Emboldened by new powers, NBA players union seeks brand deals

NBA players are among the most marketable athletes on earth, and have long cashed in via individual endorsement deals. But for years, the league—not its stars—had control over group licensing deals that governed huge product categories like jerseys, trading cards and video games. That changed last summer when a new collective bargaining agreement gave the players union more power to craft licensing deals. The upshot is that the union can now strike brand deals for off-court activities with marketers that are not official NBA sponsors. So even though PepsiCo is the NBA's official sponsor, Coke could hypothetically strike a deal with a group of players, as long as the marketer does not use logos controlled by the league. Now the union is signaling it wants to more aggressively leverage its newfound freedom by bolstering its marketing arm, known as Think450 in reference to the league's full component of 450 players. On Thursday, Think450 announced its first board of directors, including heavy hitters from the entertainment, banking and education industries. Members include Leo Hindery, former CEO of the Yes Network and current managing partner of the InterMedia private equity firm; and Raymond McGuire, global head of corporate and investment banking at Citi. They will advise the players union as it pursues a range of off-court marketing opportunities, trying to make the most of the cultural clout that the hoop stars enjoy. "People want to follow what the players are doing all the time and what impact they are making," says Jordan Schlachter, president of Think450. "We want to be the authentic voice of basketball … outside of the lines of the game itself," he adds. "And we do feel there is a tremendous opportunity out there to exploit that in a way that gives our players the reach they want." What's changed Previously, the league handled all negotiations with brands and manufacturers for licensing deals that used NBA trademarks, and shared revenue with the union. The deals involved anything in which the likeness of three or more players was used, such as in a video game. For the 2015-16 season, the league paid more than $50 million to the union for licensing royalties that was passed on to the players, according to a regulatory filing; Think450 is now trying to match or exceed that revenue on its own. Players control their individual sponsorship deals, like LeBron James' work for Kia. Now that the league's control over deals involving multiple players has ended, brands must negotiate with the league to use assets the league owns, such as team names and logos, and forge separate pacts with the players union in order to use players' likenesses. (If a brand has its own separate endorsement deals with players it wants to use as a group, it does not have to go through the union.) The union can now also craft marketing deals without league involvement for all kinds of off-court activities that don't use league-owned trademarks. Union hunts for brand deals The effects are already being seen. During February's All Star Weekend in Los Angeles, the union hosted activities at the players hotel in West Hollywood that involved brands not on the official NBA sponsorship roster. That included Lamborghini, which took over a space in the hotel to show off its new SUV, even though the NBA's official car sponsor is Kia. Lamborghini "saw a really great brand fit between the Lamborghini image and our players and the influence our players have in that space," Schlachter says. Motorsport 🏎 __ At One Court, the Lamborghini Lounge was a luxurious venue designed to immerse guests in the @lamborghini culture & soul. While visiting, players had the opportunity to discover the "Urus", the first Super SUV, for the first time in California. #OneCourt pic.twitter.com/RAGV3VzEMD Going forward, the union is open to more deals with brands that don't have official league sponsorships. Schlachter says. "I think there are lots of companies that are interested in the basketball space." The new arrangement doesn't seem to be hampering the league's ability to craft deals with its own sponsors. Taco Bell, Gatorade and Kia re-upped their NBA sponsorships last fall, for instance. And the league in March announced a deal making YouTube TV the first presenting partner of the NBA Finals. The pact includes in-game commercial spots and placement of the YouTube logo on the court at participating arenas. But as the players union seeks to make its own deals, the new Think450 board members could emerge as powerful allies as players seek new relationships in the media, tech and marketing industries. The other new board members are Charles King, CEO of Macro, which finances films and other content driven by people of color; and Lisa Wardell, CEO of Adtalem Global Education, which runs institutions like Devry and nursing educator Chamberlain University. Think450's staff members include Chief Brand and Growth Officer Que Gaskins, a former Def Jams Records executive. Think450 has also hired Dentsu Aegis Network to handle duties like finding marketing and media partners and identifying off-court opportunities. One possibility is finding brands to back the union's annual Players Voice Awards, for which NBA players vote for winners in categories such as "best dressed," "player you secretly wish was on your team," and "best social media follow." Think450 is also eyeing off-court opportunities surrounding the NBA Summer League in Las Vegas, which runs July 6-17. The new arrangement comes as the league and its players are thriving. For the 2017-18 regular season that ended Wednesday, the NBA set all-time records for total attendance at 22.1 million fans, as well as for average attendance and sellouts, the league reported today. Merchandise sales at NBAStore.com jumped 25 percent, setting a new record. On social media, the league and its players have more than 1.5 billion likes and followers, with Cleveland Cavs star James alone drawing 100 million followers across Facebook, Twitter and Instagram—making him the most followed American athlete, according to the NBA. NBA vs. NFL In the NFL, brands get rights to use the likenesses of groups of players when they sign up for league sponsorships. (The players get paid, but the union can't sign a separate deal with a brand that competes with the NFL sponsor.) But as Sports Business Journal recently reported, the NFL union is pushing for changes to this so-called "commercial agreement" when the deal expires in 2021. The push by players unions to craft their own deals raises questions about how much those deals are worth without the ability to use league-controlled trademarks, like the NFL shield logo, for instance. Historically, the value of deals has been driven by the ability of brands to use player likenesses together with league trademarks, says Marc Ganis, president of SportsCorp, a sports-business consulting firm. Now, "the players associations want to become a business and create whole operations that market the collective player likenesses," he says. "That is certainly their right to do, but the jury is most assuredly out as to whether that will actually net more money for the players or not." Still, he gave the NBA union better odds of pulling it off than the NFL union, suggesting NBA players, as a whole, are more identifiable outside the court and out of uniform. "You could always have Lebron James at a point-of-display wearing a generic uniform—there is value to that," he says. "But is there a value to an offensive lineman on the Cincinnati Bengals doing the same thing? And the answer is generally not."

Emboldened by new powers, NBA players union seeks brand deals

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