SBJ/March 5-11, 2012/Leagues and Governing Bodies

This jersey sponsorship question is No. 1

NBA considering all angles, but first issue is ‘What is it worth?’

With the NBA positioning itself as the most global of leagues, will it soon join the rest of the world by selling advertising on uniforms? The sticky issue will be debated, if not voted on, at the next board of governors meeting in April.

It’s a touchy topic, one that involves balancing some of the most influential league constituencies and addressing some thorny questions: Would uniform patches be league or team inventory? Will NBA broadcasters TNT and ESPN/ABC, or even uniform rights holder Adidas, want a piece of the action? Would the league take a PR hit as the first to accept non-endemic ads on uniforms?

Of course, the most important issue is also the most basic. “The most appropriate question and the answer we’re all waiting for is, ‘What is it worth?’” said Golden State Warriors President and COO Rick Welts, who did the WNBA’s first uniform advertising deal between the Phoenix Mercury and LifeLock in 2009. “I am not suggesting this is an easy issue, but I feel like it is inevitable. We just have to agree on value and what it would look like.”

On the WNBA Mercury’s jersey, sponsor LifeLock has the biggest presence.
In the case of the Mercury, the biggest logo on its uniform became LifeLock’s across-the-chest jersey patch,while the team logo on the jersey shrank to about the same size as the Adidas logo. The WNBA followed suit last year, with a Boost Mobile ad patch deal on the uniforms of 10 of the league’s 12 teams.

A study released last year by Horizon Media calculated that a brand logo across the middle of an NBA team’s jersey occupying 3.5 percent of the TV screen would produce $31.18 million in exposure value.

However, the study did not factor in ancillary exposure on “SportsCenter” or other highlights and news shows, nor did it account for any online exposure.

“Jersey ads are one of the last pieces of inventory that club marketers haven’t been able to sell, and for a local sponsor they could be a real boon, since it would give them exposure with a team at home and away,” said Michael Neuman, managing partner of Horizon’s Scout Sports and Entertainment.

The impact on some of the NBA’s more tradition-bound logos, and the disparity between potential revenue in various markets, are other factors to consider. Still, it’s hard to imagine a club marketer voting against the proposal, especially if would be their inventory.

“Obviously, it’s a league decision, but as someone who spent seven years at NASCAR, I know the value of putting a brand on the playing field and the uniform, so it is certainly something I would support,” said New Jersey Nets CEO Brett Yormark. “You can monetize this in ways you can’t monetize any other kind of marketing inventory. And, of course, we’re in the No. 1 market in the country, so …”

But other team executives are more hesitant about blending team marks with a company logo as they address questions such as size and placement on the uniform.

“It is something we are wrestling with,” said an NBA team executive from a large market. “There are challenges, and the question is whether there is a way to do it differently.”

From potential sponsors, there’s an appetite.

“Without a doubt, there’s already interest,’’ said Mark Tatum, NBA executive vice president of global marketing partnerships, outside the league’s annual All-Star Technology Summit that was held at Orlando’s Waldorf-Astoria. “It’s certainly not automatic, but if we do it, it would be a big deal, so we are spending a lot of time evaluating.”

Photo by: NBAE / GETTY IMAGES
Added Sal LaRocca, NBA executive vice president of global merchandising: “The good news is that Adidas has a lot of experience with this from their football [soccer] business. We continue to talk internally about the best way to approach the market, determining whether having sponsored logos on jerseys would be incremental or just a diversion of money that would go somewhere else. We’re trying to balance a lot of constituencies.”

The issue gets even stickier. Remember thatthe NBA is still the only major American
The NBA Jam Session, where big shoes and full-size courts ruled the day, drew 91,671 to the Orange County Convention Center, but some observers longed for something more. “Every sponsor has a basketball court,” lamented Skechers CMO Leonard Armato.
Photo by: TERRY LEFTON / STAFF
sports property without any logo on its game uniform other than its own — Adidas has logos only on NBA warm-ups. One senior licensing industry source said Adidas was already in discussions with the league about moving its logo to the uniform, which might obviate the other conversations.

“We are looking at all of the different elements and stakeholders, but it is an ongoing conversation,” said Chris Granger, executive vice president of the NBA’s team marketing and business operations department.

