Concinnus Financial Research Report: Do Stadium Naming Rights Align With Shareholder Best Interests?

Study thesis: Stadium naming rights do not align with best interests of shareholders. A company that purchases stadium naming rights may lack prudence and care in allocating capital, which negatively affects shareholder returns over the long-term.

Study background

Thus far in 2016, several high-profile bankruptcies have been witnessed, especially in the retail and energy industries. The financial health and long-term viability of many other businesses have been called into question.

This has especially been the case in retail, where internet sales growth compounded in the double digits for a decade now, has put pressure on many traditional retailers. In the oil and gas industry, the steep fall of energy prices that began in 2014 has whittled away at the strength of the world’s largest producers and hastened the decline of smaller ones, especially those producers in shale in the United States.

The observation was made that several public companies that have gone bankrupt this year or that have been under increased scrutiny are or were spending millions of dollars a year on the stadiums for professional athletic events. Two such companies were Sports Authority, which had purchased the naming rights for the stadium of the Denver Broncos in the NFL; and Chesapeake Energy, owner of the Oklahoma City Thunder of the NBA stadium name.

Sports Authority declared bankruptcy in March of 2016 and will completely cease to exist by the end of the year, leading to near-total loss for investors. Chesapeake Energy is still a viable business, but laden with debt, dealing with cash flow shortfalls going on two years, and a business model that does not rely on end consumer awareness, the wisdom of holding naming rights seems dubious at best.

Due to these observations, the thesis was formed that stadium naming rights generally do not align with investor best interests. The practice may also be indicative of a lack of prudence and care on the part of management in allocating capital and making the best use of business cash flows.

Research description

The sales of stadium naming rights gained popularity in the early 1990’s as a way for stadium owners to raise funds needed for construction and to increase event revenue. Large corporations started to see the large venues as an effective way to mass-market and raise awareness of the business.

Our observations were limited to the four most popular professional athletics leagues in the United States and Canada: the National Football League (NFL), Major League Baseball (MLB), the National Basketball Association (NBA), and the National Hockey League (NHL).

The study spanned the history of the sale of naming rights in these leagues, the first of record being in 1973 between the Buffalo Bills of the NFL and private food company Rich Products.

The primary study was to first compile a historical list of all company purchasers of stadium naming rights, both private and public, and identify the duration of the right, and whether a bankruptcy occurred during or shortly after termination of the naming rights contract.

The secondary study was to compare publicly traded companies stock performance during the duration of the naming rights contract against an index, either an industry specific index or a broad stock market index like the S&P 500.

Summary of observations

There were an observed 134 companies that purchased naming rights for professional sports teams since 1973. Of those, 25 were privately held and another 11 were acquired by another company during their sponsorship. Of the remaining 98 publicly traded companies, nine of them declared bankruptcy during or shortly after their naming rights contract with the respective stadium.

This left 87 companies with publicly traded stock that we could compare against an index. The average total return across the 87 companies was 150%, and total return outperformance against respective indexes of 71%.

However, there were 56 companies that underperformed their index during their ownership of stadium naming rights, and only 31 that outperformed. We found a handful of outliers that outperformed their index skewed results. Those outliers were Qualcomm (own the rights for the San Diego Chargers stadium from 1997 – present with stock performance of 3,100%), Target (own the rights for the Minnesota Timberwolves arena from 1990 – present with stock performance of 1,860%), and Molson Coors Brewing (own the rights for the Colorado Rockies field from 1995 – present with stock performance of 1,880%).

When removing those outliers, total return of the remaining 84 companies dropped to 74%, and the average company underperformed its index by 8%.

We found that companies that have owned naming rights for longer periods of time (10 years or more) performed much better and rarely underperformed their stock index. Short-term deals, of which the majority of naming rights deals were, usually underperformed their stock index or ended when the company declared bankruptcy.

Of note was company performance by industry. Most companies observed operated in the banking, oil and energy, technology, or consumer discretionary industries. Companies operating in the consumer discretionary spending industry (retail, food and beverage, and consumer-slanted technology) usually outperformed their index during their naming rights deal. Companies operating in banking, oil and energy, and technology (enterprise or business-to-business slanted technology) usually underperformed their index.

