Is It Time To Sell The Most Valued Real Estate In North American Sport? We Broke It Down
Anlayses of
Wayyy back in the spring, when fans went to games and we were readying for March Madness and Opening Day for MLB, the social space was all a-twitter over baseball’s latest break with tradition…MLB was going to allow the Nike Swoosh to appear on the front of uniforms as part of a new ten year, $1 billion deal, obliterating the pristine look that some teams, most notably the Yankees, had enjoyed forever. Corporate excess had finally found its way between the lines.Now patches are certainly not new to sport anywhere in the world, and slowly and steadily, with great pains taken for testing and approval, brands have started making their way to the jerseys, and to the eyeballs and clicks, of almost every professional sports organization. But baseball, on the front of a jersey? Had Rob Manfred and his team finally sold out this last piece of hallowed ground?
Then of course we hit the hiatus for sport, and the hemming and hawing of return to play, and there, front and center is the Nike Swoosh. And almost no one is complaining, everyone is so happy to have the game back. They also are not complaining about ancillary signage stretched around empty seats, or the ability for teams to etch logos into the visible dirt behind pitcher’s mounds…with brands ranging from GOYA Foods to Geico…all as the scramble to recoup, make-good and even forge new deals (as the New York Yankees did with TikTok in early August which included $10 million across three years to the team and YES Network in exchange for promotional spots, including signage at Yankee Stadium) is accepted and understood by even the most dyed in the wool baseball fan. The Swoosh, it seems, is OK. At least in this the most unusual of sprints of a baseball season.
Back to the patch. The pristine real estate on the front of an athlete is becoming a bit of a dying species. NASCAR has certainly led the pack for years with carving up drivers racing suits to make sure brands get noticed, and MLS has had great success, like their global counterparts, in inducing sales on the front of kits for as long as the league has been around. During the MLS is Back Tournament, the average value across broadcasts contributed by placement (Kit Front) came out to be 1.21% of the total average value ($11,645,858) in matches. Some brands like with the New York Red Bulls, who are on the ownership side, have even made the step to control all aspects of jersey signage for their own powerful messaging. The Canadian Football League, in their quest for ancillary revenue, took to the jersey patch program as well, and although not as restrictive as MLS, it still drove new areas of sponsorship that helped keep the league vibrant and growing north of the border.
During the MLS is Back Tournament, the average value across broadcasts contributed by placement (Kit Front) came out to be 1.21% of the total average value ($11,645,858) in matches.
Then came the WNBA, the great test for professional basketball in the U.S., and the selling of jersey names and patch deals. Fans were tested and accepted the look without a lot of pushback, and the rest of elite professional sports leagues in North America kept watching, measuring both patch size and sentiment, and impact on sponsor dollar growth. Logos on jerseys in the WNBA drove $89,355 in brand value over the past year, which is 4.4% of the social value the league, teams, and athletes created using logos on social media. Social value from logo placements in the WNBA is up 27% Year over Year thus far as well. All it seemed, was moving ahead.
While some may think the NBA made the next big leap, in reality it was the NHL (an example being adidas with the New York Rangers, 77 posts with an estimated $77,502 brand value for the practice patch location specifically in images and video content between July 1, 2019 and July 1, 2020), and the NFL, who took the step of allowing logos tied to local sponsorship on practice jerseys first. For example, in the 2019 calendar year, the Dallas Cowboys' practice jersey patch contributed 19% of AT&T's total value on Cowboys owned social channels. The patches would get exposure not during games, but during media sessions and in other areas well away from the national spotlight (save for when HBO’s Hard Knocks handled the exposure for participating NFL teams) but those deals were more value add for existing sponsors than as a gateway for new, large scale dollars. Still, the step was taken to see what the reaction would be…and the response got little pushback.
