Examining valuation of corporate naming rights partnerships in collegiate sports and their impact on consumer behavior

Abstract

PurposeMost college athletics department have not sold corporate naming rights to their athletics facilities. Popp et al. (2016) suggests two primary reasons: (1) difficulty in determining proper valuation and (2) fear of stakeholder backlash. The purpose of the current study is to address both concerns by utilizing a hedonic pricing model predicting collegiate naming rights values and utilizing fixed-effects models to determine if consumer behavior (event attendance and donations) is impacted by a corporate name change.Design/methodology/approachData from 110 naming rights agreements among NCAA Division I programs were examined, alongside market-related variables, institution-related variables and venue-related variables. Utilizing hierarchical model building to reduce independent variables and OLS regression modeling, significant relationships with annual value of naming rights agreements were uncovered. Fixed effects models were utilized to determine if naming rights impacted attendance and donations.FindingsA final model explained more than 53% of the variance in average annual value of naming rights agreements, with three significant factors: (1) attendance, (2) all-time winning percentage and (3) venue construction cost. Fixed-effects models revealed no significant differences in attendance or donations after a naming rights deal was signed.Originality/valueCorporate naming rights agreements for college athletics facilities are a recent phenomenon. While a similar study examining drivers of collegiate sport naming rights was previously conducted, the current study revealed a shifting marketplace. In addition, no prior study has examined the impact of a corporate naming rights agreement on future attendance and donations.