By Alex Bullock

The National Basketball Association’s (NBA) owners recently approved a proposal to allow the sale of jersey sponsorships as a part of a three-year trial program set to begin in the 2017-2018 season, the same year that the league’s official uniform provider switches over from Adidas to Nike. Jersey sponsorship will take the form of a patch on the front left of the jersey, measuring 2.5 inches by 2.5 inches. The Nike logo will occupy the same position on the other side of the jersey.

This decision by the NBA’s owners marks the first foray into in-game, on-jersey advertisements by one of the “big four” sports in the United States (NBA, NFL, MLB, NHL). Adam Silver, the Commissioner of the NBA, said the NBA teams could earn additional revenue of $100 million annually through the program, and that “[j]ersey sponsorships provide deeper engagement with partners looking to build a unique association with our teams and the additional investment will help grow the game in exciting new ways.”

The NBA’s thirty teams will have the responsibility of selling their own sponsorships (and, could theoretically choose not to sell them at all). Like other sponsorship arrangements the teams typically make, their likely partners will be locally-based businesses. But the teams, as always, must be wary of the impact their choice of sponsor will have on their brand and on the players (and fans, for that matter) who will wear the teams’ jerseys. For example, one of the biggest businesses based in Oklahoma City is the fast food chain Sonic Drive-in. From a marketing standpoint, it is likely not a good decision for the Oklahoma City Thunder to partner with a company whose name is substantially similar to the former iteration of the franchise, the Seattle SuperSonics.

The patch will likely cause consumers to create close associations between the teams and their sponsor’s brands, an association that will be subject to any baggage that may come along with such brands. For example, teams in the Women’s National Basketball Association (WNBA) and the National Basketball Developmental League (NBDL – the NBA’s version of the minor leagues), already wear sponsorship logos on their jerseys. Some teams in both leagues have the DraftKings, Inc. logo on their uniform; a company facing questions about regulatory concerns in their industry. A team’s brand partner may even become a factor in a potential free agent’s decision to sign with a team.

Furthermore, the NBA cannot deny that advertising on jerseys might interfere with existing endorsement agreements that its players have with companies. Indeed, the NBA’s article outlining this new arrangement notes that the Nike logo will be on 29 of the 30 NBA teams’ jerseys. Only the jerseys of the Charlotte Hornets logo will not have the logo, as they will instead wear the logo of their owner’s company, Jordan Brand, which is a subsidiary of Nike. Certainly Adidas or Under Armour would not have agreed to allow the Hornets to wear the logo of a direct competitor.

Players’ endorsement agreements are often the most consistent “employment” agreement an athlete has during their career. LeBron James, for example, is endorsed by Nike and has his own line of shoes and apparel produced by the company. In 2010, when he decided to leave his hometown Cleveland Cavaliers to play for the Miami Heat, he remained a part of the Nike team in South Florida. Now back with the Cavaliers, James and Nike have released 13 versions of LeBron’s signature shoe. Moreover, former Seattle Seahawks running back Marshawn Lynch notably lived solely off of income earned from endorsement deals during his playing career and simply saved the salary he earned playing football, totaling $49.7 million.

Jersey sponsorships are not a new idea in the world of sports (see European soccer). Many see them as an unfortunate eventuality in American sports. The idea does not necessarily present complicated legal issues regarding what teams may or may not be allowed to promote on their jerseys, but teams will do well to note the potential legal and marketing impacts of partnering with specific brands.

Image source: CDN