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June 1, 2009

A WNBA Deal with Major NBA Implications

Filed under: Uncategorized — Kevin Pelton @ 12:42 pm

The WNBA’s Phoenix Mercury made an announcement this morning with significant ramifications for the NBA. The Mercury has sold advertising space on its jerseys to Tempe, Ariz.-based LifeLock, a company which works to prevent identity theft. The LifeLock logo and wordmark will replace “Phoenix” and “Mercury” on the team’s jerseys, which will still be branded with the team’s secondary logo above and to the right of the company name. That’s a first for a prominent U.S.-based non-soccer team.

The most significant thing about this partnership is that NBA commissioner David Stern is participating in the press conference in New York announcing the deal. In doing so, Stern is surely giving his tacit approval to not only other WNBA teams but NBA teams as well to pursue jersey sponsorships. And while there will surely be a backlash bemoaning the spread of advertising onto player jerseys as a sign of the Apocalypse, don’t doubt that this is coming to the NBA at some point.

Alas, this is probably about the worst time in recent history to be looking for increased sponsorship opportunities, not only because of the economic crisis in general but specifically because of the criticism around the advertising done by troubled companies, like Citigroup’s naming-rights deal with the New York Mets’ Citi Field. Never has advertising seemed more frivolous in the public eye. In time, however, this is sure to blow over. If you put the over-under on when a company will appear on an NBA jersey at five years, I would take the under. And if you put the over-under on when every NBA jersey is sponsored at a decade, I’d be awfully tempted.

It makes sense that the NBA will be the first to experiment with sponsored jerseys. Under Stern, the NBA has always been the most progressive of the three major sports leagues from a business perspective, and quite frankly there are a lot of teams that could use the infusion in cash. The Arizona Republic has reported that the Mercury-LifeLock partnership (which also includes court branding) will be worth more than $1 million, a huge sum that could be enough all by itself to take the Phoenix WNBA franchise from the red to the black. In the MLS, where jerseys have been sponsorable since 2007, the average cost appears to be about $2 million, with the L.A. Galaxy and Seattle Sounders reportedly bringing in $4 million a year or more. In that context, you’d figure a struggling NBA team could potentially make somewhere in the eight figures by selling space on its jerseys.

The other reason the NBA is a natural early adapter when it comes to jersey sponsorships is that it is the most global of the major American pro sports leagues, and around the world fans will surely yawn at the supposed “groundbreaking” nature of today’s news. The notion of a team’s jerseys not being branded by a corporation would be more revolutionary in Europe.

That ties in with the other significant NBA financial news from the past couple of weeks, the Cleveland Cavaliers reaching tentative agreement to sell a minority stake to investors from China. I can’t believe this hasn’t been a bigger deal, if only for the same kind of jingoistic “the sky is falling” response we saw to some extent when Japanese businessman and Nintendo chairman Hiroshi Yamauchi led a group that purchased the Seattle Mariners in 1992. Surely it won’t be the last we see of foreign money coming into the NBA in an ownership capacity.

Say what you will about Stern’s stewardship of the NBA–and the reaction is not especially positive here in Seattle as we celebrate the 30th anniversary of the Sonics’ NBA championship today, that’s for sure–but you cannot question the brilliant job he has done of making the NBA a leader internationally. We continue to see the positive effect of that on the NBA’s bottom line.

CHAT TUESDAY: Join me tomorrow at Baseball Prospectus at 1 p.m. Eastern/10 a.m. Pacific to discuss the NBA Finals as well as the offseason happenings for the other 28 teams who have already been eliminated from contention for the championship. As always, leave your question now if you are unable to make the chat in progress.

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