The National Basketball Association has become the first of the four major sports leagues in the U.S. to accept sponsorships on team uniforms.
The NBA announced late Thursday night following its Board of Governors meeting that team owners have tentatively approved putting an advertisement patch on the shoulder area of its team jerseys, beginning with the 2013-14 season. A formal vote is expected in September at the next Board of Governors meeting, but with revenue from jersey ads estimated at $100 million annually, it appears the vote will just be a formality.
"This is very much a loose projection, but our view is , on an aggregate basis league-wide, our 30 teams could generate a total of $100 million by selling that patch on the jersey, per season," NBA Deputy Commissioner Adam Silver said in a press conference Thursday night. "We referred it to our planning committee so that we all understood the implications financially for what the additional revenue would mean on a team-by -team basis. I think it's fair to say that our teams were excited about the opportunity and think there is potentially a big opportunity in the marketplace to put a two-by -two (inch) patch on the shoulder of our jerseys."
Guidelines for jersey ads would be implemented this fall, giving teams enough time to enter into discussion with sponsors, but the actual ads won't appear on uniforms until the following season in 2013-14.
"The teams will need a significant lead time -- one, to sell the patch and, two, for Adidas to manufacture the uniforms," Mr. Silver said. "The patch that will be on the players' uniforms will also be on the jerseys sold at retail."
Eric Smallwood, senior VP for Indianapolis-based Front Row Marketing Services, said the $100 million figure is actually a conservative estimate.
"We looked into this and did a study on it, and depending on market size, you're looking at $1.5 million annually to $7.5 million per team," he said. "I wouldn't hesitate to say the yearly total could be $125 million, even north of that ."
Mr. Smallwood added that he wouldn't be surprised to see a sponsorship patch from foreign marketers, noting that the Houston Rockets had great brand awareness in the early 2000s when the team signed 7-foot-6 Yao Ming, who was extraordinarily popular in his homeland of China. The Rockets just this week signed Asian-American free agent Jeremy Lin, who burst onto the scene this past season in New York and caused the "Linsanity" phenomenon for several months.
"The NBA is the one American league that has always transcended the international marketplace," Mr. Smallwood said.
The NBA set the stage for corporate sponsorship patches on its team jerseys three years ago, when it allowed its teams in the Women's National Basketball Association to explore team jersey sponsorship deals with marketers. In the WNBA, jersey sponsorship covers the front of the uniform where the team nickname normally might be.
The $100 million boost from jerseys would be most welcome for NBA team owners. Despite league TV ratings being up 28% in the last decade, CBSSports.com estimated that NBA revenue declined from $3.8 billion in the 2010-11 season to $3.4 billion this season, which was shortened from 82 games to 66 games due to the labor issues that produced a lockout.
Naturally, the idea of sponsorship patches on NBA jerseys will still need to be refined as the process plays out the rest of this summer and into the fall, specifically conflicts with league and arena corporate sponsors. It's highly doubtful that Staples, for instance, which has naming rights to the Staples Arena in Los Angeles, would be happy to see either the Lakers or the Clippers wearing Office Depot patches on team jerseys.
Fan reaction was mixed on Twitter. Kyle Weidie@Truth_About_It tweeted, "Look, no one "likes" ads on #NBA jerseys, but what exactly are we romanticizing in lieu of reality by staking claims against them?" Another person, Colin Means, tweeted "I'm all for ads on NBA jerseys. Already have Adidas/Nike logos and whatnot, so not a huge change."
One person who goes by DP@sports_and_ads tweeted "If rumors are true and the #NBA puts ads on jerseys, consider the value of league to drop HUGE in fans eyes." Alex_Young tweeted, "If the NBA puts ads on the jerseys I will be beyond mad. It will completely ruin the art and uniqueness of the jersey."