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[2016-10-09] It is complicated that NBA uniform ad sales is not easy to make a deal before the beginning of NBA 2017-18 season

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It's been almost five months since the NBA announced it would allow its 30 teams to sell small advertising patches on jerseys beginning in the 2017-18 season.

So why has only one team -- the Philadelphia 76ers -- made a deal, one that was announced the very first day deals could be done?



We know it's not a lack of interest. Plenty of companies are salivating to get their logos on the jerseys of NBA players.

So what is going on?

The answer is complex.

The biggest factor is market value. Teams' top marketing executives are under pressure to create value for something that doesn't have an established market -- at least not in the U.S. Their nightmare scenario would include rushing to make a deal before other teams sign more lucrative ones. In other words, no team wants to be sold short.

So what happens? Teams are waiting and hoping the early deals develop a lucrative market. They're tentative even though it's understood the revenues will vary wildly.

The 76ers' three-year deal with StubHub was announced at $15 million. Future values will be dependent on market size, marquee-player value and team success. The Golden State Warriors are looking for as much as $65 million for the 2½-by-2½-inch patch on its jersey for three years, while sources say the Cleveland Cavaliers are looking for something closer to $50 million. The Brooklyn Nets are looking for half that ($25 million), we're told.

NBA teams typically tend to share a great deal of information with one another, but because they are very much competing for the same companies here, teams have shared less about these deals, sources say.

The next issue is complexity. Some product categories can't be touched in these ads: alcohol and gambling outfits, media content providers, and competitors of sports equipment company Spalding or watchmaker Tissot.

Individual teams also have other business partners that need to be satisfied: the players and local TV networks.

Players get 50 percent share of the deal, so they don't have to worry about the cut. But sources say some teams don't want to create a situation in which a top player has an endorsement with a competitor of the company on their patch or one in which players make deals with a competitor after the team's patch is sold -- devaluing the whole proposition.

At least one team, we're told, has spoken to player representatives and is seeking to offer the top players in a package that includes their endorsement with the patch deal. Another wants to make sure the patch isn't just a way to avoid advertising on local TV and is asking the uniform ad company to also buy ads on other media.

Nike will be making NBA team uniforms next season. NBA teams were told that if they wanted Nike to affix the sponsor patches on the uniforms, they had to sign their deals by January. But teams were also informed that if they do it later, they'd have to attach the patches themselves. Because jerseys sold outside the local market won't have the patches, there isn't any production pressure on Nike to know way ahead of time.

Almost a half-year of silence -- with the season rapidly approaching -- has led some to believe the NBA and its teams miscalculated the opportunity. That's not the case. It's just uncharted territory, and once deals start to get announced, expect others to follow quickly.
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