NBA jersey ads: Necessary evil?

How much is a 2”x2” patch of real estate on an NBA player’s jersey worth? That’s a $100 million question the league is seeking an answer to. Whether it makes fans uneasy or not, it’s going to happen come the 2013-2014 season.

In seeking to increase its revenues, the NBA is allowing advertising on actual game jerseys for the first time, leaving the Olympic Games as practically the only major international sporting competition where corporate logos are not allowed. The International Olympic Committee does not even allow sponsor placements inside its venues, unless the TV franchise holders are able to place them there virtually.

Why is the NBA leasing out its most precious space? The league is, at the end of the day, a business, a very large investment for its team owners. We see this all the time in collective bargaining agreements when the players try to flex their muscles: a group of athletic young millionaires challenging the authority of older, more savvy billionaires. The winner of that tug-of-war is obvious to everyone but the players. In this case, with some tweaking of contracts, the decision will be implemented next year.

In other major sports leagues overseas (all international football leagues, the Australian National Basketball League (NBL) and even the WNBA), advertising is all over the place, from the uniforms to the flooring of the playing court itself. Some even go so far as to place sponsor stickers on the backboard. This brings in additional revenues for the league and does not really have an effect on the game itself. Of course, purists will always argue the aesthetics, but they will eventually get used to it. Not that they have any choice.

As it is, the NBA has an agreement with Adidas to manufacture and sell jerseys and other merchandise. The agreement even requires players to wear the brand’s warm-ups and non-game jersey sportswear regardless of their individual endorsement deals. The only exception is the official game jersey. Now, that area is being opened up to advertising, as well.

There are several questions that have to be answered before any advertising contract can be implemented. Can teams negotiate their own deals? Will existing league sponsors be given first crack at the precious real estate? How will it impact existing television agreements? TV advertisers may object to the fact that broadcasts will inadvertently be giving exposure to rivals of their sponsors, particularly if the deals are league-wide. Remember, there are several layers of television contracts: regional, national and international; regular season, playoffs and finals. That will keep the league’s vast battery of lawyers busy working out the legal intricacies for quite a while.

Will the new ad patch also be on the replica jerseys sold at retail outlets? Most probably not, though their absence would somehow diminish the “authenticity” of the merchandise being sold to the public. Perhaps they will just be sold as limited premium items. And how will fans respond to the jerseys when they are sold? Will fans just accept them as a necessary evil, shun them, or opt for the old-style (and most likely cheaper) patchless jerseys they’ve been used to? It will be interesting to see what the market will actually bear.

This development will also complicate the endorsement contracts of some players, more so if the eventual league sponsor on the patch is a market rival of the brand they are already endorsing. On the other hand, players benefit from 50 percent of all Basketball Related Income (BRI) that the league generates. That’s a case of double-dipping sponsors would definitely object to.  

About 20 years ago, Ivan Lendl was the number one tennis player and one of the leading product endorsers in the world. He actually had a contract with an eyewear brand that ensured he would be paid a certain dollar amount for every photograph of him in an international publication wearing their sunglasses. Means of assuring advertising exposure have evolved further since then. Turtleneck sweaters became fashionable in golf and other sports because the logo on the upright collar would unavoidably be included even in close-up shots of the athlete. At the Atlanta Olympics, a sprinter even wore luminous contact lenses with his brand of sports apparel on them.

For NBA teams in smaller markets, it will be an additional revenue stream. Just three years ago, some teams sought relief from financial burdens, and last season, the league earned significantly less because the lockout shortened the season. The extra money will definitely be welcomed, regardless of whether or not fans feel the league has “sold out”. The bottomline is keeping the teams afloat, especially since player salaries and other expenses continue to escalate, and the burden is often passed on to fans in higher rates for parking, tickets to games, food at venues, and merchandise. This may be a way to alleviate that problem.

This is a big step for a league steeped in tradition. But there are also many precedents. The arenas many teams play in are named after the corporations and brands that built them, and this precisely the point, to get as wide an unavoidable exposure as possible. You can’t avoid calling the Lakers’ home court the Staples Center or the Rockets’ gym Toyota Center. And when the new advertising deal pushes through, you can’t avoid seeing the ads on your favorite player’s chest, either.

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Follow this writer on Twitter @BillVelasco.