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Sports Business

NBA owners must convince fans jersey ads not cash grab

February 7, 2013

In the current IBJ print edition I penned a front page story about jersey ads coming to the NBA.

In the article I detail how the league’s 30 owners are leaning toward allowing a 2.5-inch by 2.5-inch ad on the upper left or right corner of the jersey. NBA owners want to have the ads in place for the 2014-15 season.

Cumulatively, team owners think they can generate $100 million annually through the sale of jersey ads. Sports marketers think large market teams like Los Angeles and New York can score $15 million a year through the ads, while small market teams like the Indiana Pacers are more likely to get between $1 million and $5 million annually.

League owners are currently working on a revenue sharing plan for the jersey ads. One proposal is that 25 percent of all revenue generated by the jersey ads be pooled and shared among teams.

Officials for one local company, The Finish Line, already said they’d be interested in buying an ad on the Pacers jerseys. The ad would appear on player-worn game jerseys and replicas sold to fans.

Marc Ganis, a Chicago-based sports business consultant who counts several NBA teams as clients, thinks the demand for such ads would be high.

“Companies will line up for these ads,” Ganis said.

While numerous types of companies from cell phone dealers to banks would be interested in the ads, some categories, such as hard liquor and possibly beer could be off limits.

NBA fans’ tolerance for such ads is a great unknown.

Pacers President Jim Morris said there’s been little fan pushback about ads on WNBA jerseys and he expects a similar reception to ads on NBA jerseys.

When I asked my twitter followers what they thought about NBA jersey ads, I was surprised at the negative response. It certainly wasn’t unanimously negative, but more than half were against the idea.

Then I recalled something Larry DeGaris, the University of Indianapolis’ director of academic sports marketing programs, told me for the article. He essentially said that before NBA owners start selling jersey ads, they need to sell NBA fans on the idea. And they need to do that by explaining how the money would be used to benefit fans.

“The [Dallas] Mavericks can’t sell a jersey sponsorship just for [team owner Mark] Cuban to put $15 million in his pocket,” DeGaris said. “If that’s what fans are thinking, the sponsorship is a disaster. NASCAR tells fans at every turn, the sponsors on the cars are what makes this sport possible. That’s the message the NBA and its teams need to send to its fans.”

Some NBA executives have said the new revenue could be used to keep ticket prices in check. That might be a tough sell.

“If anyone thinks this will keep ticket prices from rising, they are very naive about economics,” said a commenter to my article. “The only thing that will keep ticket prices from rising is less people buying tickets.”

Since the NBA has a much higher profile than the WNBA and since the NBA would be the first of the big four U.S. stick-and-ball leagues (NBA, NFL, MLB and NHL) to break from tradition of having uniforms clean of corporate clutter, I’m quite certain there’s going to be some kind of reaction.

Just how violent that reaction is will depend on how effectively NBA owners can get out in front of this issue and how much the sport's fans think they’re getting out of the deal.
 

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