The NBA Will Allow Teams To Sell International Sponsorship Rights In An Effort To Create A More Profitable Revenue Stream
On April 12th at the board of governors meeting in New York, NBA owners approved a three-year test of the International Team Marketing Program. The new global strategy proves first-hand the NBA’s commitment to not only increase team revenue but also their global presence.
The program will allow all 30 NBA teams to sell their global marketing rights to two current or new sponsors beginning this upcoming season. Previously, the league had controlled all the rights to international sponsorship inventory.
The new international program gives all teams and sponsors the right to market and advertise outside the U.S. and Canada. Global retail locations will have the same liberty. Additionally, teams and brands will have the ability to post non-game team content on the sponsors’ own social and digital media sites like Facebook and Twitter. These new global rights will still include Canada and the U.S.
“We decided to create a program to enable team partners to help market the NBA globally and to give teams greater incentive to create content focused on international markets,” stated Amy Brooks, president of the NBA’s team marketing and business operations division and chief innovation officer. “It makes sense to work with these partners to create programs on platforms outside the NBA.”
At the beginning of the 2017–2018 season, the league decided to allow teams to start selling jersey patch advertising. And while each organization is being given the right to sell the new global rights to any two sponsors, many of the jersey patch sponsors and team naming rights are already global brands. So, looking forward, those brands may be at the top of the list for those interested in becoming a part of the new international sponsorship inventory.
As the three-year jersey patch test program comes to an end and the new international rights are implemented, there is a high possibility, if it is not already the case, that teams will be able to attract more significant global jersey sponsors.
While Harley Davidson has been the jersey sponsor of the Milwaukee Bucks, to date, they have not been able to activate any sponsorship rights outside the U.S. and Canada. Now, the Bucks will be able to offer the company the ability to use Bucks merchandise at various international Harley Davidson retail locations.
“This is a big deal to us as we go into talks to extend our patch partner,” stated Matt Pazaras, senior vice president of business development and strategy for the Bucks. “It is a massive benefit. In our case with Harley-Davidson, their biggest growth market is in China and in other parts of the world. There is so much equity in team brands and the value of partner activation outside the U.S. We see so much more value so this is incredibly helpful to us.”
The new program also has the potential to provide unique and profitable revenue streams for teams. In 2009, the Orlando Magic signed a 10-year $40 million naming rights deal with Amway. Amway is a U.S. based marketing company; however, 90% of their business is done overseas. Therefore, the new international marketing rights could massively increase the value of a new deal.
“Frankly, in our situation, I believe that these rights will help drive almost the doubling of value of what we receive for naming rights,” stated Alex Martins, chief executive officer of the Magic. “It is that significant. On a league basis, it will open up new partners and categories.”
However, Brooks sees the primary goal of the program is to take advantage of the global reach of various team sponsors to increase fan engagement through more targeted behind-the-scenes content (game highlights are prohibited). While the league has been working on expanding global rights for some time, it was not until earlier this year that teams obtained access to their worldwide digital rights and now the implementation of the new international marketing program.
“As popular as the league is globally, one of the ways to engage fans is through sponsorships,” stated Emilio Collins, the chief business officer for Excel Sports Management, which represents some teams in their patch deals. “If done the right way, it is a remarkable increase in value to extract from the market. The more that teams can engage fans around the world, the more the league can grow.”
In understanding what is best for the NBA, it is crucial to note that two-thirds of any teams social media following comes from outside the U.S. and beyond that, the majority of marketing partners are global brands. Therefore, the implementation of this new program seems inevitable.
While the U.K. and Mexico have been regular season fixtures for NBA games since 2011, the NBA has seen a drastic shift in focus and growth of the game in China. While the NBA has considered itself a global league for many years, China has been its most important and influential market outside the U.S.
As early as 2016, NBA Commissioner Adam Silver told the Chinese media during the “Global Games” tour in China, “Nothing can be №1 at anything in the world unless it is №1 in China. So not only do the Global Games bring the NBA to China, but through broadcasting our games in China around the globe, they also bring China to the rest of the world.”
