The Economics of Everyday Things - Stadium Names, from The Indicator

Episode Date: November 22, 2024

How did Florida International University’s new football stadium come to be named after the rapper and singer Pitbull? Adrian Ma and Wailin Wong of The Indicator from Planet Money explain. SOURCES:Scott Carr, director of athletics at Florida International University.Adrian Ma, co-host of The Indicator from Planet Money.Wailin Wong, co-host of The Indicator from Planet Money. RESOURCES:The Indicator from Planet Money

Hey, it's Zachary. Today, we're bringing you an episode of a terrific podcast called the indicator from Planet Money. It's from NPR. Each episode takes a look at one facet of the business or economic world. And it does it in under 10 minutes. Sometimes they give the story behind the news, like how much impact the president really has on the economy. They cover trends, too, like which jobs are growing fastest or how weather prediction is getting privatized. And like us, they try to have fun. In this episode of The Indicator, hosts Adrienne Ma and Weilin Wang explore the economics of college sports stadium naming rights. We hope you enjoy it.

NPR. This is The Indicator from Planet Money. I'm Adrian Ma. And I'm Wayland Wong. If you drive by any major sports venue, professional or collegiate, in almost any city, there's a good chance you'll see the name of a bank or a tech company or some other brand that has paid millions of dollars for the right to name that stadium or arena after themselves. Yeah, and some of these sponsored stadium names can be more than a little clunky. For example, the Baltimore Ravens play in M&T Bank Stadium.

I also look at this up in Pittsburgh, the Penguins play at PPG Paints Arena. I mean, ugh. Well, in Chicago, we have guaranteed rate field. That's where the White Sox play. That's bad. And people in Chicago had a lot of feelings about it when it was renamed. I can imagine.

But you know, in the normally bland corporate sounding universe of venue name mashups, here's a venue sponsor that stands out. If you are a practitioner of the krunk or clubbing arts, you might recognize this song as Don't Stop the Party from the rapper and singer Pitbull. Recently Pitbull agreed to pay six million dollars to Florida International University for the naming rights to its football stadium. And so this weekend, its football team will play the first game in the newly dubbed Pit Bull Stadium, which appears to be the only one of its kind in America named after a musician. Today on the show, why FIU struck this unusual name deal and what it tells us about the fast-changing economics of college sports. Scott Carr is director of athletics at Florida

International University, which basically means he's in charge of overseeing the sports teams. But beyond that, Scott sort of sees his job as promoting the university itself. What we always say in our athletics departments, whether it's at FIU or another one, we're the front ports to the university. We are one of, if not the strongest marketing arm for an institution, right? Now universities can try and build their reputations through their academic programs, they can buy ads and commercials. But Scott says nothing quite builds a school's brand like sports. And one sport in particular.

If you really want people to know who you are, be great in football. Yeah, the only problem with that is that FIU is, how do I put this, not great at football. Oh no, really? It's extremely not great at football, yeah. Historically, they have lost way more games than they have won.

And to be fair to FIU, its football program hasn't been around for that long. For comparison, I've worked at Auburn University and I think they're probably around 130, 140 years of football, something like that, right, by now. We've only been playing football for 22 years, which means that we haven't had some of the success that some of these other schools have had.

So how does a school football team get better then? Well of course it has to attract better players. And how does it do that? Well the simple answer is money. A school with more money can hire better coaches and give out more scholarships. It can build a bigger stadium and nicer training facilities. But that money has got to come from somewhere. and finding it has become more complicated in recent months as schools deal with some radical shifts in the economics of college sports.

