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Marketing and Sponsorship

Harman deal breaks more ground for NBA

Last week’s deal between audio giant Harman and the NBA is the latest in a rush of new sponsorship opportunities for the league’s 30 teams under NBA Commissioner Adam Silver.

The four-year league sponsorship deal announced on Sept. 17 makes Harman the official headphone, speaker and audio partner of the NBA. It’s another new marketing category for the NBA and one that is expected to include team sponsorships.

NBA Commissioner Adam Silver (left) and Harman President and CEO Dinesh Paliwal
Photo by: TERRY LEFTON / STAFF
There’s also a licensing component to the deal, under which Harman will market team-specific and player-identified headphones and other portable products. Harman’s marketing rights with the NBA are domestic, except for USA Basketball, while the licensing rights are global.

Harman Chief Marketing Officer Ralph Santana said that advertising agency Doner will be working on the company’s NBA-themed creative and that the company has not yet hired a sports marketing agency.

The deal is expected to go beyond headphones, with half of NBA arenas using professional audio systems from Harman and its JBL brand.

Financial terms of the deal were not disclosed, but it is Harman’s biggest sponsorship.

For NBA teams, the new audio category represents more inventory offered under Silver and NBA Deputy Commissioner Mark Tatum.

“The league is receptive,” said Jim Van Stone, chief revenue officer for Monumental Sports & Entertainment, which owns the Washington Wizards. The Wizards this offseason signed a floor-apron advertising deal with Geico, capitalizing on the league now allowing that on-court brand exposure.

“The NBA is very engaging and making sure that the partners are getting the benefits from the league,” Van Stone said. “For us, the opportunities couldn’t come at a better time.”

The Harman deal follows the NBA’s recent decision to allow its teams to sell sponsorships to fantasy sports companies, a category that previously was banned by the league. To date, the Orlando Magic has signed a fantasy sports sponsorship with FanDuel worth nearly $2 million annually, the team’s biggest sponsorship other than its arena naming-rights deal with Amway. Other teams likely will follow suit in landing similar deals.

Prior to taking over from David Stern in February, Silver also pushed to give teams the opportunity to sell ads on the court in front of the team benches. The floor-apron deals are now considered one of the league’s most valuable pieces of sponsorship inventory, with at least 10 teams expected to have the multimillion-dollar deals in place by the start of the season.

Now comes the deal with Harman as the NBA leverages the marketing war in the $2.3 billion headphone category. Bose recently signed a league sponsorship deal with the NFL that sources said is worth more than $30 million a year, while competitor Beats has signed endorsements with Cleveland Cavaliers star LeBron James and Brooklyn Nets star Kevin Garnett.

The NBA also is pursuing other new sponsors with deals likely to be filled by the start of the season on Oct. 28.

“You have to continue to look at emerging categories,” said Ryan Tanke, Minnesota Timberwolves chief revenue officer. “Five years ago, who would have thought that fantasy sports would be a category? The NBA is making the appropriate adjustments as the world continues to change.”

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