Why I am Happy the Boston Celtics made it to the NBA Finals (hint: I am not a Celtics fan!)

ASHOOR

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The Boston Celtics just swept the Indiana Pacers to make it to the NBA finals. Since the team plays at an arena named 'TD Garden', and as a TD shareholder, the following question came to mind:

Does a team (mainly from the big 4 leagues) making it to their respective league finals, help - directly or indirectly - the company that has the naming rights to the specific team’s arena, field or stadium? In this case, TD bank benefiting from the Boston Celtics run in the final, given that they have the naming rights to TD Garden.

As with a lot of things these days, I started my research by posing that question using an AI re-generative tool. Here is what I asked Microsoft Copilot and what response it returned (see screenshot):

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I further looked into TD’s naming rights to the Boston Celtics’ (and Boston Bruins) arena and apparently they renewed it last year for another 20 years, to be in effect until the year 2045!

I then asked ChatGPT if there are any historical studies about this and whether there is a direct or indirect link between a team making it far in playoffs and the company that has the naming rights to their stadium or arena benefiting from that and here was the answer:

"Yes, there have been studies examining the impact of sports team performance on companies with naming rights to their stadiums or arenas. While the evidence is not always straightforward, several studies suggest that there can be both direct and indirect benefits:


1. Brand Visibility and Recognition: When a team performs well, particularly making it to the playoffs or finals, the increased media coverage can significantly enhance the visibility of the company’s brand. This heightened exposure can lead to greater brand recognition and, in some cases, improved brand perception.

2. Consumer Sentiment and Spending: A successful sports team can boost local consumer sentiment, which can translate to increased spending in the local economy, potentially benefiting the sponsoring company. For example, positive consumer sentiment can lead to higher engagement with the company’s products or services.

3. Stock Performance: Some studies have examined the correlation between sports team success and the stock performance of the sponsoring company. While the results are mixed, there are instances where companies with naming rights have experienced short-term stock price increases following significant team successes, likely due to the positive publicity and increased brand awareness.

4. Community and Employee Engagement: The success of a local sports team can foster a sense of community pride and morale, which can positively affect the company’s employees and stakeholders. This enhanced community and employee engagement can indirectly benefit the company through improved productivity and employee satisfaction.

One notable study is “The Effect of Sports Sponsorship on Stock Returns: An Event Study Approach” by Timothy Loughran and Jay R. Ritter (1995), which found that companies announcing sports sponsorship deals, including naming rights, often experience positive abnormal returns around the announcement date.

While these studies suggest potential benefits, it’s important to note that the impact can vary depending on various factors, including the size of the company, the extent of media coverage, and the overall economic environment. Therefore, while there can be positive effects, they are not guaranteed and may not always be directly quantifiable."


Finally, not to feel left out, I asked Google Gemini the following question:

“Recently, TD Bank was implicated in a money laundering scandal in the U.S., where criminals used the bank to launder proceeds from illegal fentanyl sales. How could the Boston Celtics reaching the NBA Finals help improve TD Bank's image, increase business, and positively impact its stock price?"

Here is the reply it gave me:

“Here's how the Boston Celtics reaching the NBA Finals could potentially help TD's image, even though it doesn't directly address the money laundering controversy:

Positive Public Perception:


* **Shifting Focus:** News cycles tend to be short-lived. The Celtics' success could generate positive media attention, temporarily diverting public focus from the controversy. This allows TD some breathing room to implement solutions.

* **Community Goodwill:** A strong playoff run by the Celtics can create a sense of community pride and positive emotions in Boston. By association, TD, as a major Boston-based company, could benefit from this upbeat atmosphere. This positive association might lead to a more forgiving public perception.


Brand Repositioning Strategy:



* **Values Alignment:** The Celtics are known for their teamwork, dedication, and resilience. TD could leverage this positive association to emphasize its own commitment to rebuilding trust and becoming a better company. This could involve campaigns highlighting how they've addressed the past issues and are working to regain public confidence.


However, it's important to consider these limitations:

* **Superficial Impact:** The positive impact of the Celtics' success would likely be temporary and limited. It wouldn't erase the money laundering issue. Regaining trust requires concrete actions.

* **Focus on Solutions:** Real change requires demonstrable efforts. TD needs to show a strong commitment to preventing future issues and cooperating with authorities. This could involve increased transparency, improved compliance measures, and public updates on their progress."



So there you have it, as obvious as this question may seem, the answer may not be as direct. Toronto Maple Leafs one day making it to the Stanley Cup finals - virtually impossible - may have tremendous returns for the Bank of Nova Scotia (the bank has the naming rights to the arena where the Toronto Maple Leafs (NHL) and Toronto Raptors (NBA) play, than a team that is used to the finals, say Golden State Warriors from the NBA.
 
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