It was observed that bankruptcies occurred during bubbles or periods of rapid change. Most bankruptcies occurred during or around the technology bubble of the late 1990’s or the financial crisis of 2008.


We conclude that the purchase of stadium naming rights by publicly traded companies generally does not align with the best interest of shareholders. An overwhelming number of companies stocks underperform broad-based stock indexes during the deals, and a high percentage declare bankruptcy during periods of severe or prolonged economic downturn. This would indicate that many of these companies are not exercising prudence and care when allocating capital and making the best use of business cash flows. Many companies that were observed, especially those that declared bankruptcy or held the naming rights for a short period of time, displayed a lack of diligence in controlling business expenses and overhead costs.

However, it could be argued that a few select companies seemed to benefit from the deals. Those operating in industries where consumer awareness and advertising benefits business and influences consumer choice (like food, beverage, and consumer-slanted technology) outperformed while sponsoring a stadium. Other companies have a vested interest in the stadium or team itself, like Rogers Communications with its ownership interest in several professional sports teams. Factors such as this also must be considered before taking a critical look at naming rights.

Excluding a few exceptions, though, it can be concluded that shareholders who own stock of a company that purchases naming rights to a venue should weigh the cost of the deal against benefits expected to be received. It is also important to consider the company’s management team, how they manage overall business operations, and their stewardship on company funds and assets.

Finance Shminance: Stadium Naming Rights

In this episode of Finance Shminance, Adam Austin and Nick Rossolillo talk about the research report from Concinnus Financial about stadium naming rights, the companies that purchase them, and lessons for investors.

Finance Shminance: the Internet of Things

Host Adam Austin and portfolio manager Nick Rossolillo discuss the “Internet of Things.” You’ll learn what it is, how it will shape our world, and how you can start to think about the movement from an investors point of view.

Finance Shminance: Commodities

Host Adam Austin and portfolio manager Nick Rossolillo talk about and offer their two cents on commodities, but not too seriously!

Staying Calm When the World Isn’t

“The ideal of calm exists in a sitting cat.”—Jules Renard

It has certainly been a rocky start to 2016! Stock markets around the world have now seen a minimum of 10% declines, spurred on by a continued fall in oil prices, and a general panic amongst many investors. Indeed, emotions have ruled the last few weeks, bringing awareness to one of the most difficult parts of investing: sticking to a strategy in the midst of impulsive fear. No doubt many are wondering if this is the next 2008 (or 1907, 1929, 1987, 2000 etc.) and what we, your advisors, are doing about it. Hopefully this writing will give you much-deserved peace of mind, and a renewed confidence in our investment strategy.

First, let us start by saying we fully understand the fear that everyone is experiencing—the feeling of being sick to one’s stomach and the strong desire to sell. As difficult as it may be, we need to look at the investable landscape rationally, unclouded (as best we can) by emotional reaction, which studies have proven time and time again to reduce portfolio performance. Adherence to a strategy is one of, if not the most, important components of investing success.

What is the best reaction in times such as we have experienced in the last few weeks and months? Take a cat as an example: when on the hunt, it lays seemingly calm and patient, allowing the situation with its prey to unfold. When the time is right, they spring into action. For roughly the last year, we have been holding an excess of cash in accounts, waiting patiently for the right opportunity to present itself. This has had two benefits: first, it insulates us from excessive losses (such as over the last three weeks); and second, it allows us to go shopping after many other investors have found the exit and driven prices down steeply. Now that we have seen substantial drops in world markets, what is our strategy at Concinnity Financial? Here are a few key areas where we see opportunity:


  • Oil: High prices from 2008 to 2014 spurred exploration, ultimately leading to oversupply and the present price collapse. Current drastic cuts in exploration and production seem to be setting the table for the next long-term rise in prices.


  • Energy Sector: Many large energy companies are very attractively priced for the long-term. (Buy low, sell high!)


  • Emerging Markets: The collapse in energy prices and concern over China’s economy have driven markets downward in many developing countries. Many companies are attractively priced with large growth potential. (Today’s losers are tomorrow’s winners!)


