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EPL model pushes estimates on NBA jersey rights to $20M
Published April 23, 2012, Page 1
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The issue was discussed in detail in New York at the recent board of governors meetings, where owners were presented the three designs developed by the league already vetted by the NBA’s eight-member team advisory committee. There are still significant business issues to decide, with internal debate delaying the date at which the earliest jersey advertising could appear until the 2013-14 season.
According to sources, one jersey design presented to the owners is modeled after the English Premier League, which has corporate advertising dominating the front chest of the jersey with numbers only on the back.
The second model maintains each team’s logo with a smaller corporate logo on the lower front of the shirt and the numbers moved up on the front of the jersey.
The third jersey design puts a corporate logo on a small shoulder patch on the jersey front.
Each of the options focuses on the front of the jersey, and any thoughts about having advertising on the back have been shelved.
The estimated value of the advertising on each version also differs greatly, with the high end at $20 million a year in the largest NBA markets for the high-profile EPL design to about $1 million a year per team in small markets for the far less visible shoulder patch.
The value of any potential deal is the most significant question. Other issues remaining include whether jersey advertising would be sold as team or league inventory, and how any jersey logo deal would affect league broadcast and marketing revenue.
|EPL CLUB SHIRT SPONSORSHIPS|
|The following are the top five EPL club shirt sponsorships. EPL teams sell their deals individually.|
|CLUB||2011-12 SPONSOR||AVG. ANNUAL VALUE (MILLIONs)*|
|Manchester City||Etihad Airways||$32.6|
|* Conversion of British pound to U.S. dollar was done in late August 2011 (the beginning of the EPL season), using the conversion calculator at XE.com, at the rate of 1 British pound = 1.62 U.S. dollars.
** The logo featured on the jersey is Aurasma, Autonomy's mobile platform.Source: SportsBusiness Daily research
The debate isn’t simply a case of large-market franchises wanting to sell the jersey space themselves for a financial windfall while smaller markets push for the league to sell the inventory to maximize the deal. Instead, the key question remains as to how any jersey deal is best quantified either at the team or league level. In addition, there are branding issues over what impact any jersey advertising would have on individual team marks.
“One of the things we are trying to understand is how much of this would be truly incremental [revenue] versus something that just shifted dollars,” said a league source involved in the jersey talks. “This was introduced at the board meeting with the caveat that there are still lots of issues to be evaluated. There were definitely some people who said, ‘Not over my dead body will I put a logo on my jersey.’ It feels like it is inevitable, but exactly when is a good question.”
Owners will be addressing those questions over the course of at least a year as the league moves toward a decision that could make the NBA the first of the big four leagues to accept non-endemic advertising on uniforms.
Former NBA and Nike marketer Tom Fox, now chief commercial officer for EPL club Arsenal, pointed out that jersey sponsorships developed in soccer because TV advertising is so difficult within a soccer broadcast. But he wonders if such a jersey sponsorship in the NBA would turn away potential TV advertisers.
“With the NBA, TV advertising is a principal revenue stream, so they are right to be concerned about whether a jersey deal would just dilute that,” said Fox, whose team sold a kit deal and a stadium title deal to Emirates Airline. “You’d also have to wonder about how it affects individual team marks and their equity. I don’t see it as inevitable, except in the case of one marketer, perhaps the uniform supplier [Adidas] moving onto the uniform.’’
“We need to do a lot more research and due diligence to fully understand the magnitude of it,” said Alex Martins, chief executive officer of the Orlando Magic and a member of the league’s team advisory committee, which is studying the potential of selling advertising space on game jerseys. “[The Magic] is in full support of it and we think it is a revenue opportunity.”
Joining Martins on the team advisory committee are team executives from the New Jersey Nets, New York Knicks, San Antonio Spurs, Boston Celtics, Los Angeles Lakers, Utah Jazz and Portland Trail Blazers. The team advisory committee acts as a fact-finding group for the owners, who ultimately must vote on whether to allow advertising on uniforms.
“This is the beginning of a relatively long process and the outcome is yet to be known,” said NBA Deputy Commissioner Adam Silver after the owners meetings on April 13.
The WNBA already has a leaguewide jersey deal with Boost Mobile. Three teams in the NBA Development League have local jersey deals along with a leaguewide deal with BBVA that puts the company logo on the back of the eight teams playing in this year’s postseason.