The NBA has been saturated with advertising for a long time. From the Los Angeles Lakers’ Staples Center to the New York Knicks’ official beverage Pepsi, anything that could be sold for advertising space was sponsored, branded, and promoted.
There was still one stronghold that resisted advertisers, the jersey. But last year, the NBA announced corporate sponsors would be able to purchase a 2.5 by 2.5-inch patch of ad space on the left shoulder of NBA jerseys. Corporations immediately began scrambling to lock up the valuable ad space.
Jersey sponsors are routine outside America. Teams in English football leagues all the way to Australian rugby teams commonly sell ad space on their jerseys, and the profits are huge. In 2016, Spanish football team Barcelona penned a record deal with Rakuten, a Japanese tech company, worth as much as €61.5 million a year.
After seeing the success of jersey sponsorship abroad, most in the NBA figured it was only a matter of time until the league adopted new policies. In a 2014 interview with AdAge, NBA Commissioner Adam Silver said NBA jersey sponsorships were “inevitable.”
In 2017, an NBA decision opened the flood gates and teams began netting anywhere from $5 million to $20 million a year to sell the 2.5-inch square logo on their jerseys. Big name sponsors including Goodyear, General Electric, and Disney piled in to purchase the advertisements. The Golden State Warriors signed the largest deal in the NBA, scoring $20 million a year from Rakuten.
And while 2017’s decision to allow jersey sponsorships is technically a tentative, three-year trial run, there is little doubt the NBA will continue the advertisements. Why? Because according to GumGum Sports, a sports analytics company specializing in advertising, the jersey logos will generate over $350 million in value to these sponsors while NBA teams rake in money.
Jersey sponsorships offer companies a unique opportunity to reach their home market as well as abroad, part of the reason why a team like Barcelona gets such an exorbitant sum. Just ask Chevrolet, who spent $600 million to win the jersey rights of the English football club Manchester United. Chevrolet targeted Manchester United because its fan base has over half a billion people worldwide, nearly half of whom live in the Asia-Pacific region, an area Chevrolet is keen to target.
While European football teams are getting the biggest payouts for their jersey space, it probably won’t be long before you see NBA teams signing nine-figure jersey sponsorships. The NBA grows in international markets every year, and with that growth comes more opportunities for advertisers. Houston Rockets jerseys are popping up in China while Milwaukee Bucks jerseys proliferate in Europe. These jersey sponsorships will be worth more and more as the NBA continues to grow abroad.
The rights to advertise on a team’s jersey is a win-win for advertisers and NBA teams. Jersey ads offer brands a unique opportunity to reach an American audience, and pair themselves with teams increasingly popular worldwide. While purist fans may have their gripes with the new ads it’s unlikely they will be more convincing than the millions of dollars the league stands to earn each year. Who would have thought such a small ad could be worth so much?