The Redskins: What is the value of a brand name?
With the continuing controversy surrounding the monikers of certain sports teams, the value of the team’s nickname to the franchise has become part of the justification for keeping the name. Washington Redskins’ owner Daniel Snyder has vociferously defended his team’s name, citing the meaning to its football fans as being positive and the negative connotations as being taken out of context. While the U.S. Patent and Trademark Office has canceled the team’s trademark because it considers the name disparaging, the team is seeking to overturn the decision. A significant aspect of the battle is the value of the team’s name, logo, and imagery, and the brand recognition that comes with it.
Judging the value of a brand name to a franchise is difficult. While a strong brand name can be a valuable asset, there is no agreed upon way to quantify that value. However, this brand equity is a valuable intangible asset, and an attempt to understand the value of this asset can help risk managers recognize how important protecting the brand is to the organization. One simple way to qualitatively judge the strength of a brand name is to look at the franchise value relative to its direct competitors. If a company has a strong brand name, it will likely have a higher valuation in the market relative to competitors with similar characteristics.
The Washington Redskins are currently the third most valuable team in the National Football League (NFL) according to Forbes. Once you consider the Redskins’ poor performance on the field in recent years, you can draw the conclusion that their high valuation is related to off-field factors, with brand name and target market being two of the most likely candidates. Baltimore shares a target market; however, its sustained on-field success has only helped it achieve the 10th- highest valuation in the NFL. Looking at other sports, the valuations of baseball’s Washington Nationals and hockey’s Washington Capitals are about 7% and 2% more valuable than the average franchise in their respective sports despite better performances. And basketball’s Washington Wizards are below average in terms of value. The Redskins’ $2.4 billion valuation is 68% higher than the average NFL team. There appears to be significant value in the Redskins’ brand, raising the franchise value higher than would be expected.
Other ways to evaluate the value of the brand are to look at the prices that can be charged for services or goods and the loyalty of customers to the brand. For example, the value of the brand name can be seen when considering the premium prices charged at the food store for a name brand compared to the generic version of a similar item. There is also a loyalty factor, where consumers will continue to purchase from the same brand, whether it is from trust in the name, perceived value gained from the brand, or past satisfaction. This loyalty can often lead a customer to purchase from a specific brand even when objectively better options are available. Again, looking at the Redskins franchise, despite the team’s recent struggles, the average ticket price is in the top third of the league and the waiting list for season tickets is one of the longest in the league.
The Redskins name, similar to Apple, Coca-Cola, or McDonald’s, provides a clear value to the franchise. Where does this high value come from? It comes from the associations made by customers when hearing the brand name. These associations can be related to exceptional organizational reputation, historically good consumer relations, or recognition as a leader in the field. Customers hear the brand name or see the company’s logo, and their long-held perception of the company often dominate their thoughts.
The positive feelings that some brand names bring to mind are a valuable and marketable commodity. Over the past few years, both Hostess Brands and Crumbs Bake Shop struggled financially and were looking at liquidation. However, they had one key asset that was available, the fond feelings and satisfied taste buds many customers associated with their brands. While both companies were suffering from management issues (and, for Hostess, legal troubles as well), the images associated with the brands were untouched in the snacking community. Today’s Hostess and Crumbs are not the same organizations that existed five years ago, but the brand names have remained intact.
Evaluating and capitalizing on the value of the brand is an essential part of a risk management framework. While these examples reflect opportunities presented by the presence of recognized goodwill, there should also be steps taken to avoid the downside risk of having a recognized brand. This includes both preemptive risk avoidance measures and contingency plans to protect or salvage brand equity. Preemptive measures would likely include marketing strategies focused on protecting the organization from reputational risk, or put more simply, trying to avoid bad publicity. This could take the form of vetting of spokespeople, doing careful due diligence on corporate alliances, or monitoring public opinion on the brand. If these efforts fail and an organization suffers from bad publicity, the organization will need to enact its contingency plan and work to rehabilitate the brand’s image.
