NBA jersey ads proving to be tough sell

What seemed like an eight-figure opportunity for NBA teams is now turning out to be a tough sell.

More than six months ago, the NBA announced its 30 teams could sell a 2.5-square-inch advertising patch on their players' jerseys. 

Early estimates were that the new ad inventory would bring in $10 million or more annually for large market teams and a low- to mid-seven-figure sum for smaller market teams like the Indiana Pacers. Ad sales representatives across the NBA’s 30 teams were salivating at the new opportunity.

While there’s still plenty of time to get a deal done—the NBA won’t allow the jersey ads until the start of the 2017-18 season—few thought the sales cycle would be this long. The Pacers haven’t announced a jersey ad deal yet, and neither have 27 other NBA teams.

To date, only the Philadelphia 76ers and Sacramento Kings have signed a deal for a jersey ad.

ESPN reported that the 76ers signed a three-year, $15 million deal ($5 million annually) to allow ticket broker StubHub to put its 2.5-inch by 2.5-inch logo on its jerseys.

Terms of a deal announced this week that included a Sacramento Kings jersey ad for Blue Diamond Almonds were not disclosed. The Kings-Blue Diamond deal also included multiple elements in the team's new arena, which opened last month.

Some NBA team sales executives now think the jersey ads might have been overvalued.

“It’s a real challenge,” Milwaukee Bucks President Peter Feigin told Sports Business Journal. “We’ve put a big value on a new piece of inventory, like $3 million to $5 million [annually] for small and mid-market teams. So, we’re spending a lot of time educating on this, which we usually don’t have to do.”

One complicating factor is that many NBA teams are going after the same national sponsors to buy the jersey ads. One big national company told SBJ it had been approached by 18 teams pitching a jersey ad proposal.

Not even the Cleveland Cavaliers, the defending NBA champions, have signed a jersey ad deal yet. Cavaliers officials said they’re hoping to get $10 million annually from the team's jersey ad.

Pacers President Rick Fuson said during the offseason he was confident that team would sell the jersey ad by the start of next season.

“We are hopeful and look forward in talking to a number of folks who may have interest in that,” Fuson told the Indianapolis Star in June. “I’m confident that many teams, if not most, will have a great sponsor on the uniform.”

Pacers sales boss Todd Taylor remains confident that a deal will be done by the beginning of the 2017-18 season but declined to comment on specifics until an agreement is signed.

Measurement analytics firm Navigate Research, which is working with five NBA teams, recently estimated that teams will get 30 percent to 50 percent less for the patches—which will go in the shoulder area—than originally anticipated. Teams are packaging the jersey ads with everything from stadium naming-rights deals, logos on towels used on the bench, and other in-venue signage. 

Randy Bernstein, president of Los Angeles-based Premier Partnerships, said he’s been approached by several NBA teams to help them sell their jersey ads. He’s turned those teams down.

“So far, they have been priced aggressively, not attractively,” Bernstein said. 

There is hope. Emirates Airlines, sources said, is looking to sign jersey ads with up to six NBA teams. One holdup, sources said, is getting a handle on how the new jerseys—with the ads on them—will be sold in retail outlets. One important issue for potential advertisers is mandating that all jerseys sold to fans will have the logo on it. 

Some team executives are waiting for other teams to sign deals to make sure they’re putting a proper value on the new inventory.

“We’d rather see how it shakes out and jump in when we are ready,” Golden State Warriors Chief Marketing Officer Chip Bowers told SBJ. “There has been very real interest.”