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Big Market, Small Market Issues Holding Up NBA Jersey Sponsorships

The NBA hopes to hold a vote to approve the sale of jersey sponsorships this month, but Golden State Warriors President Rick Welts thinks it will be at least another year or two before owners approve the proposal.

“Money is holding this up,” Welts said. “The problem is that at a lot of levels, the local franchise levels, we are creating a disparity in revenue from big markets to small markets, and teams look at this as magnifying that (disparity) even more. So should we share that money? That’s a hard discussion to have with a brand new source of revenue.”

The NBA last July began weighing a plan that would put a 2.5-inch-by-2.5-inch logo patch on uniforms for the 2013-14 season. Those discussions have stalled among team owners and presidents because of the potential disparity that the logo ad could create between big market and small market teams. Small market owners are concerned that the value of the sponsorships will be greater in large markets, which could allow those teams to pad their revenue and potentially help big market teams pay players more and improve their rosters.

Welts said team presidents think there’s a “middle ground,” a solution where 25 percent of each team’s jersey sponsorship revenue goes into a shared pool. But he’s not optimistic that an agreement will be reached anytime soon.“Everyone knows there’s a big pot there,” Welts said. “It’s not uncomplicated, but the idea that we have hundreds of millions of dollars sitting out there and we can’t figure out a solution to bring it into the league, shame on us.”  

IMG Sports President George Pyne said that his experience at NASCAR, where he worked for 10 years, showed him the importance of having sponsor logos featured prominently on athletes’ apparel in competition. He expressed hope that the NBA would find a solution because it could help the sport.
“It gives an emotional connection between the fan and sponsor,” Pyne said. “It works internationally in football. There’s an incredible amount of value.”

Pac-12 Commissioner Larry Scott, who was also on the panel, said that there was no chance that sponsor logos would be approved in college sports.

“There’s a saying in college: it’s about the brand on the front of jersey and not the name on the back of the jersey,” Scott said. “It’s got to be a clean, pristine brand around the schools on the front of the jersey. You’ll see college resist that move to commercialism.”

NFL Executive Vice President Eric Grubman said he believes the league will explore the idea of selling a jersey sponsorship, but he doubted that it would ever actually allow teams to do it.

“I don’t necessarily see that the value difference compared to the current model would make that much of a difference,” Grubman said. “Different things work for different sports in different markets in different countries at different times. We’ll watch what other people are doing, but it’s not on the top of my list right now.”
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