Bloomberg News

NBA Jersey Sponsorship Idea Rises as League Seeks More Revenue

March 30, 2012

National Basketball Association owners gather April 12 in New York for their first board of governors meeting since the labor dispute last fall.

During the lockout, Commissioner David Stern told anyone who would listen that the players would have to accept cuts because the NBA was losing more than $300 million annually, with 22 of its 30 teams in the red. The new collective bargaining agreement helped owners control costs, but many still badly need a revenue boost, which is why an old idea may get a new hearing at the April meeting: selling ad space on game jerseys, Bloomberg Businessweek reports in its April 2 issue.

According to Sports Business Journal, the idea probably will be debated at the meeting. NBA spokesman Michael Bass says the agenda is not yet set but that “sponsor logos on NBA uniforms is a subject of ongoing conversation.” Marketing experts say it’s only a matter of time.

“When you look at the revenue streams left available, jersey branding is the most significant that hasn’t been exploited,” says David Abrutyn, head of global consulting at sports marketing firm IMG Worldwide.

What’s not so certain is what a jersey deal is really worth. Front Row Marketing Services, whose parent company, Comcast- Spectacor, runs 11 regional sports networks and owned the Philadelphia 76ers until last fall, figures the annual cost to companies to place their logos on uniforms would range from $1.2 million to $7.5 million per year, depending mainly on the market where the team plays.

A study by Horizon Media last year put the annual value of the television exposure of the space across an NBA jersey’s chest in a range from $4.1 million for the Los Angeles Lakers to $300,000 for the Minnesota Timberwolves.

Lakers Deal

Abrutyn, whose IMG arranged the partnership deal between the NBA and its official automotive partner Kia Motors, says the Lakers might fetch $10 million to $15 million per year.

In European soccer, marquee clubs such as Manchester United get more than $30 million a year for uniform deals.

“I’ve got about six companies that would buy it right now,” says Abrutyn.

Businesses that already have naming rights to NBA venues, such as Staples in Los Angeles or TD Bank in Boston, are likely to be “the ones on speed dial once this gets approved,” he says.

While dealmakers are excited, fans might not be. None of the four major U.S. sports sells space on game jerseys and the NBA, unlike the other leagues, doesn’t even give space to its uniform maker, Adidas.

But the purists have long been in retreat. In 1979, Liverpool became the first professional soccer club in England to put a sponsor (Hitachi) on its uniform. At first, the BBC refused to air the club’s games. Now every team in the Premier League sells the space on players’ chests. “Commercialization in sports has long been accepted in society,” says Abrutyn.

Players Share

The players, for their part, are not likely to complain, because they would be entitled to a share of the extra revenue. Plus, sponsorship money doesn’t come out of fans’ pockets.

“The initial outrage of people putting names on stadiums ended pretty quickly when people realized that otherwise they’re going to have to pay a lot more for their tickets,” says Frank Vuono, co-founder of 16W Marketing.

Even without a fan revolt, the league will have to sort out ground rules to keep from upsetting its current sponsors and TV partners.

Could a team with Southwest Airlines on its jersey play at AmericanAirlines Arena in Miami? Does Kia’s status as the official automotive partner of the NBA keep Chrysler from buying space on the Detroit Pistons’ uniform?

Bass says the NBA, which already does jersey deals in its development league and in the WNBA, is evaluating “the impact on key stakeholders.” One big consideration, he says, is whether jersey sponsorships would increase revenue or merely divert it from existing deals.

To contact the reporter on this story: Ira Boudway in New York at iboudway@bloomberg.net

To contact the editor responsible for this story: James Ellis at jellis27@bloomberg.net


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