When the defending NBA champion Cleveland Cavaliers signed a deal with Goodyear last week to have the company’s Wingfoot logo on Cavs’ jerseys beginning next season, it raised a lot of eyebrows and upped the ante on advertising in pro sports.
The NBA in 2016 changed its long-held rule about advertising on game jerseys, initiating a three-year pilot program beginning with the 2017-18 season that allowed teams to sign individual deals with companies to have a 2.5” x 2.5” logo on the upper left side of the jersey.
The move coincides with Nike’s first season as the NBA’s official on-court apparel provider, taking over from Adidas in a deal valued at $1 billion. Nike will have its “swoosh” logo on the upper right side of all NBA jerseys except for the Charlotte Hornets, majority owned by Michael Jordan, which will have Nike’s Jordan brand on its team jerseys.
At the time, industry analysts estimated teams could generate $3 - 5 million annually, with NBA Commissioner Adam Silver saying the league would see approximately $100 million in revenue but indicating it could be much higher.
"We still don't know how much money this will generate," Silver said at the time.
Five teams before the Cavaliers signed jersey logo deals, averaging about $5 million annually per deal.
Due to the presence of LeBron James, the Cavaliers’ deal with Goodyear has been estimated north of $10 million annually. The deal also comes with multi-media support being handled by NBA media partner Turner Sports, as well as an array of co-branded merchandise.
It also includes a $1 million donation to Cleveland and Akron school districts to support STEM (science, technology, engineering and mathematics).
Although they have yet to sign jersey logo deals, the New York Knicks, Chicago Bulls and Los Angeles Lakers could also get $10 million per year mainly due to the size of their respective markets.
And that would not be the top figure. The Golden State Warriors have said that any jersey logo deal they sign would be in the $15 - 20 million range per year.
All indications are that the NBA plans to cash in on this revenue platform beyond the three-year test.
Many WNBA teams have for years had jersey-front sponsors. And in February, the NBA signed a multi-year deal naming Gatorade as title sponsor for the Developmental League, which, beginning with the 2017-18 season, be rebranded as the Gatorade League, complete with a G-League logo that will be featured on all game balls, all 26 team jerseys, on-court signage and digital assets.
While NBA fans are rubbing their eyes in disbelief, fans of Nascar and soccer are saying, “Been there, done that.”
Pro soccer, in fact, has some of the most lucrative jersey-sponsorship deals in sports.
Manchester United is in the midst of a seven-year deal with Chevrolet that brings in $80 million a year. Chelsea gets some $57 million annually via a jersey-front sponsorship deal with Yokohama Rubber.
“From an international scale, this is commonplace. And you are seeing it more domestically,” said Cavaliers CEO Len Komoroski. “This has been planned by the league to integrate business to enhance both parties. It has been created by the NBA in a deliberate fashion.”
NBA Jersey Ad Deals (to date) With Estimated Annual Cost
• Brooklyn Nets - software company Infor $4 - 6 million
• Boston Celtics - GE $8 million
• Cleveland Cavaliers - Goodyear $10 million+
• Philadelphia 76ers - StubHub $5 million
• Sacramento Kings - Blue Diamond $5 million
• Utah Jazz - software company Qualtrics $4 million (benefiting 5 For The Fight to fund cancer research)