Put your shirt on | NBA shirt sponsorship potential value
IT HAS BEEN A year of firsts for the NBA’s Philadelphia 76ers and StubHub.
In February the online ticket exchange, an established operator in secondary ticketing, made its first major move into the primary ticketing marketplace through a partnership with the basketball franchise.
In May the two parties took the relationship to another level.
Scott O’Neil, the chief executive of the 76ers and the NHL’s New Jersey Devils ice hockey franchise, was part of the team that negotiated a three-season deal, from 2017-18 to 2019-20, for StubHub’s logo to have front-of-jersey sponsorship space under a three-year pilot programme that will tip off in just over a year’s time. The StubHub logo will be positioned on the upper-left chest – the NBA’s designated spot. More important, however, was the fact that this was the first such deal to be agreed since the NBA confirmed that it would become the first of the four most established US major leagues to allow shirt sponsorships during games.
Thanks to the move, 76ers’ stars will become walking, talking, dribbling billboards for the company.
“I think it really will become the fabric of sports,” O’Neil tells SportBusiness International.
This sort of sponsorship exposure has long been part of the fabric for auto racers and football clubs worldwide. In the US it began with Major League Soccer players in 2007. It has since been seen in the Women’s NBA and the NBA Development League.
In the NBA the 2017-18 campaign will also herald the first time that an apparel logo will appear on game jerseys – on the upper right side – when Nike becomes the league’s primary supplier.
“I just think it’s incumbent on us as leaders in the business to make sure that we’re generating revenue, to be able to fund and fuel the growth on the sporting side,” says O’Neil, who describes the patch as “the best inventory in the world […] a logo over the heart of the greatest athletes in the world.”
When the NBA announced the game plan in April, league commissioner Adam Silver said that annual revenue generated through the programme would be a total of “approximately $100m” (€89m). Some estimates have reached $150m. The patches are supposed to be a maximum of 2.5 square inches.
Silver says: “Jersey sponsorships provide deeper engagement with partners looking to build a unique association with our teams.”
Each team will cut its own deal. Half the revenue will end up in the players’ hands, because it will head into a revenue-sharing pool that goes to the 30 teams. However, the income is ultimately bound toward players’ salaries, because it is considered ‘BRI’ – or basketball-related income.
The league had been thinking about this for a while. WNBA teams began selling jersey sponsorships in 2009. Now 10 of the 12 teams have the logo of telecommunications company Verizon emblazoned on the front under the number. Seven have a sponsor over the number instead of the team name. However, according to Emilio Collins, the NBA’s executive vicepresident for global partnerships, the league has not been contemplating such an approach.
“We decided to start it out in the WNBA and the D-League, and learn from it, learn about the market dynamics, about the business model, about the aesthetics,” he says.
The NBA also tested the patch at its All-Star Game in February. The players were promoting cars, with the oval Kia logos on their jerseys.
“I think there will always be traditionalists out there that don’t like this type of thing,” Collins says.
“But, ultimately from the feedback we’ve seen to date, from what we’ve done in the WNBA and from the exposure that Kia received, we think that’s pretty minimal and we expect that to, over time, be something that is very widely accepted.”
StubHub has had a partnership with Philadelphia since 2012. Geoff Lester, StubHub’s head of partnerships and business development, says that the sides talked about extending it two years later and this idea came up.
“Then fast forward two years later,” Lester says. “The Sixers said ‘hey, the NBA is thinking about this. Are you guys still interested?’ And here we are.”
On the court the Sixers have struggled in recent years, but there was an upside for StubHub. Lester says that the company wants people to come to it “when they’re trying to find things to do,” rather than thinking of it for a specific transactional experience, and that the deal “will easily pay for itself.”
Lester says: “They are one of the more progressive and innovative partners we’ve worked with in the 16 years our company has been here. We think where they’re headed on the court is promising. We were fortunate that they won the No.1 pick in the draft the evening following our announcement.
“So we think there’s going to be a lot of eyes on the Sixers and therefore a lot of eyes on our brand. But this was the first step of many in really taking our brand and our experience beyond just a transaction (marketplace).”
The StubHub partnership seems a natural fit, but there are sponsors the NBA does not want on the jerseys.
“It’s really just the usual suspects that you’d imagine in terms of hard alcohol and tobacco or gambling,” Collins says.
The competition for some current league partners is not welcome either.
“We’re ensuring our on-court partners in particular are protected – Nike, (ball supplier) Spalding, in addition to our media partners,” Collins says of ESPN, ABC and Turner.
Meanwhile, Jimmy Lynn, who teaches sports marketing and sports industry management at Georgetown University in Washington, DC, believes the patch programme will be win-win.
“The leagues are always trying to create new, incremental revenue streams and this is another way to do so,” he says. “It is going to be done in a smart, controlled manner. And I think it is great for sponsors. Sometimes it can be really expensive for a sponsor to get involved with a team, but they can do it in a good, smart way.”
The NBA has global appeal, so a potential jersey sponsor could tap into that.
“Think about it. You’re a good marketing brand; you’re going to put it on a team or player that’s really active or popular in Asia or in Europe; then it’s a brilliant marketing move,” Lynn says.
“Look at the popularity of (Golden State’s) Steph Curry in Asia now. Yes, the US and California are important markets, but Asia is an important market. Well, that’s a great place to put your brand.”
Repucom has contracts with at least 10 NBA teams to determine the varying values for the patch, weighing tangible and intangible elements.
“Tangible elements deal in how the asset drives media or impression-based equivalent value, including media exposure in game broadcast, in TV news and highlights, on digital sites and social platforms, in print as well as retail and on-site,” Repucom senior vicepresident Michael Tange says. “Additionally, there is the value of association with the brand of the team.
“Market size drives a lot of the media variables and superstars command national and international broadcast, as well as highlights and features across all media types. Playoff performance is a huge driver of value for the asset.”
Golden State president and chief operating officer Rick Welts says there had been great interest in brands looking to land on the Warriors’ jerseys. So will this pilot programme take off and stay in play?
“Absolutely,” Welts says. “I think we’re going to look back at it and wonder what all the fuss was about.”
SOCIAL MEDIA SPONSORSHIP VALUES
Social media is a huge driver behind sponsor value, according to SnapRapid, a Londonbased company that carries out visual tracking and analytics of brand exposure over social media and digital outlets for sports sponsors and rights-holders.
It analysed the social media value of the jersey sponsorships of six NBA playoffs teams this year: Cleveland, Golden State, Miami, Oklahoma City, San Antonio and Toronto.
SnapRapid used image recognition technology to track the potential area of the patch on the jerseys in 33 conference semi-final and conference final games. It factored in size, duration and degree of engagement across Facebook, Instagram, Twitter and YouTube, as well as Dailymotion, Google Plus, Reddit, Tumblr, Vimeo, Vine and Weibo.
The final score for the six teams was $14m in combined sponsor value.
“Even though this project involved a relatively small number of games, it is clear that NBA teams have major traction across social media, which has a massive value for sponsors, and we didn’t even track digital media, which we usually do for our clients,” SnapRapid founder and chief executive Russell Glenister says. “That would have added significant extra value.
“There is a major disconnect in sports sponsorship. While audiences are migrating to digital and social media to follow and enjoy sports, sponsor deals are still being negotiated almost solely on the basis of TV viewing figures.”
The team that struck the most gold in the study was Golden State. SnapRapid estimated that the social media value for 11 of its postseason games came to $4.4m. The projected value for the entire season – minus the NBA Finals – came to $12.9m.
Originally published in SportBusiness 30 June 2016