Welts suggested one intermediate step might be an advertising patch on warm-ups. “I’m guessing that this would be a process, not a 0-to-60 rush,” Welts said.

RECOVERY MISSION:  One could argue about how much the new collective-bargaining agreement will do to ensure profitability across the NBA, but there’s no debate among league and team officials and NBA business partners that the recovery from losing around 20 percent of the regular-season schedule was easier than expected.

“We came out of it healthy and moved NBA money to college football and other places,” said Sean Bratches, ESPN executive vice president of sales and marketing, during an All-Star Thursday night reception. “We’re in a better place than I thought we’d be when it comes to NBA sales.”

On the licensing side of the house, the lockout’s late November ending meant NBA licensees largely missed the holiday season. Earlier this year, NBA consumer products chief LaRocca estimated the collateral damage at 25 percent. In Orlando, he said that figure could be mitigated by pent-up demand. From when the NBA resumed play on Christmas Day, sales per square foot in the NBA Store on Fifth Avenue in New York City are up 400 percent from the year prior, and online sales are up 30 percent. Realize, of course, that in a normal year, post-holiday sales are mixed.

“We missed the key selling season, which can’t be made up, but the pace we are on is encouraging, and Jeremy Lin is getting everybody excited about the NBA and NBA products,” LaRocca said.

At the team level, sponsorship revenue is down about 10 percent on average, with group ticket sales also down about 10 percent.

“Groups are the hardest because we lost the heart of our group sales season [during the lockout],” Granger said.
While average attendance was flat during the first half of this year’s regular season, the league is at record levels of full-season ticket sales with about a 9,000 full-season sales average per team.

Stern, at the Legends Brunch, drew a crowd for his state of the league address.
Photo by: TERRY LEFTON / STAFF
“We will also have the highest number of individual game sales in our history,” Granger said.

Roughly half of NBA teams are now in the market for season-ticket renewals, and NBA research points to a low 80 percent renewal rate coming off the first half of the season, which brought double-digit increases in ratings across ABC/ESPN and TNT. League officials said the 80 percent rate was in line with previous years.

On the corporate sales side, the four-year, $222 million deal for Sprint across the NBA, WNBA and D-League was the league’s largest.

The league also brought Under Armour into the fold during the lockout.

“Obviously, it was not a time when we could sell aggressively,’’ said Tatum, “We moved some assets and funding around, but I would say the impact on us was minimal. We got Sprint and Under Armour signed during the lockout, we renewed A-B, Gatorade and Autotrader.com.’’

Pending renewals after this season include State Farm, Haier and HP.

On the new business side, the league continues to target the airline category, with an overseas carrier a strong possibility.

AMWAY CENTER IN THE SPOTLIGHT:  The All-Star Game was the biggest event held at the Magic’s Amway Center since it opened in late 2010 and the facility drew rave reviews from nearly all who passed through its wide concourses.

The Amway Center, host to the game and ancillary events such as the Sprint Pregame Concert, drew rave reviews.
Photo by: NBAE / GETTY IMAGES
For team and city officials, the All-Star Game was the litmus test for their plans to attract other major events to drive revenue at the arena, which already has helped catapult the Magic to the seventh-largest revenue-producing team in the 30-team league.

“When we were designing the building, we spent countless hours with the league office trying to understand what a building would need to host All-Star Weekend successfully, and we designed around that,” said Magic CEO Alex Martins. “We figured if we could include everything that the league needed to have the most All-Star ready building, then we would have included everything necessary to host Magic games all the way through the Finals. Fortunately, what the league needs to host the event, we were looking for in our core principles as well: great amenities and hospitality spaces; great technology, including the ability to ‘plug in’ and broadcast from anywhere in the building; great facilities for the players; ample facilities to host the media of the world; great outdoor space for pregame activities; great acoustics; great customer service and the best technology for visuals in the center-hung, LED and digital signage network.”

One minor issue for the team to address in hosting future All-Star Games or an NCAA March Madness regional game: They must find a bigger interview room. The cramped quarters during NBA Commissioner David Stern’s state of the league address on Saturday night forced some into the hallways during one of the most critical events of the weekend.

