The Utah Jazz are the latest franchise taking advantage of new NBA rules allowing on-jersey advertising. But the team's patch will be decidedly non-corporate.
The three-year deal announced today is with Provo, Utah-based Qualtrics, which markets customer experience software to companies. Instead of putting its logo on Jazz jerseys, the company is opting to promote its in-house charity, "5 For The Fight," which raises money for cancer research. Financial terms were not disclosed.
"It has always been an important and inherent part of our culture to want to give back," said Mike Maughan, head of global insights at Qualtrics, who helped negotiate the deal. "When it came to putting our charity on the patch we thought you can do what everybody else is doing and put a logo on there. That's interesting, it's fine, but it's not going to change the world," he added. "And it's not going to do something that is unique and special."
The NBA in April approved the sale of jersey sponsorships starting with the 2017-18 season, as part of a three-year pilot program. The patches must appear on the front left of the game jerseys with each one measuring about 2.5 inches by 2.5 inches.
The Jazz are the fifth NBA team to announce a jersey-patch deal. The other teams are the Philadelphia 76ers with StubHub; the Sacramento Kings with Blue Diamond; the Boston Celtics with General Electric.; and the Brooklyn Nets with software company Infor. Also, the Cleveland Cavaliers have reached a logo deal with Goodyear Tire & Rubber Co., Bloomberg reported last week, citing unnamed sources because the pact has not been publicly disclosed. Late last year Bloomberg reported that Emirates Group is in preliminary talks to sponsor jersey patches for "a number of" NBA teams.
The deals with the Celtics, Nets and Jazz have all come within the past month, suggesting the dealmaking is heating up after a slow start. In September, Sports Business Journal reported that the ads had not been an easy sell. Some teams are cautious about striking deals in a nascent market that has yet to establish valuation benchmarks, the publication reported.
The Celtics deal with GE was worth more than $7 million a year, Bloomberg reported, citing a person familiar with the deal. The Nets deal, which was announced last week, fetched $8 million annually, Bloomberg reported, according to a person familiar with the terms.
Larry Mann, executive VP at sports marketing agency Revolution, guessed that two-thirds of NBA teams would have deals in place by the time the 2017-18 season starts.
"In this day and age, any way you can cut through clutter and put your logo in a place where it's a captured audience … I think it's a good thing," he said in an interview with Ad Age. But "the sales process on these things is long. And because of that it makes it a little bit more challenging to pull off a deal." He said the question is if teams can drive new revenue from patches or it they end up using them to entice existing sponsors to sign renewals.
Qualtrics is an existing vendor for the Jazz but the company did not previously hold a sponsorship, according to a team spokesman. The jersey patch deal is part of a larger arrangement that also makes Qualtrics the team's "exclusive fan experience insights and analytics partner." The team plans to use Qualtrics' tools to collect and analyze fan data to improve the arena experience.
"It's among the biggest partnerships that we have ever done," said Jazz President Steve Starks. "It includes more than just the jersey patch. Qualtrics really is all-in on the Jazz and so they are buying other assets and hospitality with us."
Asked about interest from brands in the patch, he said: "The demand was strong. We were able to have conversations with essentially anybody that we wanted to. Some of those were just exploratory and others were people wanted to really start negotiating with us." He added: "We were able to be selective. We didn't just want to go to just the highest bidder. We wanted to do something that would be meaningful on several levels."
Qualtrics, he noted, is representative of the tech boom occurring in Utah that earned the region the nickname of "Silicon Slopes." Qualtrics markets software to "manage the entire customer experience -- from surveys to insights to action," according to its website. It says it does business with nearly 60% of the companies comprising the Fortune 100.
Qualtrics has an interest in fighting cancer because co-founder and CEO Ryan Smith's father is a cancer survivor. The company has its roots in a tech project Mr. Smith engaged in when he moved home to be with his dad. "That project eventually turned into Qualtrics. We vowed that if the company ever made any money, we would make it our mission to support cancer research," he said in a statement.
The company's "5 For the Fight" campaign launched one year ago in partnership with the Huntsman Cancer Foundation. The model is to solicit $5 individual donations and then have donors challenge five other people to do the same. The goal is to raise $50 million.
Interested donors are asked to make donations via a website. Then they are encouraged to write on their hand the name of someone who has fought or is fighting cancer, take a photo of it and share on social media using "#fiveforthefight."