SBJ/Oct. 13-19, 2014/Media

Jersey ad revenue part of the mix

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Editor’s note: This story is revised from the print edition.

If the NBA sells corporate advertising on game jerseys, which many believe is inevitable, network partners Turner and ESPN will get certain spending guarantees related to those contracts — a development that was negotiated as part of the league’s massive nine-year, $24 billion media deals.

But that’s where the clarity ends, because the details of what the networks will receive — and from whom — remain as undefined as the league’s future policy on selling jersey advertising.

Turner will be able to sell ads on All-Star Game jerseys starting in 2017.
Photo by: GETTY IMAGES
Early parameters indicate a distinction between whether a national brand or a local/regional brand buys a team’s jersey sponsorship. A national brand with a popular team would mean more money for the networks than a local/regional brand with a team that’s not on national TV very often.

According to sources involved in the discussions, if there’s a national brand with a jersey deal that would have bought time on ESPN or TNT’s NBA game telecasts — think Coca-Cola or

SBJ Podcast:
Media writer John Ourand, NBA reporter John Lombardo and Executive Editor Abraham Madkour analyze the NBA's massive new media rights deals on the day they were announced.

Samsung — the two networks would get specific commitments from that company to also buy TV advertising during any nationally televised games featuring that sponsored team.
 
Sources familiar with the TV deals admit both networks pushed hard to be allowed to sell ads on team jerseys outright, but the league balked at handing over the potentially lucrative rights. Under the new TV deals, NBA teams maintain the rights to sell the jersey advertising, which has an estimated value ranging from around $800,000 for small-market teams like the Memphis Grizzlies to more than $10 million for large-market teams like the Los Angeles Lakers.

Specifics of the TV buy component have not been hammered out, but the level of spending required by a company sponsoring the jersey would depend on how much exposure the team has on national broadcasts.

“The conversations will start as soon as someone buys a jersey,” said one network executive, discussing how the networks would be paid. “Until then, we don’t know exactly what it will look like.”

As part of its overall media deal, Turner will be able to sell corporate advertising specifically for All-Star Game jerseys starting with the 2017 game, which will be the first season of the new deal. TNT network will continue to broadcast the event exclusively through the nine-year deal. A sponsorship of the all-star jersey should result in a solid payout, as it’s one of the most-watched games of the year for the league.

The NBA and ESPN had discussed selling jersey advertising specifically for the NBA Finals, which airs exclusively on ABC, but those talks did not lead to a deal.

For years, the NBA has been wrestling with the issue of whether to allow corporate logos to appear on the front of game jerseys.

The effort to sell jersey ads gained traction in 2012 when the NBA was seriously pursuing a jersey ad agreement that ultimately was tabled, even though there was little objection among teams to the proposal of putting a 2.5-by-2.5-inch square corporate logo on the front of jerseys.

What derailed the effort was the issue of figuring out how teams would split revenue and the role Turner and ESPN would have in any jersey ad deal.

While revenue-sharing issues related to jersey ad sales still exist within the league, the new television deals begin to answer the question of how Turner and ESPN will be involved.

The TV networks wound up with a host of new sponsorship rights from the media deals, which were announced last week. Turner is looking into selling sponsorships around specific games, like the season’s opening week or the league’s Martin Luther King Day slate of games, that they believe can become bigger events. Previously, only the league could sell sponsorships around those type of events, with the networks selling solely ad time.

“We have a lot of new opportunities to sell sponsorships,” said Turner Broadcasting System President David Levy.

ESPN will have more flexibility to sell presenting sponsorships around the NBA draft and some of its studio programming, its executives said.

“We have significantly enhanced and improved sponsorship rights,” said John Wildhack, ESPN’s executive vice president of programming and production.

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