Report: Teams still sorting out logistics of jersey ads for 2017-18
It's been nearly six months since the NBA Board of Governors approved the sale of advertisements on jerseys for the 2017-18 season, but to this point, only one team has finalized a deal.
The Philadelphia 76ers partnered with StubHub in May for three years at $15 million, but the 29 other teams are taking a more patient, cautious approach to the untapped revenue stream, wary of underselling a market that hasn't been established yet. That's one of several logistical issues still being sorted out in regards to the sponsorship patches that will soon be taking up some six square inches of real estate on NBA jerseys, ESPN's Darren Rovell reports.
In the lobbying stages of the campaign, commissioner Adam Silver suggested that jersey ads could net the NBA up to $100 million in additional annual revenue, but it now seems obvious the league will obliterate that projection. The Golden State Warriors alone are seeking upwards of $20 million per year, while the Cleveland Cavaliers are looking for a three-year deal in the $50-million range, sources told Rovell.
There will obviously be a considerable discrepancy in the amount of national television exposure those championship-caliber franchises will get compared to the woebegone Sixers, but a potential $15-million-a-year gap in jersey-ad revenue suggests Philadelphia may have undersold the market. Even the lowly Brooklyn Nets, whose market size has not been reflected in their miserable television ratings, are reportedly seeking $25 million over three years.
As a concession to small-market franchises concerned about compounded revenue imbalance, all teams will be required to put half their jersey-ad profits into a pool that will be split equally among all 30 teams. Still, sources told Rovell that teams have been secretive with each other about their negotiations with prospective ad partners because many of them are competing for the same sponsors, another factor contributing to the uncertainty over market value.
Another potential issue teams are wrangling with is conflict of interest. They're concerned about situations in which their marquee players sign endorsement deals with competitors of the jersey-patch sponsors, and there's a sense that teams' jersey deals may be devalued by existing, potentially conflicting player sponsorships, sources told Rovell.
Meanwhile, at least one team is reportedly asking its prospective jersey sponsor to also buy ads on other local media platforms. That would assuage concerns that a patch may ultimately become a means for advertisers to avoid buying space on local TV.
In other words, there is a lot at play, and teams are hell-bent on maximizing their profits for 2017-18. The Sixers may have jumped the gun, but at least they have one less thing to worry about.