“When the potential audience becomes big enough, maybe it’s not so crazy to ask a team once every two months to play a Saturday morning game.”
Earlier this year it was revealed by Commissioner Silver on CNBC’s new show “The Score,” “We realize the U.S. is a little less than four or five percent of the global population and we have a whole world out there that loves basketball and loves the NBA.”
According to the NBA, more than 300 million people play basketball in China and more than double that number watched some of its programmings during the 2017–2018 season. Additionally, with 178 followers across all Chinese social media channels, the NBA entertains the highest following of any sport in that marketplace.
“Social media is a way we’ve been able to infiltrate those markets very quickly with young people, in particular, living on social media,” stated Silver. “They’re following player’s individual feeds. Obviously, Facebook is enormous in India and Instagram and these other services that feature the NBA to combine social media.”
And while the NBA distributes its games in 215 countries and territories in 50 different languages, more than 30% of those subscribed to its “NBA league pass” are in Asia. These fans have access to both on-demand content and live-streaming games.
What has simulated such growth — digital coverage by tech firms like China’s Tencent. In 2015, Tencent signed a 5-year $500 million digital rights deal with the NBA which included free highlights which were then available to more than a billion people. Such an agreement also lowered the entry point for those individuals just beginning to follow the game of basketball.
“Our business strategy continues to do the things that we’ve been doing,” stated Silver in 2017. “I was asked earlier what the secret to our success is, and I said I don’t think there is any secret, other than longevity. I said so much credit goes to [previous commissioner] David Stern for his initial vision to move the NBA into China before other sports leagues were seen on television here.”
“The idea is just to continue executing on the ground. We have David Shoemaker here, who is the CEO of NBA China. He has roughly 175 people who work for him, mainly here in Shanghai and in Beijing. We do very much similar things that we do in the United States. We work grass-roots with young people. We work with marketing partners. We work with merchandisers. But it’s just to keep trying to convince one consumer at a time to enjoy NBA basketball.”
Instant Sponsor in China
Instant Sponsor was recently accepted into a prestigious and highly competitive Chinese government program 325. As part of the program, the Chinese government will match any equity funding received by Instant Sponsor (i.e., if Fund A invests $1mm for 20% equity, the Chinese government will contribute another $1mm for no equity stake) and provide additional resources such as office space and access to local talent.
The program is part of the broader government’s mandate to support the growth of the sports industry in China which is growing more than 11% per year, more than the GDP. The government plans to build an $810+ billion sports industry by 2025 including the construction of 70,000 new soccer pitches. The support from the Chinese government will accelerate Instant Sponsor’s expansion into the Chinese market, the second largest after the US. Our platform enables western companies to buy sponsorship opportunities across China but also allows Chinese national brands to participate in sponsorship of sports like the NBA, EPL and La Liga where there are more Chinese viewers than Americans per week yet a fraction of the sponsorship dollars.
Why China?
- The Chinese government plans to build a CNY5 trillion (US$813 billion) sports industry by 2025, a strategy covering everything from improved fitness to encouraging foreign investment, grassroots sports to elite performance.
- The industry is growing by more than 11% per year (more than China’s annual GDP growth) which is significantly higher than the 5% recorded in the rest of the world.
- President Jinping wants to see the construction of 70,000 new soccer pitches by 2020 and a massive drive for more co-operation with international associations and clubs. China has taken over the USA as the biggest market in the world for the NBA.
- Additionally, they are the second biggest sporting goods industry in the world after the US.
- A third (32%) of China’s urban population actively participate in sport, and there appears to be an increasing enthusiasm for general health and wellbeing.
- Technology is central to the growth opportunity for both domestic and international rights holders and brands.
- China advanced OTT technology and the integration of data and P2P payments, with several online media platforms competing for premium international sports rights to build subscriber and audience bases.
If you are interested in learning more about Instant Sponsor’s platform, check out the Instant Sponsor website and join the Official Telegram Community to receive news and updates about the company and sports sponsorship industry.
