Rodions Kurucs # 00 of the Brooklyn Nets heads to the basket against the Toronto Raptors during round one, game four of the NBA Playoffs on August 23, 2020 at The Field House of the ESPN Wide World of Sports complex in Orlando, Florida.
David Sherman | National Basketball Association | Getty Images
Despite the season hiatus, a drop in audience ratings for championship games, and uncertainty about the next season, the National Basketball Association expects a “significant increase” in its jersey patch revenue.
In an interview with CNBC Tuesday, Amy Brooks, president of the league for team marketing and business operations, said it was “too early to determine the exact percentage of the planned increase”. But she added that two-thirds of NBA clubs are still bound by kit patch agreements, while the rest are “actively negotiating”.
The NBA had sales of approximately $ 150 million from its patch program, which was introduced for the 2017-18 season. The program allows companies to pay to have their logo put on a patch on the shoulder of each player’s jersey. Brooks would make no commitments for the league to earn that amount again, reiterating that due to the pandemic, it is “too early to say so”.
“But we expect significant growth on an individual team basis,” said Brooks, who also serves as the NBA’s chief innovation officer. “We expect significant increases in this asset.”
Before the Covid-19 caused the NBA to suspend its season on March 11th, Brooks predicted in an interview with “a roughly 30% increase in patch sponsorship revenue” Sport Business Journal. However, marketers are forecasting a slight decline in the league’s wealth.
Tony Ponturo, acting as Vice President of Anheuser-Busch Media sports and entertainment marketing around the world for 17 years said the NBA could also see its patch sponsorship business decline by 20% due to Covid-19.
He said sponsorship dollars would still be “soft” for at least another year and that companies could view the NBA’s patch as a “luxury” that they could do without until the pandemic subsided.
“If they could keep the current rates they should be happy with them and I think they need to be better prepared for a drop,” said Ponturo, who added that the league’s ratings could play a factor.
Companies that purchase the patch covet the brand awareness that teams achieve when they play national games on ESPN or TNT, the league’s top media partners. But with the NBA’s ratings dropping, for whatever reason, clubs may need to use fewer eyeballs due to fewer.
Game 6 of the NBA Finals on ABC drew 8.2 million viewers on Sunday night and an average of 7.45 million viewers across the series The Hollywood Reporterwho also noted the 51% drop from the 2019 final.
US sports ratings have suffered for a number of reasons, including changes in consumption habits and an overflow in sports, with all four major leagues vying for attention.
“There’s just so much to consume,” said Patrick Rishe, director of the sports business program at Washington University in St. Louis, during an appearance on CNBC.Squawk box” on Monday.
Rishe noted that the NBC and Major League Baseball postseason finals played against Sunday Night Football. He also took into account the November 3rd presidential election.
“In general, sports ratings go down in election years,” Rishe said, adding that a “small percentage” of the drop in sports viewers is also due to leagues’ positive attitudes towards social injustice.
However, with fewer people watching, NBA patch prices could be affected. The current range is between $ 5 million and $ 20 million per season for some teams.
“I would have to discount you now for the real value [decline]This is the visibility of the television broadcast, “said Ponturo.” If the ratings are down, those eyeballs will be affected from looking at the patch. The biggest factor in the value of this patch is how it’s received on television. “
James Harden # 13 of the Houston Rockets speaks to official Mark Lindsay during the second half of an NBA game against the Toronto Raptors at Scotiabank Arena on December 5, 2019 in Toronto, Canada.
Vaughn Ridley | Getty Images Sports | Getty Images
Ponturo said the NBA patch was a “$ 1 million to $ 5 million opportunity right now” in a “buyers market” as companies still navigate Covid-19. Several NBA teams are shopping, including the Houston Rockets and the Brooklyn Nets.
The Rockets’ deal Rokit phones have expiredand the club did not wear the company’s patch logo in the NBA’s Orlando bubble. Rockets chief revenue officer Gretchen Sheirr said the team’s patch still holds its value in the open market.
Sheirr said there is “short term hesitation” with potential partners due to the pandemic, but other companies looking for more brand awareness “know this is a golden opportunity and are ready to act quickly,” Sheirr told CNBC. “It really depends on the brand, the industry and their position.”
The networks Deal with software company Infor was rated approximately $ 8 million a year. The team will have superstar Kevin Durant for the next season mixed with an all-star in Kyrie Irving and a new coach in Steve Nash. Therefore, the patch could keep its value.
BSE Global (the parent company of the networks) CEO John Abbamondi told CNBC the club was “extremely optimistic” and “optimistic” about its patch offerings. He said the networks “expect to be competitive next year” and that could attract more national TV games.
“Not only is this a unique marketing tool for a brand in terms of scope and scope of reach in terms of billions of impressions not just in the US but around the world,” said Abbamondi.
He described the patch as “the alignment of the cabinet brand with our organization except” [arena] Naming rights. “
The problem: The network’s asset also lacks its own brand awareness.
It ranks among the lowest in SBJ online recognition survey for top US markets. The survey measured NBA fan awareness of team patches at the national and regional levels.
The networks also ranked in the bottom five in local TV ratingsaccording to Nielsen data and 24th place in the NBA participation before the NBA’s season break in March. Abbamondi said there was “strong interest” in the team’s patch and the team was “confident” that ratings will “increase significantly next year”.
The teams can now designate two partners who can freely use their intellectual property outside of the US and Canada. The move could benefit global companies looking to partner with more global teams like the San Antonio Spurs
The NBA maintains US market rules that restrict advertising outside of club jurisdiction.
The league also added second patch for practicing jerseys, now in the stomach area of the uniforms. With such increased engagement, the clubs could fetch higher prices, Miller said.
Excel has sold patches for multiple teams, including the Boston Celtics, Chicago Bulls, and Rockets. The company also monitors the Patch listing for Minnesota Timberwolves.
“There is a certain way to sell these [patches]”said Miller, noting that it could take more than a year to negotiate new arrangements for teams.
“There has to be an element of storytelling, an authentic connection with the organization, and the right level of competition in the market,” he said.
Miller said clubs “impose safeguards they would otherwise never give” in order to attract new partners or renew agreements.
Teams with upcoming expiration dates like the Philadelphia 76ers are already starting talks for the 2021-22 season. The Sixers Deal with StubHub expires after the next season.
With the NBA unsure about the start of their 2020-21 season, the number of games, the location, and the fact that spectators will be allowed to return to the arena, Ponturo and Sheirr agreed that both teams should have the spots could keep free to await better deals for the 2021 NBA. 22 campaign.
“It makes sense to hold back to make sure you’re in the right direction, and sometimes finances play a role,” Sheirr said.