  • United States Markets: We see a short-term (1-3 months) rebound, but a mid-term (over the next year) continued downtrend in stock prices.


  • Europe: Some countries are historically undervalued. The European Central Bank (the equivalent of our Federal Reserve Bank) seems committed to extending stimulus measures in efforts to boost the European economy.


In sticking to our strategy, selling after a 15% decline in the S&P 500 does not make nearly as much sense as does BUYING at presently discounted prices. In spite of all of the doom and gloom in the headlines, there were some exciting developments in the markets this week. Aggressive buying, and the corresponding sharp bounce in prices following session lows on January 20th, reinforce our belief in a short-term rebound. The chart below (UPRO, a fund that tracks the S&P 500 multiplied by three) illustrates how many investors were buying in late December at relative highs, and subsequently sold on the way down.



It is not a perfect science to time the market, or to avoid any and all portfolio losses. However, remaining objective and buying when many are fearful can lead to attractive purchase points on investments that we believe have strong future potential. Certainly, we are well aware of some portfolio constituents that have not lived up to expectations in the short-term. However, the recent market declines offer a great opportunity to lower our average purchase price and further capitalize on potential future rebounds. In the above chart, I believe we can all agree that the objective investor who SOLD high to the greedy at $64, and subsequently BOUGHT low from the panicked at $44, certainly made wise investment decisions that likely contradicted their emotions (and other investors) at the time.

In closing, in spite of our completely natural, emotional response to short-term market declines, it is vital to temper those feelings with a rational mindset. Our thinking when making purchases over the last three weeks was, “Hey! What great sale prices!” Over time, we hope to help you achieve the same mindset: one that avoids emotional pitfalls, and maintains a focus on longer-term portfolio performance. It is a continuing possibility that many investments will go “on clearance” in the near future. Let’s be determined to have the objectivity—and the cash on hand—to go shopping at those discounted prices, setting the table for future returns.


In confidence,

Nicholas Rossolillo and Stephen Ertel

The Student Loan Debt Debacle

We have all heard on the news about the growing issue that is rising college tuition and student loan debt. Check out this recap of a discussion presented by Stephen Ertel last month at our office. This video outlines the underlying problems with the growing student loan burden and what parents, students, and potential students can do about it from a financial planning standpoint.

Attack of the Robo-Advisors? Or Just a Cheaper Version of Your Human Advisor?

The last two decades have dramatically changed the world we live in. The internet, once a novel technological curiosity that was occasionally accessed after minutes of waiting through annoying dial-up noises, has penetrated every corner of our daily life. The resulting innovations in a relatively short period of time are astounding.

While still sluggishly ambling along behind many other sexier and innovative industries, the financial sector has witnessed some changes as well. Online DIY stock trading, the wide adoption of low-cost investment vehicles, the limitless flow of information (or disinformation) on financial markets at our fingertips, and the polarizing advent of crypto currency like Bitcoin have all caused disruptions and contributed to new innovations in the wide world of finance.

Despite the slew of new ideas, one area that has been notoriously digging in its heels is the investment advisory sub-industry. Investment advice has been around for quite some time, and it has become essentially a commodity. Everyone from your local bank, broker-dealers and investment banks, insurance companies, and tax preparation companies have all rushed to offer their two-cents on where you should be putting your money. Enter stage left a newcomer to the fray: the robo-advisor.


What Is a Robo-Advisor?

Before tackling this question (assuming you don’t already know), let me first review the historical “human advisor” experience for those of you who have avoided enduring such an activity. Whether you go to a broker-dealer, your bank, or any other place, the experience is roughly the same: a securities registered advisor (either in person or on the phone) takes down some information on your financial situation and recommends an investment portfolio “tailored” to you. How is a robo-advisor different?

A robo-advisor essentially limits the human interaction and intervention in your investment plan and portfolio. You enter your personal information online, and the robo-advisor provides you with an automated plan and portfolio allocation using various mathematical algorithms.

These technology driven advisors have really picked up momentum the last couple of years. Many of them have seen explosive growth, new startups have been created, and even some big name brokerage firms have been quick to pick up on the trend and now offer their own version of the service. But why the need for them in the first place?


