…delivered by Delta and UPS, and powered by The Southern Company. Where is the $280-plus million dollars worth of extension money the Atlanta Braves have handed out in the past month coming from? I suspect that a large chunk of it will be coming from selling the naming rights to the new stadium.
Must of us have likely heard by now that the bulk of the Braves’ TV deal with FoxSportsSouth is far below market value. The deal was signed before the team was sold to Liberty Media, and runs through the 2027 season. Reports are that the deal is only worth between $10 and $20 million a year. This is horribly undervaluing the Braves broadcast rights when one considers that the Phillies recently signed TV deal is worth almost $100 million a year. The Dodgers TV deal is worth a whopping $280 million a year.
The Braves did apparently get a better deal on a smaller portion of games that were recently moved from Peachtree TV (old TBS contract) to FSS. None of the dollar figures are disclosed, but the rift last year between FoxSportsSouth and DISH Network over the higher cost to carry these additional games indicates that FSS probably paid a much higher premium for them (for which they passed onto the carriers).
So with an under-market TV deal in place for the next decade and a half the Braves needed to find new revenue streams… enter the opportunity to build a new ballpark. But more than a new ballpark (which is going to cost the team money to build), the opportunity to sell naming rights, and to possibly sell them at a new higher premium — to set a new market for how much stadium naming rights are worth.
AT&T paid $19 million last year for the naming rights to the new Cowboys stadium. The Mets make $20 million a year from naming their stadium Citi Field. The naming rights for Atlanta’s Phillips Arena are actually just over $9 million a year. The Braves should be able to easily secure naming rights for their new stadium within a $10 to $20 million range. Of course, three years from now when the new stadium is scheduled to open, I would expect naming rights deals like this to be worth more. Other factors, like a World Series Championship between now and then, could increase the value of any potential rights deal.
There is also an opportunity for some competition with this naming rights deal. While Coca-Cola has a long-standing relationship with the Braves, including the giant Coke bottle in the outfield, how much would Pepsi pay to own the naming rights to a stadium in Coke’s backyard? $50 million a year? $100 million a year? Pepsi could coordinate a naming rights deal with a renewed push to win-over more of the southern market for sugary drinks from Coke. The free media coverage of something like this could also have added value in any deal.
How much would KFC pay for the naming rights, or simply the rights to put a Big Chicken replica in the outfield instead of a chopping Chick-Fil-A cow? How much would Lowe’s, headquartered in North Carolina, pay to have a stadium named after them that is literally one mile from the corporate headquarters of Home Depot?
While the Braves should be able to secure a very high dollar amount, perhaps even a record amount, for the naming rights to the new stadium, the competition among brands could force that number even higher. How much might Coca-Cola pay to keep the naming rights from Pepsi? How much might Chick-Fil-A pay to keep a Big Chicken from towering over the outfield wall?
The ability to fund payroll through the sale of stadium naming rights is a revenue stream that currently does not exist at Turner Field, and with the opening of the new stadium the Braves have an opportunity to make up for the deficiencies in revenue from their below-market TV contact. The prospect of the new streams of revenue from the new stadium, including naming rights, is a big part of why the Braves have been able to sign their young stars to long-term contracts that are significantly back-loaded (with higher salaried years coming near the end of the deals, after the new stadium is opened).
The Braves have been praised these past few weeks for being innovative and forward looking in securing their homegrown core, and that innovation needs to continue as they seek a name for their new stadium. I’ve been thinking on this for some time, and I feel strongly that the Braves could set a new industry standard for stadium naming rights. I want to see them shatter previous naming rights deals.