Revenue from NBA jersey ads likely to vary

July, 20, 2012
7/20/12
4:25
PM ET
The NBA is projecting to make $100 million annually from the jersey sponsorships teams will now be able to sell.

But just how much upper-tier and lower-tier teams will see of that remains to be seen.

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Even at the top of the NBA marketing spectrum, a significant gap exists between a team that could command the most money and the next team on the list. Last year, Horizon Media studied what the top teams in the NBA, NFL, MLB and NHL could potentially make from jersey sponsorships, considering a variety of sizes and placements. One NBA projection had the Los Angeles Lakers at $4.1 million a year, while the next highest-team, the Boston Celtics, came in at $2.8 million.

Lee Igel, associate professor of sports management at New York University who reviewed the Horizon Media study, said it’s tough to say if the league’s $100 million-per-year projection is accurate. It might even be conservative.

“It all centers on the fact that there is no yardstick. Assuming they follow through and it really happens, [the NBA will] be the first of the major U.S. sports leagues to do this,” said Igel. “It wouldn’t be surprising if there was a wild rush from corporations to get their names on the jerseys.”

While revenue won’t be shared equally if sponsorships are indeed sold on a team-by-team basis, teams that can’t command as high a price will still get a slice of the pie thanks to the NBA’s new local revenue-sharing plan. Reported details of that plan have each team contributing 50 percent of all local revenue, minus certain costs like arena expenses, to a common pot. From that pot, teams would each receive an allocation equal to the average payroll. Teams above the average payroll would become payers, while teams below would become payees.

The bottom seven teams were projected to make as much as $16 million per year from local revenue sharing before the jersey sponsorship announcement. That’s over half what each team receives from national television and sponsorships deals and approximately 25 percent of the salary cap. The addition of jersey sponsorship revenue would increase that payout, alleviating some of the gap between what large- and small-market teams would be able to command for the sponsorships.

It wouldn’t only be teams benefiting from the deals, however. Under the new collective bargaining agreement, players receive about 50 percent of all “basketball-related income,” which includes league and team sponsorships. That means the players’ guaranteed share of league revenue could rise by $50 million per year if the league’s projections hold up.

Igel said adidas likely will be another winner in this deal. The league’s official apparel company doesn’t even get its own logo on game jerseys currently, but expect that to change.

“Absolutely,” Igel said when asked if adidas would see its logos on NBA jerseys once sponsorship patches are put in place. “They’re not going to get left out of this.”

Kristi Dosh

Sports Business
Dosh covers sports business for ESPN. She is an attorney, founder of BusinessOfCollegeSports.com, and joined ESPN in October 2011.
Author of "Saturday Millionaires: How winning football builds winning colleges."

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