The NBA has dramatically expanded its teams’ local marketing territories, a significant move that has major revenue implications for the clubs.
With the change, teams can now market their brands across a 150-mile radius from their home cities, twice the 75-mile area they were able to cover under the league’s previous, long-standing geographic boundary rules. Additionally, a team can reach beyond that 150-mile area to market throughout their entire home state so long as doing so doesn’t encroach on another team’s 75-mile territory.
The change has long been pushed for by teams, which want to increase their branding, ticketing and partnership programs far beyond the area to which they’ve been limited. The new rule pertains to all promotion and advertising with any team marks, such as in-store and billboard marketing. It also lets teams’ partners tout sponsorships in cities that previously were off-limits.
“The value for our partners is to reach more customers,” said Chris Granger, president of the Sacramento Kings.
At the team level, consider the potential boon for a club like the Charlotte Hornets. The new rules let the Hornets market to fans in the basketball-rich Raleigh-Durham market as well in Columbia, S.C., and other points throughout the Southeast (see graphic). All told, the change adds about 10 million people to the Hornets’ marketing territory, a footprint that previously ranked 17th among the NBA’s 30 teams by population.
“Now we’ve become top-10 market,” said Pete Guelli, executive vice president and chief sales and marketing officer for the Hornets. “We have also launched a D-League franchise in Greensboro [that begins play in the fall], and this falls into that area as well.”
Owners voted unanimously to approve the territory expansion plan earlier this month.
“It enables us to reach more than 100 million more fans from a team standpoint,” said Amy Brooks, executive vice president of the NBA’s team marketing and business operations division. “It also enables us to market in 10 cities that have professional sports teams but not NBA teams — like Pittsburgh, Jacksonville and Nashville.”
Among other individual teams, the Cleveland Cavaliers can now market across an area that includes Pittsburgh as well as Columbus — both previously outside their 75-mile territories. Both of Florida’s NBA teams (Miami and Orlando) can now target Jacksonville, and the Memphis Grizzlies can now reach into Nashville with the new rules. Each represents fertile new ground.
“It is an opportunity for team sponsors to activate in a broader area than they might otherwise,” Brooks said. She added that with the change, teams also will have new opportunities to collaborate on their marketing efforts should they so choose.
That’s what’s happening in the case of Miami and Orlando.
“In essence, we are doubling the population base we can directly market to,” said Alex Martins, chief executive officer of the Magic, adding that Orlando’s staff is already addressing ways to work with Miami’s staff in their efforts to reach new Florida markets. “Both of us will take a look at how we can take advantage of collectively working in our state. There will be other parts of the state we will choose to go out on our own, but we can blanket the state between the two of us.”
The rise of digital media played a key role in the NBA making the policy change. It’s easier for teams to reach and engage with fans in markets farther away from their home cities now than in decades past. In that sense, the 75-mile marketing limitation had become a rather antiquated policy, though the league will still use that benchmark as a way for teams to protect their immediate areas.
Retaining that 75-mile boundary protection essentially lets each NBA team maintain its claim to the territory it’s had in the past while allowing all teams to reach into larger areas at the same time.
The NBA is not the only league with team-marketing restrictions; similar rules exist in the NFL, MLB and NHL. But the NBA last year began to seriously address redrawing its rules under a few different models. Doubling the marketing radius proved to be the most viable option, and once the policy was finalized, it was easily approved by NBA owners.
“We tried to make it as equitable as we can,” Brooks said. “There is no TV impact. It made the most sense.”