The rise of Lin, shown on a Panini trading card, is driving business for the Knicks and NBA China.
Photo by: TERRY LEFTON/ STAFF
LINVESTMENTS:
  Look for the New York Knicks to continue to leverage the NBA story of the year in Jeremy Lin. On the heels of the phenomenal rise of Lin, the Knicks announced during All-Star Weekend a marketing partnership with Taiwan-based tiremaker Maxxis International. The one-year deal is the Knicks’ first deal with an Asian company since Lin joined the team, but likely won’t be the last, with Lin expected to take a Nike-sponsored tour in China after the season.

“It’s a great platform to China,” said Scott O’Neil, president of Madison Square Garden Sports.

The NBA’s Tatum added, “Of course Lin is a great door-opener in China, but you also have the media and marketingcapital of America excited about the NBA now.’’

Since Lin burst on the NBA scene last month, per cap spending at Madison Square Garden is up 20 percent, while in-arena merchandise sales have jumped 67 percent.

Lin is also helping drive NBA China’s business. NBA television ratings in China are up 39 percent this year, according to NBA China CEO David Shoemaker.

“We had been having our strongest year on record before Lin,” Shoemaker said. “Then Lin comes along and I see it as a great further catalyst. It is a sensational story and speaks to the global appeal of the game and our love of the underdog.”

The run on Knicks jerseys to customize with Lin’s name was exacerbated by the fact that Adidas was making fewer anyway, since the Knicks are changing their jerseys next year. Nonetheless, LaRocca said there were more Knicks jerseys sold in New York during the first three weeks of “Linsanity” than in the two months after the Knicks made their much-anticipated trade for Carmelo Anthony last February.

Gameday Merchandising ran the NBA Store at Jam Session and the hotel concessions, and company President Alan Fey said all the Lin merchandise he had was gone by the end of the BBVA-title-sponsored rookie/sophomore game on Friday night.

HELP WANTED:  There are some key vacancies as the NBA begins the second half of its season after All-Star Weekend.

The Atlanta Hawks are looking to hire a new chief sales officer to replace Tracy White, who recently left the team to join IMG College.

The Philadelphia 76ers are searching for a new vice president of sponsorship, while the Golden State Warriors are looking to hire a chief technology officer. It is a newly created position for the team under President Rick Welts.

Under Armour’s Kevin Plank was a proud papa with son James, who was a ballboy during Saturday night’s skills competition.
Photo by: TERRY LEFTON / STAFF
Meanwhile, the search continues by NBA and NCAA-owned iHoops, which is looking to hire a new CEO to replace Len Elmore, who left last month.

Parker Executive Search has been retained by iHoops for the search.

DOUBLE DRIBBLES:  A couple of favorite moments from the weekend in Orlando: Under Armour CEO Kevin Plank was delighted that son James was a ball boy for Saturday night’s skills competitions, but he was less than enthusiastic that his offspring was required to wear apparel from Adidas, the NBA’s master apparel licensee. Plank pointed to the floor of the Amway Center, noting, “we negotiated an out for footwear,” so his son was wearing Under Armour for the night. … Other than an expanded NBA store, which included footwear and seemed better merchandised than past years, we found the Jam Session a bit tiresome. And we weren’t the only one. “Every sponsor has a basketball court,” lamented Skechers CMO Leonard Armato. Meanwhile, attendance at the NBA Jam Session, held at the Orange County Convention Center, was 91,671 for four days, versus last year’s
Skullcandy drew eyeballs and ears by mixing a DJ and a pop-a-shot competition at the Jam Session.
Photo by: TERRY LEFTON / STAFF
102,729 in Los Angeles over four days. … We’re not used to smaller licensees doing much at all at fan fests, so we had to admire Skullcandy’s combination of a DJ mixing and a pop-a-shot competition at Jam Session. … At the Legends Brunch on Sunday, just five months into the job, new National Basketball Retired Players Association CEO Arnie Fielkow elicited a mixture of gasps and guffaws when, during an onstage speech late in the program, he paused to “spank, er, thank Commissioner David Stern.” His faux pas went live on NBA TV and was quickly posted on You Tube. Emcee Ernie Johnson, who followed Fielkow onstage, could not contain his laughter. “I am thinking at All-Star Weekend, of all the people you’d want to do that to, he’d probably be the last one,” Johnson laughed.


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