Look closely at NBA players’ chests in the 2017-18 NBA season, and you’re likely to notice something a little different: advertisements. While placing ads on team uniforms is common in Europe, the concept of promoting companies on an athlete’s outfit is a new idea in the major U.S. leagues. Jersey ads aren’t just a new potential revenue stream for American franchises; they’re also a welcome opportunity for brands looking to connect with sports fans.
A Travels into New Territory
The NBA isn’t the first sports organization in the U.S. to advertise on uniforms, Real Salt Lake of MLS added jersey sponsors in 2006, but it’s the first of the major four sports leagues to embrace ads on game jerseys—the ones most fans see. Because the NBA knows that some fans may not like the ads, the league is calling the three-year program a “pilot.” The Philadelphia 76ers became the first team to get on board after the NBA’s April 2016 announcement, cutting a May 2016 deal worth a reported $5 million per year with secondary ticket site StubHub.
— Philadelphia 76ers (@Sixers) May 16, 2016
In early October, the Sacramento Kings became the second NBA team to land a jersey ad partner, inking a three-year deal with Blue Diamond Growers for an undisclosed amount. In addition to real estate on the team’s jerseys, Blue Diamond will also receive in-arena branding and the right to sell almond products at arena concessions stands.
Despite these high-profile deals, recent reports, including one from Sports Business Journal, suggest that NBA teams are having trouble selling the sponsorship opportunity. For one thing, the ads are small, just 2.5 inches by 2.5 inches. But they’re also expensive at between $5 to $10 million a year and won’t be included on jerseys sold to fans.
A Tried, True and Accepted Concept Overseas
Slow start or not, global trends suggest that uniform ads are the way of the future. European football fans have seen brand logos on the front of Premier League (England) and La Liga (Spain) jerseys for years, and every year new sponsors up the pricing on the coveted real estate of the top clubs’ kits. Chevrolet kicked off a partnership with Manchester United in 2014, and FC Barcelona recently extended a deal with Qatar Airways worth some $40 million per year. Spending on Premier League jersey sponsorship reportedly rose 90 percent from 2010 to 2014 and continues to skyrocket as the game grows globally. Teams, sponsors and ownership groups are stepping up their efforts to reach new audiences via investments in other territories. For example, FC Barcelona recently opened a business office in New York City to expand its footprint in the U.S.
Europe’s experience proves that there is money in the jersey sponsorship game, and more American sports leagues are likely to follow the NBA’s example in pursuing this largely untapped revenue stream. This is not only significant for the leagues, teams and athletes that make money on the deals, but also for brands looking to reach their target audiences through unique sports sponsorships. Not everyone wants to pay $5 million for 30 seconds of TV air time, the reported price FOX is pulling for 2017 Super Bowl commercials. A jersey patch that appears over and over again, in close-ups at the foul line and instant replays, may have a much greater long-term return on investment.
For those who still doubt the potential future of jersey ads in U.S. sports, consider this: In 1994, only one MLB stadium had a corporate naming-rights sponsor. As we close out the 2016 baseball season, there are only nine stadiums that don’t have a corporate name. Never say never.