Clock Ticks for NBA on Jersey Ads

David Stern, NBA Commissioner

(from Sports Business Journal, November 5, 2012) Since last year the NBA has been in the process of allowing teams to sell jersey advertising and it could be put into place as soon as next season.  No conclusion has been reached on whether the deals will be sold on the league level or the team level.  The system that is being debated could generate an extra $100 million annually in revenue if every team has a deal in place.  However, it has not yet been determined how this extra revenue will be shared among teams.

With little objection, teams seem to be in favor of ads that will only be a small corporate patch on the jersey.  Many proposals are being reviewed, including one that would see revenue split evenly between all 30 teams. It is predicted a large market team, like the New York Knicks, could receive up to $15 million annually, while a small market team could generate up to $800,000.  Alex Martins, the chief executive officer of the Orlando Magic said, “There are a number of different issues that need to be resolved and [revenue split of jersey advertising] is just one of them. It seems like a simple process on the front end, but you get into details ranging from current corporate partners to revenue decisions. It is a complex decision.”

Some small market teams are concerned that these ads will give large market teams a financial advantage.  Another issue could be an increase in the league salary cap, which is based on league-wide revenue.  There is speculation to how the fans will respond to having sponsors on the jerseys, but that isn’t as great of a concern as the finances.

Time is running out on the NBA to figure out a system to put in place by next season.  The pressure is on for teams to make a deal happen and that urgency should lead to a deal in the near future.