Jersey Logo Real Estate = Location, Location, Location
The NBA took another significant step toward selling space on its jerseys when it unveiled a deal with BBVA last week to have the banking firm place its logo on NBA Development League jerseys during 2012 D-League playoffs.
Although the NBA will not enter the realm of Nascar, which allows signage to cover its cars and race driver togs, it has upped the stakes for its teams and marketing partners. The NBA already allows logos on practice jerseys, and WNBA teams can sell jersey-front space to sponsors (which also is an accepted marketing practice in Major League Soccer). Keep in mind that the league is also a major "sales representative" for Nike, Adidas and other basketball shoe companies, which are allowed to place prominent logos on their wares, which in turn are worn by every player in the league.
The fact that BBVA is an official NBA marketing partner helped the D-League deal to become a reality. All leagues are very protective of their marketing alliances, so any deal involving non-league partners — and especially firms in direct competition with league marketers — are red-flagged. Last season, for example, Boost Mobile signed a deal to have its logo on 10 of the WNBA's franchise jerseys, but was unable to secure space on two others’ because those teams already had alliances with rival telecom firms.
The value of jersey-logo deals comes to fruition in a multitude of activation levels. Based on recent WNBA and MLS pacts, companies generally have paid from $1 to 4 million over several seasons for logo rights, with a $7.5 million, multi-year deal between PepsiCo division Quaker Oats and the MLS Chicago Fire currently at the higher end. But the value for both the teams and companies bumps up due to national TV and global exposure.
In 2007, when Herbalife first splashed its logo across the jersey-front of the MLS Los Angeles Galaxy, for example, both the team and the company received millions of dollars from income and exposure the first year alone via worldwide sales of more than 300,000 David Beckham Galaxy adidas jerseys.
Analysts have speculated that a logo on the jersey of LeBron James or Kobe Bryant could translate into even more ROI. Speculation is that the NBA would test the waters during preseason games before trying it during the regular season and playoffs. The league's current stance on corporate logos: "It is an opportunity we continue to evaluate."
The NBA D-League deal with BBVA is the most recent example of a company using sports build its name. According to Sheiludis Moyett, BBVA Compass director of brand and advertising, "The exposure we get from presenting the playoffs and the finals, especially with our logo displayed prominently on the player jerseys, is a huge step in building the BBVA brand and strengthens our connection with fans and customers."
Even the two leagues that have shown the most resistance to jersey corporate signage are moving in that direction. The NFL allows companies to acquire logo space on practice jerseys, and MLB allows corporate logos on jerseys during international games, such as the recent 2012 two-game season opener played in Japan between the Oakland A's and Seattle Mariners (which even had a title sponsor, tech firm Gloops).
NBA (Adidas) and NHL (Reebok) allow official jersey providers to place their logo on jerseys. Nike paid more than $1 billion for a five-year deal to replace adidas division Reebok as the NFL's official uniform provider beginning in 2012. However, based on the uniforms that were unveiled earlier this month, you won't find the Nike Swoosh anywhere on the jersey, although it will be seen on gloves, pants and shoes.
Although Nike has not placed a ROI figure on the deal, adidas wrote in a recent company statement that Reebok could lose as much as a $250 million in annual revenue.
Bottom line: Soon after Qatar was chosen to host the 2022 FIFA World Cup, it signed a six-year jersey-front sponsorship deal with FC Barcelona, one of the most iconic names in international sports, which was valued by team officials in excess of $200 million. This month, Tom Benson, owner of the NFL's New Orleans Saints, acquired the NBA's New Orleans Hornets for an estimated $330 million.