Extra Cost of Naming Rights for Credit Unions Might Be Small

Credit unions are frequently announcing naming rights deals, but often omit the financial fundamentals.

A CU Times analysis of 12 naming rights deals announced since January 2019, along with the total fees to be paid and years to pay them, showed that credit unions committed to paying $265.8 million over five to 25 years.

Their yearly cost was $18.6 million, or 0.02% of average assets out of total marketing expenses of 0.15% of average assets in 2023, based on comparing the fees to NCUA data for assets and the NCUA’s “Educational and Promotion Expenses” category in Call Reports.

Those 2 basis points were also about the same amount of difference from other credit unions that did not readily show up as having naming rights deals in searches on Google or in the CU Times library.

Marketing costs for credit unions that did not show up in the searches were 0.12% of average assets in 2023, based on NCUA data from Callahan’s Peer Suite.

The gap of 2 to 3 bps held for 2021 through 2023. In the first half of this year, the gap was 3 bps with the 12 with naming rights with identified costs having marketing expenses of 0.14% of assets compared with 0.11% for others.

Details of the 12 naming rights deals are shown below:

1. America First Federal Credit Union of Riverdale, Utah, agreed in 2022 to pay $100 million over 15 years to Real Salt Lake (RSL) for the 20,213-seat America First Field in Salt Lake City. The yearly cost is $6.7 million, or 0.04% of average assets out of total marketing expenses of 0.18% of average assets in 2023.

2. Mountain America Federal Credit Union of Salt Lake City agreed in 2023 to pay $50 million over 15 years to Arizona State University for the 53,599-seat Mountain America Stadium in Tempe, Ariz. The yearly cost is $3.3 million, or 0.02% of average assets out of total marketing expenses of 0.13% of average assets in 2023.

3. L&N Federal Credit Union of Louisville, Ky., agreed in 2023 to pay $41.3 million over 20 years to the University of Louisville Athletics for the 60,800-seat L&N Federal Credit Union Stadium in Louisville, Ky. The yearly cost is $2.1 million, or 0.10% of average assets out of total marketing expenses of 0.18% of average assets in 2023.

4. Desert Financial Federal Credit Union of Phoenix agreed in 2019 to pay $7.5 million over five years to Arizona State University for the 14,198-seat Desert Financial Arena in Tempe, Ariz. The yearly cost is $1.5 million, or 0.02% of average assets out of total marketing expenses of 0.2% of average assets in 2023.

5. Gesa Credit Union of Richland, Wash., agreed in 2021 to pay $11 million over 10 years to Washington State University for the 33,000-seat Gesa Field in Pullman, Wash. The yearly cost is $1.1 million, or 0.02% of average assets out of total marketing expenses of 0.22% of average assets in 2023.

6. State Employees Credit Union of Maryland agreed in 2022 to pay $11 million over 10 years to the University of Maryland for the 51,802-seat SECU Stadium in College Park. The yearly cost is $1.1 million, or 0.02% of average assets out of total marketing expenses of 0.10% of average assets in 2023.

7. SAFE Credit Union of Folsom, Calif., agreed in 2019 to pay $23 million over 25 years to the City of Sacramento for the 2,442-seat SAFE Credit Union Performing Arts Center, the SAFE Credit Union Convention Center and the SAFE Credit Union Plaza in Sacramento. The yearly cost is $920,000, or 0.02% of average assets out of total marketing expenses of 0.09% of average assets in 2023.

8. VyStar Credit Union of Jacksonville, Fla., agreed in 2019 to pay $9.8 million over 15 years to the City of Jacksonville for the 15,000-seat VyStar Veterans Memorial Arena in Jacksonville. The yearly cost is $650,667, or just half a basis point of average assets out of total marketing expenses of 0.14% of average assets in 2023.

9. Michigan State University Federal Credit Union of East Lansing, Mich., under its OU Credit Union subsidiary, agreed in 2023 to pay $5 million over 10 years to Oakland University for the 4,000-seat OU Credit Union O’rena just north of Detroit. The yearly cost is $500,000, or 0.01% of average assets out of total marketing expenses of 0.15% of average assets in 2023.

10. Chartway Federal Credit Union of Virginia Beach, Va., agreed in 2019 to pay $4.25 million over 10 years to Old Dominion University for the 8,400-seat Chartway Arena in Norfolk, Va. The yearly cost is $425,000, or 0.02% of average assets out of total marketing expenses of 0.15% of average assets in 2023.

11. Liberty First Credit Union of Lincoln, Neb., agreed in 2022 to pay $1.6 million over 10 years to the City of Ralston for the 4,000-seat Liberty First Credit Union Arena near Omaha. The yearly cost is $160,000, or 0.04% of average assets out of total marketing expenses of 0.22% of average assets in 2023.

12. GreenState Credit Union of North Liberty, Iowa agreed in 2019 to pay $1.4 million over 10 years to ArenaCo for the GreenState Family Fieldhouse in Coralville, Iowa. The yearly cost is $140,000, or just a tenth of a basis point of average assets out of total marketing expenses of 0.09% of average assets in 2023.