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Volume 20 No. 42

Leagues and Governing Bodies

The prospect of selling advertising space on NBA game jerseys was discussed again at the recent NBA sales meeting held in Brooklyn as teams hunt for new sponsorship inventory to drive revenue.

“It’s an ongoing conversation,” said Chris Granger, senior vice president of the NBA’s team marketing and business operations division. “Clearly, this would be a big opportunity, but because it is such a big opportunity, we want to think it through and be very mindful.”

The league isn’t close to making a decision on whether to open up the sale of advertising space on team jerseys, but with the NBA-owned WNBA and the D-League already having team and league jersey sponsorship deals, some NBA team executives see a major opportunity.

The Phoenix Mercury is one of five WNBA teams with jersey sponsors.
The Los Angeles Lakers, one of the league’s top brands, are not against the idea. “It is popular in Europe and I don’t think we would be necessarily opposed to it with certain guidelines,” said Jeanie Buss, executive vice president of business operations for the Lakers.

One source said there will be more attention paid to the idea as teams continue to look for new marketing categories.

“Teams are searching for new revenue opportunities, not unlike five years ago when they were pushing for the casino sponsorship category or the liquor sponsorship category,” said one source with knowledge of the league sales meeting held on Jan. 9 and 10. “The [jersey sponsorship] question was raised on the team side, not by the league.”

The league has since opened the casino and liquor sponsorship categories to teams. But there are myriad issues the league must work through before allowing jersey sponsorship deals, including how revenue would be counted in the league’s new collective-bargaining agreement, what sponsorship categories would be allowed to be displayed on the jerseys, whether the NBA would sell jersey ad space to a league partner or allow teams to sell their own deals, and any impact it would have in the league’s uniform deal with Adidas, which does not put the company’s logo on game jerseys. The Adidas logo is allowed on warm-up and practice gear.

“The procedural questions are large,” said Sal LaRocca, executive vice president of global merchandising for the NBA. “Our sponsorship guys would tell you national or local broadcasters might want to get involved. So it is an intriguing issue, but one with a lot of complexities and stakeholders.”

A study done by Horizon Media last year estimated a potential value of a full season of jersey sponsorships at $31.1 million, leaguewide.

“I think the league is always looking for opportunity, but it is so early in the conversation,” said another source.

Staff writer Terry Lefton contributed to this report.

The NBA awarded 12 teams for having full-season-ticket sales of at least 10,000 at their annual marketing meetings held Jan. 9-10 in Brooklyn, N.Y.

The dozen teams hitting the league sales benchmark is up from 10 teams last season. In addition, the league recognized seven teams for having season-ticket renewal rates of more than 90 percent.

League officials would not disclose the specific rank in sales, but teams this year reaching 10,000 in full-season-ticket sales are the Boston Celtics, Chicago Bulls, Dallas Mavericks, Golden State Warriors, Los Angeles Lakers, Los Angeles Clippers, Miami Heat, New York Knicks, New Orleans Hornets, Oklahoma City Thunder, Orlando Magic and Portland Trail Blazers.

NBA Ticket Sales
Teams with 10,000 in
full-season-ticket sales

Boston Celtics

Chicago Bulls

Dallas Mavericks

Golden State Warriors

Los Angeles Lakers

Los Angeles Clippers

Miami Heat

New York Knicks

New Orleans Hornets

Oklahoma City Thunder

Orlando Magic

Portland Trail Blazers

Source: SportsBusiness Journal research

New to the list are the Warriors, Clippers and Hornets. The Hornets benefited from a marketing push to reach 10,000 season-ticket sales as the NBA-owned team positions itself to be sold, while the Clippers marketed behind Blake Griffin and the team’s recent acquisition of Chris Paul. The Warriors’ business is surging under the efforts of a new ownership group led by Joe Lacob, which spent the past year overhauling the franchise.

Among the NBA leaders in full-season-ticket sales are the Thunder, with 14,000 full-season tickets sold, 1,000 more than last season.

“We have had a 92 percent season-ticket renewal rate running in Oklahoma City and we have maintained that base,” said Brian Byrnes, senior vice president of sales and marketing for the Thunder. “Clearly, we have had the opportunity to grow on the success of our team over the past two years and we have been strategic in converting single-game buyers into season-ticket buyers.”