With all that as a backdrop, Adam Silver’s league would be the ones to take the next bold step, approving a uniform patch for all games starting with the 2017-18 NBA season. The move coincided with Nike becoming the uniform and apparel maker for the league, and with that the Nike Swoosh appeared on the front right shoulder of player uniforms for the first time in league history (replaced next season by the Jordan Brand "Jumpman" on the front right shoulder of jerseys worn during big games or rivalries, and left leg of shorts). The patches, with size dictated by the league, were not value-added to existing sponsorships for the most part. Rather they were gateways for many new brands, ranging from Bumble with the LA Clippers and WISH with the Lakers to Infor with the Brooklyn Nets and Sharecare with the Atlanta Hawks, who had the multimillion-dollar budget but were looking for a unique and buzz-worthy entrance point into the uber high priced world of the NBA. A brand like Squarespace took the patch for the New York Knicks and immediately expanded it into a building wide deal to storytell around their technology; while Rakuten, who has spent considerable dollars on kit sponsorships with FC Barcelona used their deal with the Golden State Warriors as an inflection point to introduce their company to the U.S. marketplace. Others like Harley Davidson, a staple in the vehicle space, partnered with the Milwaukee Bucks to expand their reach while also amplifying support as a Wisconsin-based company, much like another big consumer brand spender, FedEx, did with the hometown Memphis Grizzlies.
All the brands to date have had their own strategy for patch engagement, mostly for the same four- or five-year period at a price point (few are reported) well north of $3 million per year. Thus far, two have flipped, the Dallas Mavericks going from 5miles to Chime, and the Houston Rockets not renewing their deal with ROKiT (which has driven $8,045,163 in brand value on social for ROKiT since they announced their partnership on October 16, 2018) as of the NBA restart this month, and the valuations and dollars spent for many of the upcoming renewals will be up for considerable debate.
Even if there are changes in engagement for teams, two aspects of NBA patch programs have held true and are serving as guideposts for the other three leagues yet to engage; the revenue driven has been a much needed, and rare, new revenue stream, and the acceptance of the strategically sized and tested patch has been pretty much universally accepted by consumer sentiment.
Where to go from here? The NHL and NFL still offer up practice patches, with whisperings of multimillion dollar national patch deals across the league put on hold during the pandemic, while MLB’s test of the Nike Swoosh has gotten even less pushback than the amended rules and suspended games due to COVID exposure.
Then you have the college space. How big-time football returns this fall is still up for debate as we approach Labor Day, but the college football space has been testing patches…league patches, bowl patches, and visible apparel provider marks, for several years. Bowl season can see as many as four patches adorn a high-profile team as the BCS Championship game approaches, with little or no fanfare or pushback from the cognoscenti. For example, in 2019, NCAA Football apparel partners Nike, UA, Jordan Brand, and adidas combined for $6,633,777 in brand value on social alone. The top partnership was the Jordan Brand with the University of Oklahoma, valued at $669,547. The ancillary dollars which can be brought by an NCAA patch program will be a much-needed boost for dollars for cash-strapped schools in the coming years, especially around major football and men’s and women’s basketball. Will the NCAA finally acquiesce and open up the limits for patch sponsorships, albeit regulated and controlled? And what about a high visibility property like Little League, whose championships draw millions of eyes and a legion of brands every August? Could a company, the right company, grab a patch spot for the World Series? Fans are certainly used to having hyper local brands as uniform sponsors around the country, why not on the national level. And given the current uncertainty of the Olympic Games, will there be a time when those pristine global uniforms see patch acceptance as well? All of those questions will be on the table as the months and years unfold, since the visibility of the patch has brought recognition, and little pushback, from those who have given the green light for engagement.
In most recent years the reason for not having patches has been quietly whispered as much more price point than fan sentiment. The risk of underselling such valuable real estate was greater than the reward for bringing in a new brand. However we are in a world where, for the next several years, ancillary dollars are going to be more important than ever before, and finding brands willing to spend in a unique, first time program for NCAA, the NHL, the NFL and yes maybe even MLB, may finally make patches both irresistible and essential. For the NBA, renewals on patch deals will be an important watch point…did the disruptive brands drive ROI as much as buzz, or could the dollars be best spent elsewhere at a time when discretionary income is going to be very tight. Was a patch a fun luxury or a necessity for future growth, and is the NBA the place to spend?
All of those questions will be in the mix as that targeted landing spot on the front of your favorite North American athlete comes into focus. You know what they say about real estate…they aren’t making any more. However, in many team sports, the jersey is still hallowed ground. The question is who…when…and most importantly what price.
We have come a long way from hand wringing about the Swoosh last spring. Now the question will be not when, but who will be the next to ante up for the spot with the teams we love…and the merchandise we buy. The teams need the new revenue stream, and the fans don’t seem to be bothered.
Let's have a call to understand your measurement goals.
Take a look at our product and methodology with a demo.
Align our products and services to your needs in a tailored package.