to shell out millions on traditional, linear advertising, SoFi, a financial startup that provides student and personal loans, will pay only a fraction of that, and yet it’ll reach the same audience.

It’ll be practically unavoidable.

At just 8 years old, SoFi is making the same type of investment legacy brands like Mercedes-Benz and Levi’s make after a century of business: stamping its name on a sports stadium.

Mercedes-Benz bought the naming rights to the Atlanta Falcons' stadium for a reported $324 million on a 27-year deal.
Mercedes-Benz

For a reported $400 million over 20 years, SoFi was awarded the naming rights to the Los Angeles stadium that will soon be home to the Rams and Chargers, two teams that relocated to L.A. within the past three years. The stadium is set to open in 2020. Even though the deal is expected to be the largest in NFL history, when compared to traditional advertising costs, naming rights are both more efficient and more effective.

According to sports marketing experts, there are only two reasons a brand would consider naming rights: They’re either already established and want to keep it that way or they want to make a splash.  SoFi hopes the move will make it a household name.

It’s a creative way to get your legacy out where there is going to be buzz,” said Joe Favorito, a sports marketing professor at Columbia University. “You’re looking at the most advanced, high-tech stadium in the No. 2 market in the world.”

The partnership guarantees that SoFi will be associated with the 2022 Super Bowl, the 2023 College Football Playoff and the opening and closing ceremonies of the 2028 Olympics, all of which will take place at SoFi Stadium. It also doesn’t hurt that the stadium is only three and a half miles from LAX, guaranteeing SoFi free additional advertising from every flight in and out of the city.

The stadium, the most expensive ever built at $5 billion, was privately funded by Ram’s owner Stan Kroenke and his organization, including $1.6 billion of personal equity. The NFL also extended its standard loan of $200 million per team.

The stadium is part of a new 298-acre entertainment complex, more than three times the size of Disneyland, formally called the L.A. Stadium and Entertainment District at Hollywood Park, which includes a casino, a hotel and a performance venue. Taylor Swift is set to be the first artist to perform at the stadium.

Top-of-mind awareness

It was an easy decision for SoFi CEO Anthony Noto, who played linebacker at West Point and previously served as the CFO of the NFL from 2008 to 2010. Noto also was Twitter’s CFO and helped broker a broadcasting deal in 2016 between the social media platform and the NFL, which led to Twitter streaming 10 Thursday night NFL games. (The league jumped to Amazon the next season.)

“We’re going to be associated instantly with by far the largest aggregator of audiences in one event—the NFL,” Noto told Adweek. “We’ll instantly have the credibility of being partners with the largest media sports brand in the U.S.”

Noto also pointed to the importance of brand trust, especially in the finance industry. “It takes years and years for financial institutions to build the trust and awareness that the top 10 banks in the country have,” he said. “People need to believe that we will be around for centuries, not years.” 

With the deal, SoFi has bought top-of-mind brand awareness, at least among the 15 million fans who tune in on average to NFL games every Sunday.

“Twenty years ago, you’d buy TV ads on Thursday night during Desperate Housewives. … Those days are gone,” Noto said. “Live sports and live entertainment are really the only places you can reach really large, unduplicated audiences consistently. We’re basically trading out the money we’d spend across all the platforms into one sponsorship.”

"People need to believe that we will be around for centuries, not years."
Anthony Noto, CEO, SoFi

In addition to a VIP lounge named after the company, SoFi will host its own corporate events at the new stadium. As the “exclusive financial services provider” for the stadium, all the ATMs in the park will be owned and operated by SoFi. 

“The days of people coming in and slapping a logo on are gone. … This is a cultural buy,” Favorito said, pointing out that while both the Rams and Chargers are legacy franchises, both are new to Los Angeles. “[They] will grow together.”

SoFi is also no stranger to sports marketing; it previously sponsored other events like the men’s U.S. Open in golf and the X Games.

“Everything we did last year in sports sponsorships aggregated about 10-15 million unique viewers over the entire year,” Noto said. “We’ll be able to do that in one night when a football game is on national television.”

The deal

The naming rights to the stadium went for about $400 million, or $20 million a year until the contract runs out in 2039, pending renegotiation, according to Fox Business News. Jason Gannon, the managing director of SoFi Stadium and Hollywood Park, said the stadium received considerable interest, from more traditional brands to technology and startup companies.

“There’s definitely people that can pay more than us,” Noto said. “There are definitely people that wanted to pay more than us. We analyzed it based on cost-per-impression. … The forecasts make it a lot more efficient than other vehicles, not to mention the scale was infinitely greater.”

While SoFi is currently advertising across NFL Sunday Ticket, the financial services company wouldn’t comment on its media buys during broadcast games.

Noto said the naming deal represents less than 10% of the brand’s overall marketing budget and that marketing accounts for less than 5% of SoFi’s budget overall. However, neither Noto nor the stadium would get into the specifics of the contract.

‘Nobody really knows what the ROI is on these deals’

AT&T Stadium, home of the Dallas Cowboys, sold its naming rights for a reported $17 million to $19 million a year for an undisclosed amount of time in 2013. Metlife Stadium, like SoFi Stadium, houses two teams: the Jets and the Giants. In 2011, Metlife acquired the rights for $400 million for 25 years, or about $16 million a year. Adjusted for inflation, the annual rate amounts to about $18.2 million today.

Before SoFi, Metlife Stadium in New Jersey was the only NFL stadium home to 2 teams.
Getty Images

“We feel really good about the investment the company’s made,” said assistant vice president of sponsorship and promotion at MetLife Daniel Pincus, who joined MetLife 30 days after the deal was signed but has seen the relationship grow over the past eight years. “For a brand in a low engagement category like insurance and financial services, to be able to talk to a diverse fan base has driven success for us.”

Pincus said buying the naming rights had “overdelivered” but that he wouldn’t get into the dollar value of the return on investment.

In terms of cost per year, Mercedes-Benz is an exception. The car manufacturer bought the rights to the Atlanta Falcons’ home stadium for about $324 million on a 27-year deal, roughly $12 million a year. A spokesperson for Mercedes-Benz did not respond when asked whether the company felt the stadium deal was worth it.

“The naming rights market has been a little slower than it had been,” said Smith College economics professor Andrew Zimbalist. “The fact that you’re getting about the same amount of money as those deals got more than five years later suggests that there is some weakness overall in the naming rights market.”

He added, “Nobody really knows what the ROI is on these deals. … Companies like the idea. They think it’s a good investment, but they don’t know if it’s a good investment at $20 million, $15 million or even $10 million.”

Zimbalist also pointed out the plethora of dot-com startups that purchased naming rights only to fade away.

The Patriots used to play in CMGi Stadium, the Ravens in PSINet Stadium. The Houston Astros famously spent two seasons calling Enron Field home while the energy company was declaring bankruptcy.

Of course, there are also iconic stadiums like Lambeau Field in Green Bay, Soldier Field in Chicago and Yankee Stadium, where the name of the stadium is more valuable than any naming rights deal.

“You don’t want to undersell your assets…. The brand damage that would be done would outweigh [the decision],” Favorito said.

SoFi is betting that as the first brand attached to the stadium, the company will face an easier path toward name association. The stadium will always be SoFi Stadium, unlike Mile High, which is technically now Empower Field, or Cleveland Browns Stadium (now FirstEnergy Stadium).

“Any time anything opens, there is a massive splash,” Favorito said. “If you’re first in, you don’t have to worry about a legacy name. It’s an expensive buy, but if you’re going to roll the dice and you’re a disruptive brand that wants to get involved, I don’t know how else you could do that.”

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