Ads on NBA Jerseys Are About to Become Extremely Common

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The first pick in the NBA Draft at the Barclays Center in Brooklyn, New York, on June 22nd will follow a predictable pattern. League commissioner Adam Silver will announce the Boston Celtics' selection, likely University of Washington freshman Markelle Fultz. The 18-year-old guard will approach the podium, greet the commish with an awkward hug, and hold up his new team’s cap. Soon after, he’ll get his new team's famous green and white uniform with his name on the back. The proceedings will look the same as they have for years, except for one subtle but key difference.

The jersey will feature an ad.

Starting in the 2017–2018 season, NBA teams can sell a 2.5-inch-by-2.5-inch patch on the left shoulder of the uniform. So far, six teams — the Philadelphia 76ers, the Sacramento Kings, the Brooklyn Nets, the Cleveland Cavaliers, and the Utah Jazz in addition to the Celtics have done so — with Boston pulling in a reported $7 million annually from their sponsor General Electric and Cleveland getting $10 million a year. Overall, the program could be worth more than $100 million per year for the league's teams, a not insignificant amount of money even considering the $8 billion in revenue the NBA earned in 2016.

Officially, the NBA is running a three-year experiment, but few expect advertising on jerseys to cease in 2020. It will, in all likelihood, expand, both in the NBA and in other leagues. The last sacred space in American sports is about to be up for sale in a major way. Uniform advertising is the next domino to fall in the selling of sport. "The expansion of advertising in sports in general — whether on uniforms, in stadiums, stadium names, or every aspect of the broadcast — all of that is a ratchet situation," Paul Lukas, proprietor of Uni Watch, says. "The screwdriver only goes one way and it never comes back."

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In some ways, it's amazing that it has taken this long for advertisements to appear on the uniforms for one of the four major American sports. In the rest of the world, ad-adorned uniforms are the rule, rather than the exception. European soccer teams earned nearly $1 billion collectively last season, with English Premier League stalwart Manchester United getting $80 million to place a Chevrolet logo front and center. Major League Soccer followed suit, with every team boasting a jersey sponsor in 2017.

Furthermore, advertising has infiltrated American sports to a greater and greater degree. Stadiums are named after all kinds of commercial ventures. The seventh inning stretch is brought to you by another company. A third presents the halftime show. Increasingly, this is a feature, not a bug. "What franchises have gotten very good at doing is monetizing everything," Lee Igel, the co-director of the NYU Sports & Society program, says. "Everyone is looking to monetize everything."

It's only natural that the jersey barrier would fall, and that the NBA would be the first to try something. The league has a young commissioner and a number of owners, such as Joe Lacob (Golden State Warriors), Joshua Harris (76ers), and Wyc Grousbeck (Celtics), who made millions recently in tech, media, and private equity. The combination produces an organization that's not afraid to push traditional boundaries. "Adam [Silver] is one of if not the most forward-thinking leaders in sports," Michael Colangelo, assistant director of the USC Sports Business Institute, says. "Some of it has to do with him looking forward and some of it has to do with ownership demographics. A lot of the NBA owners are new money owners. They are interested in trying these things. They are not afraid of risking something to see what happens." (We're talking about a league that announced its Development League would change its name to the Gatorade League because of a new sponsor.)

The Celtics taking on GE as a sponsor is the most significant partnership to date. The storied Boston franchise is one of the oldest; most successful; and, even with a forward-thinking owner, most traditional franchises in the league. Its fanbase reveres the team's place in history. Their green and white uniforms are iconic, rivaling the famous and flashy purple and gold of the Los Angeles Lakers. If a team was going to hold out against the ad-on-uniform storm, a smart bettor would have picked the Celtics. Instead, they were one of the first teams to jump, a move that sent a strong signal to the rest of the league. "If the Celtics would do it, everyone can do it," Lukas says. "If the Celtics have done it, everyone will do it."

Which leads to a question: Why haven't more teams signed deals? The league announced the plan to sell space in April 2016, yet more than a year later, only a sixth of the 30 teams have sponsors. Progress seems... slow, no?

Lukas, for one, isn't so sure. "No one really knows what this spot is worth," he says. "It's a new market. There is no baseline. It's all sort of an experiment. Nobody knows what this market will bear. It's all sort of making it up as we go along. Maybe we're seeing some growing pains. But even that is an implicit assumption, that there's something problematic about the pace of it. Maybe it's not problematic."

The thinking here goes that rather than jump at a quick couple million, team executives want to find the right long-term fit (and, presumably, brands want to do so as well). This isn't true for every team — the Brooklyn Nets, for example, have a hideous patch from an unknown data and analytics brand — but many teams appear to be doing due diligence. "Everybody is watching. Everybody is much more conscious of who they do business with," Igel says. "You don't want to be the team that has a United Airlines patch on their uniform." It's better to forgo low single-digit millions for a year or two than to have the next Enron Field or Livestrong Stadium sitting on your team's jersey for all to see. This goes the other way, too. Brands want to be associated with the “right” kind of franchise, avoiding a team like the Jail Blazers or the Cincinnati Bengals.

Still, the deluge is coming. "There has to be an inflection point," Colangelo says. "Once you get to 12, 13, 14 teams, I think you'll see a lot more dominos fall into place. You can't afford to miss out on that revenue stream." Teams can afford to be risk-averse and cautious, right up until the moment that they can't. There are only so many high-quality brands to go around, and smart teams will test the water sooner rather than later.

Major League Baseball, the National Football League, and the National Hockey League are also taking a wait-and-see approach. MLB commissioner Rob Manfred won't do anything until the league changes suppliers to Under Armour in 2020 and NHL head Gary Bettman doesn't want to have ads on uniforms. The NFL is the most resistant. But make no mistake, the ads are coming. None of these leagues will wait forever. There's simply too much money to be made. The ad-on-jersey genie is out, and he's not going back. Hell, the lamp is probably sponsored.

For now, the NBA will continue to lead the way. "We believe jersey sponsorships are a valuable asset for both our teams and our partners," Amy Brooks, executive vice president of team marketing and business operations, NBA, told Racked in a statement. "We are pleased with the momentum so far, and optimistic about the possibilities. This will give teams the opportunity to develop partnerships that are closely integrated and authentic to their brand, while also allowing those brands to build unique associations with specific markets and garner exposure on a global scale."

One thing to note, however: Most retail jerseys won't include the ad patches. "That does seem to suggest to me that they understand this isn't a fan-friendly move," says Lukas. "If they thought it was something that made the jersey cooler, then they would include the ad."