Did the San Francisco 49ers Receive Appropriate Value for their Stadium Naming Rights?

The big news in the NFL this past week was the San Francisco 49ers announcing they had sold the naming rights for their new stadium, which will open for the 2014 season. The deal was finalized at $220M over 20 years, making it the second largest deal in NFL history (MetLife Stadium is still No. 1).

While the deal is very impressive, the expectations for the deal were much higher. Thus far the stadium has been promoted as one of the most technologically advanced stadiums in the NFL as well as being environmentally friendly. These characteristics of the stadium along with the number of technology-based Fortune 500 companies in the San Francisco area led many to expect a much higher price, with one estimate of $330M over 20 years at one point. The expectations have resulted in the general opinion that the 49ers did not receive as much as they could have on their naming rights deal.

In order to evaluate how well the 49ers deal stacks up against the competition, we need to find comparable NFL cities. Of the 31 NFL stadiums (two teams play in MetLife Stadium), 23 have sold their naming rights prior to the 49ers. However, the Cleveland Browns and First Energy have kept their deal private, leaving us with 22 deals to compare to. (See table below for contract details)

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The first fairly obvious trend that stands out is the fact that the larger TV market you’re in, the more expensive the deal. Thanks to Nielsen, we can find other markets comparable to San Francisco.

Of the top 10 NFL markets, seven NFL stadiums have sold their naming rights. The three stadiums that haven’t are Chicago, Dallas, and Atlanta, although Atlanta expects to have a new stadium in 2017 and sell the naming rights at that time (Home Depot Field?). Of the remaining deals, we will eliminate New York since that stadium houses two teams as well as Detroit since the naming rights were sold under market value by the Ford Family to the Ford Family. This leaves us with four comparable deals: Philadelphia ($6.62M/yr), Boston/New England ($8M/yr), Washington D.C. ($7.59M/yr), and Houston ($10M/yr).

Since all four deals were signed between 1999 and 2003, comparing them to the 2013 deal of the San Francisco 49ers deal will be difficult due to inflation. Using the Bureau of Labor Statistics Inflation Calculator, we find that $11M in 2013 was worth $8.7M in 2003. Doing the same for the four comparable deals, we find amount each deal would have been worth in 2003: Philadelphia ($6.62M/yr), Boston/New England ($8.2M/yr), Washington D.C. ($8.4M/yr), and Houston ($10.2M/yr).

When looking at the 2003 values of the naming rights deals, the Houston Texans signed what is by far the most valuable deal, while the Philadelphia Eagles, the largest TV market, has a naming rights deal worth much less than the other teams. The San Francisco 49ers deal comes it as the second most valuable on a per year basis, slightly above New England and Washington D.C. Based on these comparisons, it appears the San Francisco 49ers received appropriate value in their naming rights deal and that the expectations for the deal were unrealistic.