The seven teams recognized for having season-ticket renewal rates of more than 90 percent are the Bulls, Heat, Knicks, Magic, Thunder, Mavericks and Blazers. The league last year also had seven teams with season-ticket renewal rates of more than 90 percent.

The leaguewide season-ticket renewal average is now between 80 percent and 85 percent, the same as last season to date despite the five-month lockout that hindered teams in their offseason marketing efforts.

“It was definitely different selling this year than in the past because of the uncertainty of the start of the season,” said Alex Martins, CEO of the Magic. “But in Orlando, there has been no residual effect from the lockout and from the late start.”

The gathering also looked at Web traffic, and the top three teams recognized for having the top traffic and page views on their team websites are the Heat, Lakers and Magic. The Magic is new to the list this year.

More than 250 league and team executives from all NBA teams attended the meeting, along with a separate track held for NBA team presidents. Commissioner David Stern and Deputy Commissioner Adam Silver also addressed the executives at the meeting.

“The agenda has different tracks including sales, ticketing, digital and sponsorships,” said Chris Granger, executive vice president of the NBA’s team marketing and business operations division.

Teams also discussed season-ticket renewal strategies for next year. Many teams will begin rolling out season-ticket renewal packages for next season in February, about the same time as last season. No decisions have yet been made on whether teams will raise prices for next season.

The simple turning of the calendar is very much at the root of last week’s two-year contract extension for MLB Commissioner Bud Selig, a deal that will keep him in office through 2014.

As recently as a month ago, owners who spoke with Selig had no strong sense that the commissioner was willing to deviate from his oft-discussed plans to retire and expand his teaching interests at the University of Wisconsin and Marquette University.

“Certainly at Christmas, I had no real feeling he was going to come back,” said Oakland A’s owner Lew Wolff, who has known Selig for nearly 60 years. “And when they opened up that new office for him in Madison [at the University of Wisconsin campus], I was certainly concerned and discouraged. But I kept after him to stay on, as did others.”

San Francisco Giants CEO Larry Baer, firmly at odds with Wolff on the A’s bid to move to San Jose, tells a similar story regarding Selig.

“It was only, maybe, in the last month or so that this really began to get on the front burner,” Baer said. “You saw the calendar turning over, and there was a decision to make. We certainly wanted him to stay, and as long as he had the appetite for it, that was certainly in the best interest of baseball. But if he didn’t stay, there was going to have to be a process set up this year [to seek a successor]. It turned out, fortunately, to be a fairly seamless process, which is great.”

Since the first step was to see if the 77-year-old Selig would remain in office before formalizing any structure to seek a successor, it is unknown whether the owners would have been able to come to any consensus on a new commissioner before the end of 2012. But given Selig’s lengthy tenure in office — already the second-longest in league history — and his substantial legacy, finding the next commissioner will not be easy whenever that process commences.

The 77-year-old Selig has the second-longest tenure in MLB history.
Selig said last week that a plan to find MLB’s 10th commissioner will be developed during this next contract term but offered no further details.

Owners last week also recognized the role of Selig’s wife, Sue, in the contract renewal. She was long skeptical of Selig’s steady retirement claims, even as they grew strident over the past year.

“You can’t forget her role in all this,” Wolff said. “And she knew, of course, what we all know: He looks better now than probably I’ve seen him. He’s got amazing energy, is still in great health and has this passionate love of baseball.”

There was a minor bit of drama last week in the contract-renewal vote, as outgoing San Diego Padres Chairman John Moores cast the lone dissenting vote against the new Selig deal. That move, however, according to league sources, owes to hard feelings stemming from last week’s tabling of a vote to approve the transfer of the team to current Padres CEO Jeff Moorad. It does not represent the consensus opinion of team owners, many of whom owe their existence in the game to Selig.

“I’ve worked with him and I’ve worked for him, and the changes I’ve seen in the game in just the last two years have been tremendous — and I give Bud a lot of credit,” said Paul Beeston, Toronto Blue Jays president and chief executive. “We’re in great shape going forward.”