After years of playing in a stadium that was not baseball friendly, the Twins finally gained approval to build their own new ballpark. Initially, the Twins were faced with the challenge of quantifying the sponsorship revenue they could expect from a new ballpark.
The Twins needed to answer a number of questions:
- What is the best way to sell naming rights and other top-tier sponsorship packages? How have other sports properties approached this?
- How could the team capitalize on new assets such as club areas, upgraded hospitality and premium signage opportunities?
- What are the naming rights and other opportunities worth?
When the time came to execute a new strategy, the Twins faced numerous challenges common to sponsorship sellers, including:
- The need to justify the marketing value they deliver sponsors, especially in a down economy
- Customizing their value proposition for each sponsor’s needs
- Gaining consensus internally on the best way to approach and position their property to sponsors
- Knowing the significance and value of providing certain sponsorship benefits (e.g., exclusivity in additional product categories) in the context of negotiation and industry norms
How IEG Contributed
The Twins tapped the collective resources and experience of a cross-functional team of IEG personnel. To answer the Twins’ initial questions, IEG:
- Conducted extensive competitive research on other professional sports naming rights deals
- Provided information on current sponsorship best practices and trends such as selling title to areas within the stadium, e.g., club areas and seating sections
- Reviewed the sponsorship packages prepared by the Twins to ensure they included the most marketable rights and benefits
- Used IEG’s objective, sponsor-endorsed Valuation methodology to determine the fair market value of naming rights to the ballpark and other top-tier sponsorship packages. In addition to accounting for all the Twins’ new tangible assets, the Valuations effectively measured intangibles such as fan loyalty, category exclusivity and promotional rights
- Projected the Twins’ sponsorship revenue under several different sponsorship packaging models
After determining the amount of sponsorship revenue the Twins could expect from the new ballpark, IEG has worked hand-in-hand with the Twins as they have executed their sponsorship strategy. IEG presented its initial findings to the Twins owner, president and executive management team. With sponsorship revenue projections and cost benefit analysis clearly defined by IEG, Twins management had the information they needed to go to market and execute their sponsorship strategy.
The Twins have successfully negotiated a multimillion-dollar, 25-year naming rights contract with Target. IEG’s Valuation Statement provided the Twins with the credible, objective documentation they needed to justify their rights fee. IEG will continue to independently determine the fair market value of Target’s naming rights deal periodically throughout the contract term.
In addition, the Twins have secured major sponsorship deals with several other partners including Anheuser-Busch, Pepsi, Treasure Island, Pentair, US Bank and Qwest. Although the Twins had existing relationships with most of these partners, IEG’s third-party Valuations enabled the Twins to justify the value of the additional benefits associated with the new Ballpark and ensure they receive the full fair market value of the sponsorships. As a result, the Twins were able to obtain higher rights fees from both new and existing sponsors.
IEG has continued to serve as the Twins’ go-to source for sponsorship information, insights and counsel. The Twins engaged IEG to provide the counsel and insights the team needed to secure a naming rights contract with Target and other major sponsorship deals. IEG’s ongoing contributions to the Twins have included:
- Competitive research on annual escalators used in pro sports naming rights contracts
- Customized Valuation Statements for several of the Twins’ sponsorship prospects
- Behind-the-scenes negotiation counsel on the team’s naming rights deal and other sponsorship contracts
- Annual valuation of the Twins/Target deal to document the value of the specific benefits delivered each year and plan for the next season
- Revenue analysis for signage and ancillary sponsorship opportunities surrounding Target Field
- Competitive research on public/private partnerships in order to arm Twins executives with information they needed to respond to inquiries from governmental agencies, Twins sponsors and other stakeholders
- Survey of Twins sponsors to better understand their objectives, most desired benefits, how they are measuring results and the performance of Twins account management team
- Facilitation of a multi-department strategic planning meeting to brainstorm new ideas, develop sponsorship renewal strategy and help ensure the Twins meet annual revenue objectives
- Survey of Twins fans to determine the impact sponsors are having on fans (e.g., levels of awareness, feelings toward sponsors, propensity to purchase sponsor products) and ultimately help the Twins report on their sponsors’ ROI
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