There are many examples of instances where certain brand names lost their luster due to exposure to reputational risks. Any bad publicity has the power to introduce negative connotations to the imagery of a brand name, no matter how favorable the brand may have been. The Lance Armstrong Foundation, a non-profit organization which sought to support and inspire cancer survivors and their families, was a well-run charity created by an American icon who survived his own battle with cancer. Most people will remember the yellow Livestrong bracelets worn by those who had donated to the cause or were supporting a loved one in their fight against cancer. Unfortunately, Armstrong became better known for his involvement in a doping scandal and was stripped of his seven Tour de France victories. The foundation was synonymous with Armstrong, and as his star faded so did the organization’s. In order to keep the foundation viable, Armstrong stepped away and the company rebranded, becoming the Livestrong Foundation. Despite losing its partnership with Nike, the message and image of the Livestrong Foundation have allowed it to maintain its name recognition among cancer-related charities.
While any hit to the brand image is a major consideration, it is much more concerning when the entire brand name gives a negative impression. This was the case for Philip Morris, a company linked to nicotine in the minds of most consumers. Philip Morris needed to remove the tobacco connotations from its name, which could hurt its other brands, most notably Kraft Foods. After failed attempts to change the image through advertising, Philip Morris rebranded and became the Altria Group. While Philip Morris USA and Philip Morris International continued to exist, the non-tobacco-related companies were no longer subject to the negative connotations associated with the Philip Morris name.
An example from the financial world shows a clear benefit of rebranding, even if the rebranding was fortuitous rather than intentional. During the 1990s, intense disputes developed between the accounting firm Arthur Andersen and Andersen Consulting, separate business units of the same parent company. The dispute led to Andersen Consulting becoming a separate entity and being forced to rebrand, which led to the creation of Accenture. While unplanned, the rebranding helped Accenture to avoid the reputational hit from Arthur Andersen’s role in the Enron scandal.
The rebranding of sports teams has become more common in recent years. While most of these changes are minor, such as tweaks to a more marketable logo, others are pre-emptive moves to keep the teams away from any potential controversy. One example of this comes from the Washington area, where the NBA’s Washington Bullets were renamed the Washington Wizards in the late 1990s. The primary reason for the change was the violence associated with the word “bullet” in an area with particularly high crime rates. For a franchise like the Bullets, there was not a significant value to the franchise name and the costs of rebranding were likely offset to some extent by the benefits of selling new merchandise.
Most recent examples of sports teams altering their brand are attempts to be more sensitive to Native American culture. One example from professional sports is MLB’s Cleveland Indians, who have made no mention of changing their name, but have altered their logo and imagery, replacing the caricature Chief Wahoo with a block letter “C” as the primary logo. The National Collegiate Athletic Association (NCAA) made efforts to remove potentially offensive names and imagery during 2005, and most schools fitting that bill (including all using the nickname “Indians”) have changed or modified their names and images to be more sensitive. Most of those that did not change have nicknames related to a specific tribe who support the team name and imagery. St. John’s University in New York changed its nickname from the Redmen to the Red Storm prior to these efforts, and many high schools using some form of Redmen or Redskins have also dropped the nicknames.
The change was in the best interest of each of these programs. However, the Washington Redskins case is less clear because of the value associated with the brand. There is evidence that the Washington football team has value above that of a nondescript franchise. However, the value due to the name and logo compared to other factors, such as the longevity of the franchise and loyalty of its fan base, cannot be measured. While Snyder defends the Redskins name as having a different meaning for fans and former players—one of honor and respect—there is likely a significant financial component regarding the reluctance to rebrand.
While no company can survive without solid infrastructure, quality products, and strong risk management, the value of the brand name can often be one of the key components in the evaluation of a company’s worth. The goodwill associated with a brand is difficult to quantify, and it is an undeniable asset and often a key component of the price of a company. This is why organizations will work so hard to protect, or defend, their brand.