We are just about two months away from the start of the 2017-18 NBA season. This year’s jerseys will have a whole new look.
As the 2017 NBA season draws nearer, we are starting to get our first look at 30 new sets of jerseys. The league is entering the first year of a new eight-year deal with Nike that is worth nearly $1 billion over the span of the contract.
This move obviously represents a significant increase in revenue for the NBA, as ESPN’s Darren Rovell reported in June 2015 that the deal is a 245% increase from the NBA’s last jersey deal.
However, this deal brings about a feature that we have never before seen on jerseys of any of the four major sports across the United States. Many teams have agreed to put advertisements on their new uniforms.
The Business Side
This movement of advertising on jerseys in the NBA could serve as a major stepping stone for advertising on jerseys across the four major sports. It has become a staple across the soccer world, as many teams have become synonymous with the logo plastered across the front of the jersey.
The league expects that the new 2½-by-2½ inch jersey advertisements could generate at least $100 million annually. Major League Soccer teams have featured advertisements on their jerseys since 2007, and while MLS doesn’t rival the NBA’s size and viewership, they still manage to generate upwards of $6 million per year in revenue, according to Business Insider.
The Philadelphia 76ers, in May 2016, were the first NBA team to ink a jersey sponsorship deal when they landed StubHub as their jersey sponsor.
“We’re so tightly associated with the event-going experience that it was natural for us to move aggressively and chase this opportunity,” StubHub President Scott Cutler said.
76ers CEO Scott O’Neil said:
I’ve always been jealous of the English Premier League teams. NASCAR figured it out a long time ago… For some reason, the big four sports in North America have not. I think it’s an unbelievable opportunity.
Starting this season, Orlando Magic jerseys will feature a Disney patch. The team is also partnering with Disney to promote Orlando’s Walt Disney World, as the team will sell annual passes to Walt Disney World for first time, according to ESPN’s Darren Rovell.
In a statement, Orlando Magic CEO Alex Martins said:
With Orlando as our hometown, Magic has always been a key strand of our DNA… This expanded agreement with Disney brings our story full circle and represents the coming together of two dynamic organizations that have become synonymous with Orlando.
In addition to the small Disney patch on their jerseys, the Magic will have a new Disney-branded special seating and hospitality area in the Amway Center.
While there are certainly going to be mixed reviews about the advertising, ultimately it makes sense. Fans across the league often forget that professional sports leagues are meant to provide entertainment and earn a profit. Advertising on jerseys is just another way for teams to bring in more revenue.
The increase in revenue will allow teams to further enhance the value of their franchise. This allows teams to build world-class stadiums and enhance the entire fan experience overall.
The more you think about this situation, the easier it is to understand why a team would want to do this. We are moving toward an era in sports where if a club’s brand is weak, it typically translates into a bad team. For example, take a look at the Detroit Pistons.
There are many factors as to why the Pistons and the Red Wings waited so long to move into a new arena. For example, the city of Detroit (again unrelated to sports but has an impact) took a huge hit during the 2008 financial crisis with the collapse of the auto industry.
Due to Detroit’s inability to keep a steady economy, its sports teams took a hit. While they were able to stay strong for a few years, the Red Wings did not make the playoffs for the first time in 26 years after the 2015-16 season. The Pistons went from one of the most dominant franchises in the 1990s and early 2000s to a mediocre and underachieving club. The Tigers and Lions remain in limbo as they both continue to chug out disappointing seasons.
Then you take a look at the other side of the coin. The Miami Marlins went from surprise World Series Champions in 2003 to an organization worth $1.2 billion in 2017. This is a result of the brand they were able to develop as they moved into their new ballpark back in 2012. Committing to a new stadium or moving a franchise certainly comes with some major risks, but it typically works out, even if other aspects that factor into a brand’s value are in flux — like Miami’s ownership situation had been until the team’s recent sale.
Enhancing your brand as a sports team is no different than enhancing your brand as a business. There are HR and accounting departments for any professional team. It’s those people you never pay attention to who are the ones enhancing a team’s brand. Players are looking to work in the finest facilities because it gives them better opportunities to become a stronger, more developed athlete.
The main point to take away from all of this is that by incorporating advertisements into their uniforms, teams will be able to increase the value of their brand. Increasing the value of the team’s brand will hopefully allow for more teams to be successful both on and off the court.
There is certainly a crowd that is very against this new deal, but ultimately it’s for the better. The NBA has been taking steps toward becoming the most popular sport in the country, and this deal can only help them to bring in revenue, furthering that cause.
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