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.