The National Basketball Players Association is making a significant move this summer as it takes its marketing and merchandising rights in-house after more than two decades of leasing them to the NBA.
The move comes amid an extension of the league’s collective-bargaining agreement, the framework of which was agreed upon last month, and the union and league were close to completing a 600-plus-page deal last week. The general licensing agreement traditionally has the same term years as a CBA and is completed afterward.
In 1995, the GLA allowed the league to rent player rights for marketing, sponsorship and advertising. However, under new union leadership, including Executive Director Michele Roberts, who was hired in July 2014, and Jordan Schlachter, hired a year later as the NBPA’s first chief marketing officer, the union has been gradually moving toward taking back at least some of its rights.
“This should have happened a long time ago, but now we have the resources in place,” Schlachter said in his first public comments on the move. “NBA players are unique in the marketplace at this point, in their popularity and in their ability to influence people.”
The move by the NPBA to take back all of its marketing rights during the negotiations was noteworthy since there was discussion along the way of a hybrid model that would have left some of the rights with the league.
The NBPA was the only union of the major stick-and-ball sports to license out its rights. According to its most recent LM-2 filing, the NBPA received around $41 million from the league during the fiscal year ending June 30, 2016, in payment for its licensing and sponsorship rights. At a minimum, taking those rights back indicates the union thinks it can increase that return.
“We have not quantified that for our players, but I’d look for an immediate (increased) return,” Schalchter said. “We’re going to do better every year moving forward. … Our players have made it clear that they want us to explore other opportunities.”
Controlling its own marketing rights means the NBPA will be free to sign competitive licensing and sponsorship deals, explore additional player-only licensed product agreements, and stage and sell its own events. Even use of the PA’s own logo was restricted under the old agreement. So the move opens up a significant number of new opportunities for corporations, licensees and media entities to associate with NBA players and possibly events.
The most immediate impact of the PA taking its rights in-house is that NBA licensees using player names and likenesses will need to cut separate deals with the union, as they no longer will have automatic player rights. Schlachter said an agreement allowing NBA sponsors the ability to use players in uniform for marketing purposes was still a possibility.
Licensees with the longest lead times, like video game and trading-card manufacturers, could be granted exemptions. As a former NBA employee, Schlachter is promising licensees a relatively seamless transition. “Some of the dynamics are changing a little, but we look forward to continuing to grow a strong business,” he said.
In running in its own licensing programs, like other big stick-and-ball player unions, the NBPA will need to staff up, as it currently has a very small marketing staff.
The PA is expected to discuss specifics with membership during meetings around the NBA All-Star Game in mid-February.
The NBA had no comment, seeking to defer remarks until a CBA is formally signed.
