One Small Patch of Fabric – A Lot of Weight

 

Sponsorship is a huge part of the sports business world and a significant portion of most professional franchises’ revenues. Outside the United States, it is commonplace to have the team’s sponsors’ branding on all team apparel, especially game jerseys. For many years, however, US sports have resisted this trend (and resulting revenue) by banning on-jersey sponsorships. This month the NBA approved a three-year pilot program to begin in the 2017-18 season allowing on-jersey advertisements. Long a subject of debate in and around the league, the program was approved 28-2 by the NBA team owners. The 2.5-inch-by-2.5-inch patch will appear on the left shoulder of the player’s jersey opposite the Nike swoosh. The 2017-18 season will also bring the beginning of Nike’s exclusive apparel deal with the NBA, an eight-year deal with an estimated value of over $1B. The NBA logo will remain on the back of the jersey where it was moved two years ago.

Seattle Sounders Jersey featuring sponsorship of Microsoft’s XBOX product

In 2006, Major League Soccer became the first American professional league to allow its teams to sell ad space on-jersey. Shortly thereafter, the WNBA followed suit, also allowing the on-jersey ads. Signs that the four major sports leagues might allow on-jersey ads have been apparent for years: the NFL allowed practice jerseys to be sponsored in 2009 and the NBA put the Kia brand patch, the official automotive partner of the NBA, on the 2016 All-Star Game jerseys. Nonetheless, it remained unclear whether the owners would approve the on-jersey ads for regular season games.

NBA Commissioner Adam Silver

Sponsorship is not only a revenue source for teams, but also allows brands to build a deep connection with “their” team. Brands sponsoring a team seek to build an association with the fans between its brand and the team. “Jersey sponsorships provide deeper engagement with partners looking to build a unique association with our teams and the additional investment will help grow the game in exciting ways,” said NBA Commissioner Adam Silver. Silver cites the changing media landscape and the fact that “people are watching far less commercials” as the reason why companies need additional opportunities to connect with their consumers. Commissioner Silver projects the pilot program will generate over $100 million for the League. To make the deal more attractive to the League owners in smaller markets, half of the revenue generated from this ad space for each team will be put in the revenue-sharing pool and half will be kept by the team.
However, the reaction has not all been positive as many people are resistant to the break from tradition and the further “commercializing” of American sports. As a compromise, the NBA will not allow merchandise with the new corporate logos to be sold except in official team stores at the team’s discretion. This was also the reason for the relatively small, and some hope inconspicuous, patch.
While most would say I am a traditionalist, as an MBA focusing in sports marketing with a particular interest in sponsorship, I believe the League should have the ability to exercise this option if they so choose. The NBA is a business after all.

Written by Robert Cella

As I transition into sports business industry, I am a current MBA candidate at the Warsaw Sports Marketing Center. I am energized and passionate as I make this career change into sponsorships and corporate partnerships. With experience in small business operations, financial advising and international business, I am well-positioned to succeed in this area upon graduation in 2017.