Iatrogenesis and the Race to the Bottom

The two most common arguments I hear for automated robo-advisor investing are lower costs and the elimination of human error. The former is obvious, and represents a continued race to the bottom of the pricing barrel within the financial world. Commissions and fees are a drag on investment performance, so any way to reduce them represents a higher return to the investor (or so the argument goes, although this is a completely different topic). Thus the emergence of low cost index funds, DIY discount trading, and now the robo-advisor, with all of the above an attempt to cut out the “middle man” and reduce cost.

The second reason, and I think more intriguing of the two, is the attempt at elimination of human error that represents a drag on performance. It is no little-known fact that oftentimes investors, not excluding investment professionals, make mistakes that erode returns (think irrational and emotional decision making driven by fear or greed). Sometimes we get in our own way and cause more harm than good. The medical community knows this as iatrogenesis, or complications being caused by the medical professional, medical procedure, or treatment; basically restated, it means creating unintended consequences. Such iatrogenic decision making happens in all number of areas of consideration: environmental studies and human attempts to right their impact on our planet, a simple trip to the auto mechanic gone wrong, or probably every politician to have ever made a decision in the history of mankind. The investment community is obviously not immune to unintended consequences, be it from conflicts of interest a financial professional has to deal with, uninformed and uneducated decision making, or just simply fear and greed getting the best of a sound recommendation.

The hope of many, creators of robo-advisors and end users of them alike, is that automated decision making and portfolio management eliminates the human error from the system, therefore eliminating resulting performance drag and providing potentially higher returns (or at least more consistent returns) to the consumer. Simple enough, right?


My Thoughts and Ramblings on the Matter

Let me first state that I am all for technological advancement. I think the financial industry as a whole is especially ripe for innovation. If technology has advanced to the point that our job can be replaced or eliminated, it might be time to shift gears and move on.

That being said, to reason that human interference can ever be eliminated from any system, financial or otherwise, is total folly. Someone created the technology, someone told it how to act and behave, and therefore any design or assumption errors in the system will be present. Even if the principles and inputs backing up a new piece of innovation were perfect, external human error will never be eliminated; how will the system cope with such externalities? Mathematical and algorithmic trading and investing is not new; in fact, it has been around for a very long time (in the form of technical analysis especially). That being the case, it begs asking a few questions about investment strategy based on mathematical inputs, be it from a robo-advisor or from your traditional human in the flesh advisor:

‘What is the stated investment strategy of who or what I am working with? Historically, how closely have they stuck to that strategy?’

‘What has been the historical performance of who or what I am working with? What has been their strategy’s historical performance?’

‘Do I have the patience to stick with that strategy in a variety of market conditions? How do you judge if the strategy is broken and no longer working, and at what point would it make sense to change to a different one?’

‘Does the stated strategy make sense for my personal circumstances at this particular point in time?’

To round out this discussion, I do think there is a place in today’s world for the robo-advisor, algorithm based investing, mathematical based decision making, or whatever you want to call it. However, it would be naïve to think that human input and error can be eliminated. It is equally naïve to think that any mathematical equation can be developed to create the perfect investor experience. So what is the robo-advisor, really? Is it truly game-changing and revolutionary technology, or is it yet another new low-cost alternative designed to inveigle investors into doing business? If they do provide sound advice for you, great! If not, bad advice is still bad advice, no matter how little you spend on it.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Past performance is no guarantee of future results.

Lower Oil and Gas Prices – How to Maximize Your Upside

By Nick Rossolillo, President, Concinnus Financial

March 10, 2015

I want to say one word to you. Just one word. Are you listening? Plastics.

Thus went the recommendation given to Dustin Hoffman’s character Benjamin Braddock in the 1967 movie The Graduate. Sound advice? Perhaps. Actionable advice? Dubious.

In a world where “advice” is easily obtained but rarely personalized, the real trick becomes how to apply it to your own situation. In a previous article you can find here, I outlined some of the reasons oil and gas has come down so dramatically in price in the last nine months or so. However, the actionable advice part of the post was lacking. This is a follow up to that article on how one might specifically put these lower prices to work for their own situation, whether as a business owner, or as an investor and saver.

