One of the big changes for the 2017-2018 NBA season will be the inclusion of an ad patch on the upper left hand side of the jersey.
The patch will be 2.5in. x 2.5in. and located on the opposite side of the Nike logo. The 2017-2018 season also coincides with the beginning of Nike’s tenure as the official apparel maker of the NBA.
Only one team up to this point has negotiated an advertising deal for the patches. The Philadelphia 76ers signed a 3 year contract with StubHub worth $5 million per season.
Darren Rovell of ESPN is reporting that the Golden State Warriors are asking for $15-$20 million per season for a company to advertise on their jersey, which is more money than any other team is asking for.
The Warriors are sitting in a unique situation relative to other teams in the league. They are coming off of two seasons in which they won a championship and then won an NBA record 73 regular season games.
Just In: Warriors asking for $15 million to $20 million a year for a company to put its logo on their uniforms https://t.co/wKQqXBvtZx
— Darren Rovell (@darrenrovell) July 15, 2016
Their recent signing of Kevin Durant has ensured that this team will remain a huge draw in the league for the foreseeable future.
Their performance on the court combines with their favorable location playing in Silicon Valley, surrounded by enough powerful business interests to make the potential revenue stream of this team quite impressive.
The price that each team commands for the patch will be largely based on both national exposure of the team as well as the corporate environment that the company competes in.
A team with numerous nationally televised games will be able to command more money than a team with few nationally televised games. The nationally televised games that get awarded are based on a combination of market size and team talent.
A company with more competitors in their field than another company will also end up being more likely to pay an increased price for the patch, not just because there’s more pressure for them to distinguish themselves above their numerous competitors, but because there’s more rivals that they’d theoretically have to outbid, meaning the price of the patch would escalate.
What gets complicated is that what the patch would be worth for the advertiser is largely dependent on how talented the teams is, and varies year by year. If key players leave in free agency in the middle of an advertising contact, then suddenly a company can find themselves severely overpaying based on the status of the team.
The counter argument is that a bad team can quickly ascend in this league, and a company advertising with them for cheap will suddenly get more of a return on their investment as that team gains more national exposure.
It goes both ways, as companies can either catch a team on a rapid rise or a hasty decline. The solution to this might be to design the contracts in such a way that companies have an opt-out clause each offseason.
Eric Smallwood of Apex Marketing group is estimating that not including any playoff games, the Warriors’ advertising patch is going to be worth somewhere between $12.9-19.3 million if they garner 30 nationally televised games, which is likely.
Based on this estimate, their asking price isn’t ridiculous. Silicon Valley companies are probably going to pay a hefty sum to associate themselves with a team that many are anticipating will be a legendary squad.
The Warriors are believed to be asking for more money than any other team, and they are certainly in the position to do so.