Monday, May 21, 2012

Dollars & Sense - NBA Jersey Sponsorship

In the first post in I-95 SportsBiz history, the proposition of sponsorship space being sold on NBA jerseys will be under the intense scrutiny of the weekly Dollars & Sense column where, well you guessed it, we examine whether the dollars make sense.
With the NBA Playoffs in full swing and many of our favorite teams knocked out long ago, we can’t help but look ahead to next season.  Where are those marquee free agents that ESPN keeps talking about* going to land?  Are the Spurs really going to be able to stay young for one more year?  The Bobcats can’t really be that bad again, can they?  But one question that should be engrained in your mind now is will there be sponsors on the front of my favorite team’s jersey?
The Facts
The owners have been looking into the idea of jersey sponsorships throughout the season, and now more than ever it seems to be coming closer to reality.  There are essentially three choices: replacing the name, under the number, and on the jersey shoulder. 

The money that could be generated from jersey sponsors could potentially help the league immensely.  Although it is unclear as of now how many teams stand to lose money this season, last season a reported 22 teams dipped into the dreaded red numbers. 

Money is the clear-cut motivating factor here.  Many have spoken of the jersey sponsorship models currently used in the WNBA and the EPL.  The WNBA currently has a deal with Boost Mobile that has 10 of the 12 teams in the league bear the Boost Mobile brand on their uniforms.  The deal has allowed the league and its teams to see a little bit more stability**.

The EPL’s jersey sponsorship deals are on a team by team basis.  According to Sports Business Journal, the top annual values are $32.6 million worn by Manchester United (Aon), Liverpool (Standard Chartered), and Manchester City (Etihad Airways).  Chelsea’s deal with Samsung worth $22.5 million is good for fourth in the EPL.  Even though these are widely regarded as some of the strongest international brands, they are worth noting as a point-of-reference.

Estimates for NBA jersey sponsorships slot the value somewhere between middle of the EPL pack and somewhere closer to the WNBA.  It all depends on which sponsorship placement is used.  Experts cited in Sports Business Journal place their estimated values between $1 million and $20 million.

The Pros
A big pro for the teams of the NBA is pretty clear and that is the sweet smell of "straight cash, homie***".  The obvious new cash flow would be coming straight from the sponsorship deal.  However, it is important to keep in mind an indirect yet large chunk of change that could stem from a jersey deal: merchandise.  Avid fans always want to keep up with the latest and greatest trends from their favorite team.  Having the newest jersey is something that many avid fans pride themselves on^.  A jersey sponsorship would change up that avid fan’s favorite team’s jersey, therefore that fan is now on his/her way to the local sporting goods store to don the team’s newest look.

There is also one huge pro for sports marketers and that is cutting through the clutter with these jersey sponsorships.  Marketers spend millions of dollars with teams for signage and category exclusive rights.  In this day and age of sport, it has become increasingly hard as to not blur the lines of categories.  It is tough for fans to recall team sponsors because there’s so many.  Fans see so many signs that many have become immune to the sight and no longer internalize what they see.  Jersey sponsorships can cut through the cluttered sponsorship place.  With essentially a few signatures^^, a brand can instantly become the most visible of a team’s partners. 

The Cons
The con is the reason that we do not already see jersey sponsorships.  The con is that tradition says no.  Close your eyes for a second.  Imagine Michael Jordan’s famous cross-over of Byron Russell of the Utah Jazz in game 5 of the 1998 NBA Finals^^^.  We can all picture it vividly.  Now, at the moment when Jordan turns around after following that famous follow-through, place some large and obnoxious logo on the front.  I know it’s hideous, right?  It’s exactly why the traditionalists say no way.

The Sense
My senses say that traditionalists may not be able to hold their ground much longer.  I personally can’t decide where I stand on the matter.  I usually find myself initially siding with tradition, but tradition only sells for a small number of teams.  I think that the NBA should do one of two things, assuming that they do go in the jersey sponsorship direction. 

Option #1 – Make the Adidas, the NBA’s jersey provider, logo visible on game jerseys.  The logo is on all warm ups and fan purchased jerseys.  We see it in other sports, most notably in the NFL who has a huge jersey deal with Nike.  Fans are used to that and Adidas would put in extra money to make their logo more visible during games.

Option #2 – Go all out.  If the NBA is going to do it, then they should just do it.  There is no use in beating around the bush trying to sell the fans on false statements about attempting to avoid over-commercialization.  They aren’t fooling anybody.  Just take the most money that is offered and move on.  Fans will get used to it because they won’t have another choice.

The NBA is already trying to loosen up the fans by “experimenting” in the NBDL and throwing quotes out in the media saying that jersey sponsorship is inevitable.  As a fan, I say please make the decision, lay it on us, and let us adjust yet I’m also wondering what a Celtics jersey would look like with a corporate logo on it.  With the NBA becoming more of a global appeal, the jersey sponsorship could make sense because it would put them more on the international level with the EPL.  From a sports marketer’s standpoint, I would jump on this as quickly as possible and really elevate my brand to a new level by paving a new path. 

The Final Verdict
The dollars make sense for sports marketers trying to elevate their brands.  The dollars will only make sense for the NBA if they are straight forward with selling points to the fans and really use it as a platform to make the league a true global brand.

In the meantime, I’m on my way to meet with Commissioner David Stern on my new proposal… Selling ad space on the forehead of every player in the NBA.

* – No that will not be the last shot that I will be taking at ESPN.  Don’t worry, there will be plenty more.
**– Stability relative to the Women’s National Basketball Association of course.
***– That quote has to be one of Randy Moss’s top 5 contributions to the sports world.  Seriously.
^– Sheer observation through the years.  Nothing scientific.
^^– And a large briefcase full of freshly printed, neatly wrapped United States dollars.
^^^– I was going to say imagine Ron Artest making his way through the stands at the Palace at Auburn Hills with a large and obnoxious logo on the front, but I figured it didn’t hold a place in your heart that would instill anger toward over-commercialism. 


  1. Good debut post. Well written and relevant Sports Biz topic.

    I think another con is that if these jersey deals become team sponsorship inventory then it would probably widen the gap between small and large market teams with teams like the Bobcats getting deals closer to $2M/year and the Lakers over $20M. A solution would be increased revenue sharing on the jersey deals but I doubt that would happen.

    I imagine these deals would also be complicated by local versus league-wide sponsors. For example, the NBA's official bank (BBVA) wouldn't be too happy if the Celtics played on national TV with a TD Bank logo on their jersey.

    But I definitely agree that the jersey sponsorships are likely within the next 3-5 years. Then the NFL will probably follow.

  2. Thank you for the kind words.

    I agree that if deals are done on a team by team basis and not through one big league-wide deal, there is going to be a big problem with the disparity between teams. I can't imagine the NBA accepting the fact that the competitive balance could be jeopardized more.

    One thing I would like to see is how the league leverages these deals with their brand. I wonder whether they are discussing this option simply as another revenue source or if they are looking to use the jersey sponsorship as positioning for a more global league. Only time will tell though.