Why Scotiabank paid $800M for naming rights to the Air Canada Centre

Click to play video: 'Air Canada Centre to be renamed Scotiabank Arena' Air Canada Centre to be renamed Scotiabank Arena
WATCH ABOVE: Maple Leaf Sports and Entertainment announced it reached a new 20-year naming rights agreement with Scotiabank to rename the ACC. Ashley Molnar reports. (Aug. 29) – Aug 29, 2017

VANCOUVER – Scotiabank‘s $800-million deal for the naming rights to the Air Canada Centre, home of the NHL’s Toronto Maple Leafs, is the latest move by a corporation to corner the sponsorship market of the country’s national pastime.

While a whopping sum – 10 times as much as Air Canada is reportedly paying annually – experts say the investment will pay back in dividends through goodwill and increased revenue as even die-hard fans have become accustomed to the new norm of stadiums bearing corporate names.

The bank announced Tuesday it has signed a 20-year deal for the naming rights for the arena, which will become the Scotiabank Arena in July 2018. Next year’s name change will be the first for the 18-year-old venue.

READ MORE: Toronto’s Air Canada Centre to be renamed Scotiabank Arena in 2018

But Scotiabank believes the investment is worth the price tag for a deal that was called “record setting” by Maple Leaf Sports & Entertainment.

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That’s because Scotia considers hockey “core to our strategy,” said Jacquie Ryan, the bank’s vice-president of sponsorship and philanthropy.

It supports more than 8,000 community teams and already has its name plastered on another NHL team’s arena, the Scotiabank Saddledome, where the Calgary Flames play.

“Hockey is a key driver of our brand health,” she said, adding “the reach of a hockey sponsorship portfolio in Canada is significant.”

External consumer research done for the bank shows people who are aware of its financial support for hockey are three-and-a-half times more likely to consider using its services, Ryan said, a potential boon for a bank in a nation where it’s difficult to entice consumers to switch institutions.

“It’s quite possible that number could go up,” she added, thanks to increased visibility when the Scotiabank name appears on the Toronto Maple Leafs’ arena.

The bank is looking to increase that positive sentiment by associating itself with the sport Canadians are so passionate about, said Vijay Setlur, a marketing instructor at York University’s Schulich School of Business in Toronto.

Since banks are in an industry where they all provide similar products, Setlur said it is crucial for them to differentiate from their competition through things like sports sponsorship.

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The Bank of Montreal, for example, tends to focus on soccer and basketball, he said, while the Royal Bank of Canada hones in on junior hockey and the Olympics.

By branding itself as “the bank of hockey,” Setlur said, what better platform for Scotiabank “to reinforce that message than to have the naming rights of the Air Canada Centre, which arguably to some is the epicentre of hockey in this country?”

Banks could measure a deal’s effectiveness by the number of new bank accounts opened afterwards, Setlur added, as well as the amount of money deposited in them and the amount of interest the bank earned.

They may also look at less concrete things like consumer sentiment, which may not always translate directly into revenue dollars.

WATCH: Behind-the-scenes look at how the Air Canada Centre converts from a basketball court to an ice rink

Click to play video: 'Behind-the-scenes look at how the Air Canada Centre converts from a basketball court to an ice rink' Behind-the-scenes look at how the Air Canada Centre converts from a basketball court to an ice rink
Behind-the-scenes look at how the Air Canada Centre converts from a basketball court to an ice rink – Apr 19, 2017

Another benefit is increased media coverage, as the company’s name will be linked to the arena any time a newsworthy event takes place.

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However, corporate names slapped onto beloved sports stadiums aren’t always well received.

When a historically-named stadium is rebranded under a corporate sponsorship, fans tend to get upset, according to research conducted by Stephen Reysen, an associate professor of psychology at Texas A&M University.

READ MORE: Renaming famous Toronto landmarks no easy feat

That was the case in 2005 when Toronto’s SkyDome, home to the MLB team the Toronto Blue Jays, was renamed the Rogers Centre much to the chagrin of fans.

However, a follow-up study Reysen conducted showed fans did not care if a stadium’s name changed from one corporation to another, as will be the case when the Air Canada Centre is renamed to the Scotiabank Arena.

“The only way fans out there will care is if Air Canada is meaningful to the fan identity, and I can’t see it being meaningful,” Reysen said.

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