There’s a well-known phenomenon that bad things happen to companies that put their name on a stadium.The most notorious example was in 2000 when Enron bought the rights to Enron Field in a $100-million, 30-year deal. Just two years later, the defunct company would sell the contract back to the Houston Astros for $2.1 million.
The curse also famously struck TWA, PSINet, Fruit Of The Loom, CMGI Inc., Savvis Communications, 3 Com and Conseco.
How consistent is the trend?
Victor Niederhoffer analysed the performance of companies buying naming rights from 1990 to 2001, in his book Practical Speculation. These companies trailed the S&P 500 by a median of -8% in the year they named a stadium and a median of -27% three years later (they beat the index on mean thanks to the extraodinary performance of Qualcomm).
Niederhoffer attributed the stadium curse to hubris: “Corporations are beset by the same harmful tendencies as investors. When they are at their peak, they reach for the sun.”
The following slides show what happened to every company that named a stadium in the nineties.