Branded Stadiums are Bad Investments but Execs Love Them

Growing up, my friends and I would go to the Pepsi Arena for shows and game events. I have a lot of fond memories associated with that stadium. Yet, I feel this association has never influenced my behavior — in fact, my entire life I’ve always ordered Coke products. Jesse Singal from NYMag has been wondering the same thing. He writes in a recent article, pointing out that stadiums and sporting events are often packed with brands. But does this mere association endear us to their products?

J. Scott Armstrong, a Marketing Professor at the Wharton School of Business, says that there’s very little data to really confirm its effects, but he thinks no. In an email interview, he explained to Singal:

“…the effects are so weak that it is unlikely that one gets a return on investment. I was unable to find a single experimental study that showed it to produce a positive return on investment.”

That notion must be pretty disappointing for companies, like MetLife and Citigroup that paid millions to affix their name to the stadiums where the NFL’s New York Giants and Jets play and where MLB’s New York Met’s play.

So, then why do companies keep doing it?

Armstrong believes the explanation is simple:

“People who are running the company feel good about it — and this is just speculation, of course. They feel important, I imagine.”

Armstrong has even asked employees of these companies whether they have numbers to indicate a return on these pricey investment deals. He writes that their response has mostly been, “Nah, we don’t do that.”

The pride of having your company’s brand on a stadium must be a rush, and while I can understand the idea, the notion is still upsetting to me. With all that money, you could help a guy like Kenton Lee put shoes on children’s feet; you could set up projects that would change the world.

But as Julie Sunderland, director of program-related investments for the Bill & Melinda Gates Foundation, said in her interview with Big Think, perhaps big companies are intimidated by markets that they don’t understand. Citigroup and MetLife can relate to screaming crowds cheering on their favorite teams, and that’s part of the allure of having your name on your favorite team’s stadium.

Read more about Armstrong’s assessments of stadium advertising on NYMag.

Photo Credit: Anthony Quintano/Flickr