The NBA’s jersey patch program – introduced in ’17 as a 3-year pilot – has been an “overwhelming success” from both the league and the advertisers’ perspectives; the 29 deals (OKC remains the only club without a patch partner) generate more than $150 million/year in new revenue for the teams, while sponsors receive 25%-50% more exposure than they would have on a comparable spend (Navigate Research). However, despite the pilot’s success – and the opportunity to further grow revenues – the NBA has no plans to increase the size of the patch (2.5 in. x 2.5 in.) or to add a secondary sponsorship opportunity to team uniforms. The league will instead focus on growing revenues through the sale of replica jerseys with corporate logos. As it currently stands, fans can only find jerseys with corporate logo patches in team controlled stores or on their websites. The league would like to expand retail distribution and is considering making jerseys with a corporate logo the only ones available for purchase.
Howie Long-Short: The patch sponsorship pilot program has far exceeded league expectations. Back in April ’16, Commissioner Adam Silver projected patch sponsorships would generate +/- $100 million in newfound revenue – so the league overshot its goal by +50%. While an extra $50 million would be welcomed by any business, $150 million doesn’t exactly move the NBA’s needle – the league generated over $8 billion in 2018. It should be noted though, that 20 of the 29 participating partners are working with the league (or their teams) for the first time – which helps to explain how sponsorship revenues grew +31% (from $861 million) last season.
Corporate sponsors are paying NBA teams anywhere between $5 million – $20 million (Rakuten, Warriors) per year, for the right to place their logo on an NBA team’s game jersey. It’s been estimated that the patches are visible for between 15-20 minutes during the average game telecast. Nielsen Sports reported that Wish (Lakers), Rakuten (Warriors) and GE (Celtics) have received the most exposure among the league’s patch partners this season.
Bucks President Peter Feigen says that the value of patches will be “worth significantly more [during the next round of negotiations, than they were during the last round] because the impression numbers have been so good”, but they’re also going to appreciate because the league has plans to make replica jerseys – with sponsor logos – more widely available, which would grow the advertiser’s reach “exponentially” and allow teams to charge more. Sports Business Journal reported that at least one team executive is expecting the value of patch sponsorships to rise +20%-30% during patch 2.0 negotiations. Fans should expect those new (or renewed) agreements to be longer in length, as well.
Opening up sponsorship opportunities to gaming companies is another way for the league to grow patch program revenues. During the first round of negotiations teams were forbidden from engaging companies whose primary product is associated with alcohol, tobacco or gambling; competitors of Nike, the league’s uniform provider, were also off limits. But since that time, PASPA was struck down and nearly 20% of the country has legalized sports betting. Growing the potential sponsor pool would result in teams signing larger deals and it’s all but certain U.S. casinos/sportsbooks would have an interest in the offering; 9 of 20 EPL clubs have enlisted a gaming company as their main kit sponsor.
Fan Marino: The addition of sponsorship patches to team jerseys has been met with fan indifference after some initial pushback, as “consumers have [just] become accustomed to it.” In fact, the presence of corporate logos on the uniform has become such a non-story, that fans who buy team jerseys are now clamoring for replicas of what their favorite stars are wearing on the floor – including the sponsor insignia – be made available at retail. It’s a no brainer for the league and its teams to stock “authentic” versions everywhere jerseys are sold.
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