One of the more extraordinary aspects of the NBA’s apparent done deal to place advertiser logos on jerseys is how relatively little the league expects to collect from the arrangements. While the NBA may be intentionally lowering expectations, the league suggested last week the brand patches would bring in a combined $100 million a year for its 30 teams.
The NBA is going to sell some of the most valuable real estate it has to offer marketers for an average of $3.3 million per team? Even if the figure is more like $5 million, that seems like a pittance in the world of top-tier sports.
Look what teams pay underperforming players not to play for them. One of the latest examples is the Washington Wizards dropping a player, even though it will cost them $23 million.
The NBA views itself as a global league with growing appeal in China. Yet, soccer powerhouse Manchester United collects an estimated $31 million a year from Aon for the company's brand on its jerseys. The Aon emblem is bigger than the small patch the NBA is considering, but it would still be worth the equivalent of what 10 NBA teams may take in.
A significant amount of NBA teams are reportedly losing money. But it seems unlikely the jersey dollars will provide much help in shifting to profitability.
The NBA's plan still needs to be approved via another vote this fall, but the expectation is the ads will begin appearing in the 2013-14 season in an upper corner on jersey fronts.
At first glance, it would seem TV networks would be vehemently opposed to the NBA’s initiative. If Geico is a heavy advertiser on TNT, why would it spend more if State Farm has an unavoidable presence on LeBron James’ jersey all game long? And more clutter, especially where a network gets no money, would seem to be a negative.
Yet, TNT and ESPN shouldn’t have much to worry about. With live sports such valuable programming for advertisers, there’s little reason to believe cutbacks would be coming. Yes, the jerseys bring direct affiliation with players and thus increased value, but State Farm has had its logo behind the basketball hoop for some time now and competing insurance companies still flock to sportscasts.
On the offensive side, the jersey sponsorships open a new opportunity for networks. Marketers don’t buy one area and walk away. They want the clichéd 360-degree presence. So, an advertiser buying a jersey presence may invest more in NBA commercials and other media extensions to reinforce its on-court exposure and, of course, its visibility on the jerseys sold in stores.
Networks might make off better than the league itself over time.
There are some suggestions the logos might bring some fan backlash. ESPN.com cited four polls where fans are overwhelmingly opposed to them.
What are they going to answer in a pro-con online click opportunity? The equivalent of: “Give me more of the Verizon V!”
Fans will get over it fast. Is there an example where a new ad venue has been established in sports, where fans have been turned off enough to engage in any notable rejection?
Still, the NBA becoming the first major American sport to go with ads on jerseys is just plain sad. Ad creep will continue in sports, but jerseys in games seemed to have a certain sanctity. (The NFL has had them for several years on practice jerseys.)
It’s one thing to pop one of the 2.5-by-2.5 inch insignias on a Memphis Grizzlies or New Orleans Hornets jersey. But on the front of the Boston Celtics’ home whites or Los Angeles Lakers’ road purple? The incongruity was driven home by MLB Commissioner Bug Selig, who in an interview questioned how ads in baseball might tamper with the venerable laundry worn by the Chicago Cubs or New York Yankees.
A few years ago, NBA Commissioner David Stern and fellow executives may have had a similar opposing stance.
Correction: A TV Blog Friday should have noted cable operator Mediacom had more than 1.05 million video customers at the end of the first quarter. Also, the combined OIBDA -- the metric the company uses to gauge its performance -- was $147.3 million for both of its operating entities in 1Q, an increase of 6.3% compared to the same period in 2011.