Current Prices, Tax Deductions, and Discrepancies Between the Two

At the time of this writing, I filled up the gas tank at just over $2 a gallon. Having a 10 gallon tank in my car, that equated to just over $20. You have, no doubt, been experiencing something very similar, depending on your car (or truck) and which part of the country you are filling up in. It’s a pretty good feeling, since that leaves you a few extra bills in your wallet than it did last year (about a 60% savings in my particular case!).

If you use your car for work or you are self-employed, you probably know that the federal mileage deduction rate for 2015 is set at 57.5 cents per mile*. Let’s assume you get an average of 20 miles per gallon, your vehicle has a 10 gallon tank, and you use that entire tank of gas for business related activities. Your deduction would be $115 dollars, more than likely substantially higher than what you actually paid at the gas station. (Perhaps you do not drive for work, or as a business owner you do not take this deduction but instead write off actual costs of your business vehicle or vehicles. Hang with me, this is still applicable for you. We are all currently saving on our gas budget in some form or fashion.)

What are you doing with that savings? Is it being spent elsewhere, eating out, going on vacation, etc.? Or is it being put to work for you, either helping you catch up on bills or padding your savings account? If you answered yes to the former, here is a way for you to perhaps adjust your budget and start accumulating some extra funds. If you answered yes to the latter, congratulations! Let’s take your planning to the next level.

Ideas to Put That Cash to Work

If you believe that inflation is a real thing and that prices will always tend to go higher over the long-term, you are wise to accept current gas prices as a gift and stow away your savings for later. Here are a few ways you can get a little extra out of that savings:

  1. Increase the amount you are contributing to your retirement accounts. If you haven’t fully taken advantage of what your employer matches, increase your deferral to do so. If you already take advantage of your work-sponsored plan, consider starting a Traditional or Roth IRA. ᶱ
  2. Start a savings account earmarked for future gas consumption. As prices rise again in the future and start to cut into other parts of your budget, you have a cushion to fall back on.
  3. Consider a hedging strategy with what you have already saved. You can purchase oil and gas investments in your retirement savings, which you can assume are for future transportation costs when you retire. If you own a business or are self-employed, you can deposit savings into a business investment account, and hedge for a future increase in business expenses. If prices rise, you are growing current savings to hedge against future cost increases. If prices decline, your hedge is a wash as you continue to save money on your driving expenses.ᶲ

Any strategy you may choose to pursue should begin with a look at your budget as a whole (whether it is a business budget, personal budget, or both). Where is your money going? Is a decrease in spending in one category being allocated somewhere else? Is this re-allocation a necessity? How much are you saving overall? If you use one, consult with your financial professional regarding your budget and any tax strategies or investment strategies you employ as part of your business or personal financial planning. Consider consulting an accountant and/or investment advisor if you are unsure of how to structure any of the strategies just discussed for your business.

Final Thoughts

The drop in fuel costs caught many by surprise. Who would have guessed a year ago we’d see gasoline under $2 a gallon again? Or that we would see news headlines now espousing oil oversupply, after a decade of discussion about energy shortage and unsustainability? At the end of the day, though, treat the current circumstances as an opportunity. Don’t let it slip away, only to be a “remember when…” story recounted at summer barbecues and after-hour work parties. Find a way to put the situation to work and benefit from it down the road!


Nick Rossolillo is the president and founder of Concinnus Financial, based in Spokane, WA. He works with individuals and small businesses creating personalized investment portfolios and helping with financial planning. To contact Nick, visit, email him at, or call (509) 220-1895.

Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Investing involves risk and you may lose your principal.

*New Standard Mileage Rates Now Available; Business Rate to Rise in 2015.” IR-2014-114, Dec 10, 2014.;-Business-Rate-to-Rise-in-2015

ᶱIndividual Retirement Accounts (IRA) offer tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of IRAs. Their tax treatment may change.

ᶲManaged futures are speculative, use significant leverage, may carry substantial charges, and should only be considered suitable for the risk capital portion of an investor’s portfolio.