When a Company Pays for Stadium Naming Rights, Is It Time to Cut and Run On Its Stock?

With coronavirus wreaking havoc on the world and exposing all sorts of fragility in the economy, corporate budgeting is one area that has again made headlines -- especially given the number of large companies out there suddenly in need of a lifeline. I already picked on stock buybacks a few months ago, and how some irresponsible behavior has manifested itself this year. Not to add more fuel to the dumpster fire that has been 2020, but stadium naming rights are another precarious part of the economy that deserve investors' closer attention.

Hundreds of stadiums around the globe host professional sports teams. To generate revenue, many of these venues sell the right to name the stadium after a corporate sponsor. In exchange, the business gets its logo plastered all over the venue, gets at least a couple name drops during an event broadcast, media mentions, and the opportunity to pick up direct sales at events themselves (like Molson Coors (NYSE: TAP), which has its name attached to Coors Field in Denver, Colorado).

Image source: Getty Images.

Source Fool.com