The NBA jersey sponsor patches are working
Brad McCabe Posted on May 24, 2018
Corporate sponsors spent an estimated $1.12 billion on the NBA this season, fueled by the new sponsorship patches on team jerseys. The figure comes from IEG/ESP, which owns sponsorship.com and tracks sponsor spending and ROI on the major US sports leagues.
The figure is 31% higher than the $861 million in NBA sponsor spend last season, a much bigger increase than was projected. Sponsorship spend in the big four pro leagues typically gets bigger every year, but the NBA spend grew by far more than anyone expected.
The huge jump in spend was driven by the jersey patches.
This is the first season that the NBA has experimented with letting teams sell real estate on their jerseys: small patches (2.5 inches by 2.5 inches) on the upper left side. So far, 21 of the 30 teams have done it. These nine teams haven’t yet: Chicago Bulls; Houston Rockets; Indiana Pacers; Memphis Grizzlies; Oklahoma City Thunder; Phoenix Suns; Portland Trailblazers; San Antonio Spurs; and Washington Wizards.
The brands that have jumped in range from big, publicly traded American corporations (General Electric, Goodyear, Disney, Harley-Davidson, Western Union, eBay-owned StubHub) to private tech startups (dating app Bumble, Utah software “unicorn” Qualtrics) to one foreign company: Japanese gaming giant Rakuten (sponsor of the Golden State Warriors, of course: Silicon Valley’s sports team.)
Some of the patch deals were made long before the current season started (StubHub and the 76ers were first, announcing their deal way back in May 2016) while the latest ones happened as recently as March (Bumble and the LA Clippers, and 5Miles and the Mavericks).
The jersey patches only account for $137 million of this year’s total, IEG/ESP says. That’s a small chunk of the $1.12 billion, but it’s $137 million that is entirely new this season, since the patches are new. The average patch deal pays a team $6.5 million per year, and most are two-year deals.
The lion’s share of the $1.12 billion comes from league-level sponsors: big blue-chip consumer brands like Anheuser-Busch InBev, American Express, Frito-Lay and Gatorade (both part of PepsiCo), Nike, and State Farm, which IEG/ESP says is the No. 1 most active NBA sponsor.
“Our partners continue to activate with us at extraordinary levels and integrate into our platforms year-round,” says the NBA’s SVP of global partnerships Kerry Tatlock.
While the NBA is reaping new revenue from the patch deals, the sponsors also sound happy with the experiment. GumGum Sports, which values sponsorships, estimated halfway through the season that each participating brand is getting $350 million in social media exposure from the patches, which is so much more than they’re spending that it looks like a no-brainer. (GumGum told Forbes it arrives at this figure by analyzing logo exposure in game footage that appears on social media.) The only better logo placement, GumGum says, is Nike’s full-league apparel deal, which puts the swoosh on every single jersey.
In other words: the patches are likely here to stay, like it or not—by next year, it would be surprising if they aren’t on all 30 teams. And the patches are likely only the beginning.
“The NBA’s foray into jersey patch advertising should serve as a wake-up call for other U.S. pro sports leagues,” says William Chipps, an editor at IEG/ESP. “The patches can drive significant revenue with zero repercussions on fan affinity.”
Well, maybe not zero repercussions—there are certainly fans who simply don’t like the idea of ads on their favorite team’s jerseys. To alleviate some of that distaste, the majority of the patches match the team’s existing jersey colors (even when the official corporate logo is normally a different color) and the patches do not appear (yet) on the replica jerseys sold to fans.
With the NBA teams and the sponsors both happy, the patches aren’t likely to go away. And after all, supporters argue: international soccer, Major League Soccer in the US, and Nascar athletes have all had their uniforms covered in ads for years.
Article by Daniel Roberts as posted on Yahoo Finance.