When construction workers broke ground on the future home of the NFL's Minnesota Vikings, no one thought it could come to this. Wells Fargo (NYSE:WFC) had provided $300 million of the $400 million in financing needed to construct the mixed-use development surrounding the stadium, while U.S. Bancorp (NYSE:USB) had purchased the naming rights to the new stadium itself, the aptly named U.S. Bank Stadium. Wells Fargo would have rights to put signs on the frontage of the buildings it was financing, plus the right to paint a sign on their roofs.
That sign on the roof, it turns out, was not painted but was instead constructed and currently sits about 18 inches above the rooftop. The Vikings called this "ambush advertising" and a "photobomb" and sued Wells Fargo to cover it up immediately and then take it down.
It sounds ridiculous, and on the surface it kind of is, but for both U.S Bancorp and Wells Fargo, that sign represents hundreds of millions of dollars in potential marketing value. It's so much that even a scant 18 inches is enough to send these two banking giants to battle in court.
The photobomb heard around Wall Street
Last month, a U.S. district court judge in Minnesota heard the case and ruled that the sign could stay up, at least for now. He conceded, however, that the Vikings have a "fair" chance of succeeding in removing the sign in the appeals process.
The terms of the contract between the Vikings, the developers, and Wells Fargo stipulated that Wells would be allowed to paint a 56-by-56-foot logo on the rooftops of the two buildings. By elevating that logo 18 inches, the Vikings contend that Wells is essentially butting in on the value of the naming rights purchased by U.S. Bancorp.
Part of the value of the naming rights is the aerial shots of the stadium during TV broadcasts with tens of millions of viewers nationwide, with the name of the stadium always featured prominently. If the Wells Fargo logo is also displayed in those shots, the value of U.S. Bancorp's naming rights diminish considerably.
Potentially hundreds of millions of dollars at stake
The exact sum U.S. Bancorp paid for the naming rights is not known, but recent examples indicate a sum very likely to exceed nine figures. The naming rights to the San Francisco 49ers new stadium, which opened to play in the 2014 season, fetched $220 million for 11 years of rights. The highest naming rights deal in American sports is a tie between Citi Field and MetLife Stadium -- both stadiums are home to teams based in New York City and each deal worth $400 million.
It's unlikely that the Vikings' contract with U.S. Bancorp will approach that $400 million record given the smaller Minneapolis market, but it is still highly likely that it exceeds $100 million. Whatever the exact price tag, it is a certainty that U.S. Bancorp did not hand over such a large sum only to share the main stage with Wells Fargo.
Beyond the costs, the value these naming rights deal deliver can be staggering. For example, when the Super Bowl came to Indianapolis in 2012, Lucas Oil Stadium, home to the Indianapolis Colts, received an estimated $30 million to $40 million in marketing coverage from that single event alone. The naming rights in that case were sold for $122 million over 20 years beginning in 2006. The stadium has also hosted national events such as the Final Four basketball tournament in 2010 and 2015, plus the annual Big 10 college football championship game every year since 2011. All of that exposure comes on top of the regular NFL season played each fall. Estimates have put the return on Lucas Oil's investment in the naming rights at more than six times the annual cost.
In consideration of how much exposure an NFL stadium can generate for a brand, it's no wonder U.S. Bancorp would be upset by Wells Fargo's enhanced signage. It also makes perfect sense why the Vikings would file suit to protect the value of the naming rights it sold to U.S. Bancorp.
For investors of either bank, this drama could also have a subtle but meaningful impact on the two stocks moving forward. It won't garner the media attention of a big quarterly result, but, over the next 20 years, this stadium could drive hundreds of millions of dollars in marketing value to each of these brands.
At first the dispute over Wells Fargo's signage may seem small, but the reality is that 18 inches may have never been worth more.