After the hardships that COVID-19 brought to professional sports, league executives were forced to think outside of the box and produce new ways to generate revenue. Following the example led by soccer, executives across three of the core four professional US sports leagues have taken advantage of a mutually beneficial opportunity: corporate jersey sponsorships. In 2017, the NBA announced a three-year program that saw the incorporation of corporate logos on jerseys throughout the league. At the time, the NBA was the only one of the four major US sports leagues to launch this program, but just last year, the NHL decided it was time to take advantage of this revenue-generating opportunity and include corporate logos on their helmets and jerseys. Most recently, the MLB announced an initiative that will see the placement of corporate logos on either sleeve during the 2023 season.
With the NBA seen as veterans in this space, teams around the league are starting to look at different options regarding jersey sponsorships. Most recently, the Chicago Bulls signed a new multi-year contract with technology hardware company Motorola. Previously, the Bulls had formed a partnership with Zenni Optical, but once the three-year partnership expired, the Bulls wanted to bring in a company close to home. The Chicago-based technology company is now the exclusive smartphone manufacturer of the Bulls and is able to place digital assets throughout the organization. The Chicago Bulls president had this to say about the new partnership: "It is exciting to see us take this significant step into a new, expanded partnership that will have local, national, and global reach." These two organizations not only share a common location but also a passion for bringing consumers together through various experiences such as different marketing activations and community initiatives that involve fans beyond the streets of Chicago.
When the idea of implementing sponsored jersey patches was first mentioned, NBA commissioner, Adam Silver, projected that this initiative would generate $100 million in revenue for the 30 teams. Approximately five years later, it is being reported that the patches are now projected to bring in $225 million - more than double the initial estimate. Major market teams such as the Golden State Warriors or Los Angeles Lakers are charging nearly $20 million per year for their patch deals with global companies such as Rakuten and Bibigo. Additionally, non-major market teams such as the Sacramento Kings or Portland Trailblazers were able to double the rates of what a jersey patch may cost from the original $3-5 million range after the program was seen as impactful and mutually beneficial. While the monetary incentives are not the sole reason for teams to partake in this initiative, it gives some motivation for teams to reach new heights and continue to grow their brand.
Approved last month by the league's board of governors, NHL teams are now able to discuss with any corporate company regarding jersey patch logos. Most recently, the Boston Bruins have signed their official jersey sponsor with a company right in their backyard. Rapid7, a cybersecurity company whose headquarters are next to TD Garden, home of the Bruins, has become the first jersey sponsor in the team's history. The deal is estimated to be a 5-year deal worth $30 million. Over in Canada, the Toronto Mapleleafs have inked a deal with the Dairy Farmers of Ontario (DFO) to become their official jersey sponsor. This deal is more than just a revenue stream but a way to develop a partnership to support healthy living and access to the sport for players and fans around the world. Additionally, DFO has pledged to provide 5,000 tickets to games to community youth groups around the Toronto area. This is a great example of ways that these partnerships are more than just in-game signage, but a way to connect with fans and create meaningful relationships with them.
This is an exciting time for the NHL as now 16 out of 32 teams have official jersey sponsors. While this is only the start for jersey sponsorships in the NHL, the hope is for them to generate revenue for teams while creating long-term relationships with communities and fans through various initiatives similar to the Maple Leafs x DFO partnership.
The MLB is no stranger to this category of partnership as they have experimented with jersey patches on the sleeves during international games. For example, in 2019, the Boston Red Sox included the pain relief company, BioFreeze, on their sleeve during their game in London. During this year's All-Star break, team marketers throughout the league met in Los Angeles to discuss the implementation of jersey patches for the first time in the states. While there has been only one concrete sponsorship deal made public in which the San Diego Padres and Motorola agreed to a 4-year $9 million deal, Mass Mutual has an informal agreement in place with the Boston Red Sox to become their official jersey sponsor. There will be more teams to join them as the San Francisco Giants have signed agency giant, WME, to facilitate a deal for them.
Providing a new asset for sponsors to capitalize on has resulted in successful patch sponsorship programs across these three leagues, proving a successful revenue stream for teams and a highly visible location for brands to advertise and generate brand awareness. We expect to see more and more of these partnerships forging as the leagues continue to grow and expand in this space, building upon existing relationships or allowing new companies to take part in sports sponsorships. The biggest question outstanding at this point is: when is the NFL going to follow suit?