SBJ/January 21-27, 2013/Leagues and Governing Bodies

NBA owners debate how to share revenue from jersey ads

The latest step on the NBA’s path to jersey advertising includes one proposal calling for teams to share 25 percent of the collective jersey advertising revenue.

That revenue-sharing proposal, discussed as team presidents met in Miami last week, aims to solve one of the biggest roadblocks in the debate: how to split the revenue generated by sales on jerseys among the league’s 30 teams.

One source familiar with the jersey discussions said that while there is little philosophical opposition to selling ads on the jerseys, there still is no agreement on how to share the estimated $100 million-plus in annual revenue expected to come from the jersey sales across the league. The idea of pooling a percentage of the proceeds among the league’s 30 teams, sources said, is one way the league is looking to offset the wide range in the value of jersey deals between high-revenue teams like the New York Knicks and Los Angeles Lakers and low-revenue teams such as the Memphis Grizzlies and Charlotte Bobcats.

Estimated jersey deal values range between $1 million and $15 million.

“[The teams] are getting closer to where people feel more comfortable,” said one source familiar with the issue.
The likely time frame would be to get the deal approved this year, have teams sell the inventory next season, and then have the ads appear on the jerseys for the start of the 2014-15 NBA season.

“We are not talking about anything for 2013-14, and if we were to do anything, the earliest season would be 2014-15,” said Sal LaRocca, executive vice president of global merchandising for the NBA. “[Manufacturing] guidelines are what they are, and we could probably work with them, but the people responsible for generating sponsor interest are telling us sponsors have their budgets set 12 months in advance. So if you are looking to tap into incremental money, you’d better be planning more than 12 months out.”

The hope among team executives supporting the plan is to reach a consensus in time to put the issue up for a vote at the NBA board of governors meeting in April.

“There was a lot of discussion among the team presidents to try get it on track for a vote,” a source said. “The prevailing issue is how the money will be shared.”

While team presidents focused on jersey advertising issues, another major topic discussed at last week’s annual NBA sales and marketing meeting involved the league’s new partnership with Ticketmaster for NBATickets.com. League officials updated teams on the new site, which sells both primary and secondary tickets for all 30 teams on one site. The site began operating at the start of the season as the league looks to use a more centralized strategy to drive both primary and secondary ticket sales.

In addition, NBA Commissioner David Stern and NBA Deputy Commissioner Adam Silver addressed the attendees, and team officials heard presentations from Facebook and Twitter executives regarding social media marketing efforts, as well.

The league also brought in Shawn Achor, author of the bestselling “The Happiness Advantage” and founder of Good Think Inc., as a guest speaker.

The subject of jersey advertising for teams first gained traction at last year’s league sales and marketing meeting.

Staff writer Terry Lefton contributed to this report.

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