For one thing, a couple of years ago, the main governing body of college sports, the NCAA, got rid of an old rule that prohibited athletes from earning money off their name, image, and likeness. As a result of this change, donors and corporate sponsors who in the past would have given money directly to a school can now give money directly to athletes. So schools that are losing that revenue have to make it up elsewhere. Compounding this issue is a second major shift expected to happen next year. In a proposed settlement in a lawsuit involving the NCAA, schools may soon be able to start sharing revenue from things like ticket sales and

sponsorships with student-athletes. And they may have to if they want to attract the best. We do want to be able to participate at whatever level that we can. So you think about that and you say, okay well you know we need to increase the revenues that we have because that's a new expense, if you will. Right. That's a new expense that wasn't there five years ago. The hunt for new revenue led Scott and his colleagues to do what more and more schools have done in recent years, which is lease out the naming rights to their sports facilities. And if I use case, this is a 20,000 seat football stadium. 20,000 seat football stadium. And that is when they approached a man named Armando Christian Perez, aka Mr. Worldwide,

aka Pitbull. And Pitbull agreed to pay FIU $6 million to have his name on the stadium for five years. Well, first of all, you know we got to get it going. Here he is talking about the deal in ESPN. You know, coming from Miami, you got that chip on your shoulder where you're just the underdog of all underdogs. And you're constantly trying to figure out ways on how to do things that nobody's thought of or they thought that it was unbelievable and impossible. So to be able to pull something like this off, I want to say thank you to FIU.

Do you think I'm doing that right? Pitbull, is that you? No, it's me. I thought he was in the booth with us. Oh, you fooled me. Well, it's me. I was just doing an impression of Pitbull. Yeah, I can't tell you two apart.

Now, Pitbull is obviously a celebrity and a successful musician. I'm not saying you're not, Adrian. But why didn't FIU do a name deal with, let's say, a bank or a tech company or a Fortune 500 company with super deep pockets? Scott says it was about generating buzz. We made history because there's not another college stadium that's named after a musician. If we had named our stadium after that fortune 500 company, you and I had never met each other and we're probably not doing this interview.

Scott says he got a company to estimate the amount of media exposure the school has gotten in the two weeks after they announced this Pitbull Stadium deal. And he says it was estimated to be worth around $86 million. So I guess we're kind of a part of this too? Yes, I think bait, set and hook. That is us. Well, you know, it's like this Pitbull angle was catnip for us. How can we resist? It really works. We got suckered. So forming this partnership with Pitbull appears to be already paying off for FIU. And there's more to it.

As part of the deal, Pitbull will help the school with fundraising, promote the school on social media, and even write a special Pitbull Stadium song. I think this is sounding like a pretty good deal for FIU so far, but even so, you know, there are so many entertainers in Miami that we just had to ask Scott, what other celebrities did you consider? Sure. I, I'm going to, I'm going to plead the fifth on that, right. On who was on our list, right.

Come on. But Armando Pitbull was, was at the top. I love how he says Armando Pitbull. That's so cute. We should say, lest we give the impression this is a philanthropic endeavor for Pitbull, that it is also a multi-dimensional money-making opportunity for him. On top of having his name on the stadium, he has the right to sell on-field advertising space.

Pitbull also owns a vodka brand, which will be sold in the stadium. And maybe the biggest deal of all, 10 days a year, he gets to use the stadium rent-free. So he could throw a concert. He could lease it out. He could, like, throw a children's birthday party and offer pony rides.

He could like throw a children's birthday party and offer pony rides. That would be an epic, epic kid's birthday party. Can you imagine? You could have like a Ferris wheel in there. You could have sword swallows. I guess I'm just describing a circus. I'm describing a circus.

This sounds like you're pitching Pitbull right now. Yeah. Can you get Scott to give me his number after this? You know, looking forward, who knows if more celebrities will follow in Pitbulls footsteps or foot or paw prints. What does seem likely is more schools will be looking for naming rights deal like FIU did. For this story we spoke to a sports marketing firm called Elevate and they estimate about 25 percent of universities have a corporate sponsor on their stadium and they think it's likely

to increase thanks to the changing economics of college sports and the fact that these venues are just prime advertising real estate. Even when a team is only so-so? Well, you haven't lived until you have cheered for a losing football team. All I'm saying. I went to Northwestern, the doormat of the Big Ten. Hahaha! This episode was produced by Angel Carreras and engineered by Patrick Murray. It was fact-checked by Cierra Juarez, Cake and Cannon edits the show, and the indicators for production of NPR.

Thanks again to NPR for sharing an episode of The Indicator from Planet Money. You can find more episodes of The Indicator wherever you get your podcasts. Five days a week, always less than 10 minutes. We'll be back in a few days with a new episode. The hidden side of everything.