Add the Washington Wizards to the list of National Basketball Association teams looking to attract a jersey partner after a deal with insurance company Geico expired.
Monumental Sports and Entertainment, the company that owns the Wizards and National Hockey League’s Capitals franchise, is creating what it calls a “unified offer” to entice a new corporate partner. This includes combing its NBA G League, esports teams and WNBA’s Mystics franchise into one asset valued as high as $12 million. Industry sources, who asked to remain anonymous since talks are ongoing, suggest the combination of assets could net around $10 million, though.
In an interview with CNBC, MSE’s president of business operations, Jim Van Stone, frequently referred to the asset as a “unique opportunity,” adding international companies are top targets. “We think it’s a global opportunity,” he said. “We feel good about the package and what we can bring together for the right partner.”
Will another Wizards makeover help?
Geico took over the Wizards jersey asset in 2018 but the team made the postseason just once during the partnership.
NBA jersey sponsors see increased engagement around their brands when teams are featured in national games on ESPN and Turner Sports, and especially during the postseason. That means Geico didn’t benefit from TV and extra social media impressions since the Wizards failed to advance to the postseason twice.
But, on the WNBA front, the Mystics provided Geico with winning results. The team made two WNBA Finals appearances in the same timeframe and won the championship in 2019. The WNBA’s viewership increase and stardom around Mystics forward Elena Delle Donne also helped. Van Stone said Geico remains a “legacy partner” with MSE, and the deal includes in-venue signage at the Capital One Arena during NBA and WNBA games.
The Wizards are undergoing another makeover after bringing in a new head coach and trading All-Star Russell Westbrook to the Los Angeles Lakers last month. The team also agreed to a three-year, $54 million sign-and-trade to acquire former Brooklyn Nets guard Spencer Dinwiddie. It still has franchise star Bradley Beal’s All-Star appeal to leverage.
Van Stone added global players on the roster, including rising star Rui Hachimura (Japan), Davis Bertans (Latvia), Raul Neto (Brazil) and Deni Avdija (Israel), could assist in luring international companies.
“If you look at our young players that we have, we’ve got some talent,” Van Stone said. “We think the team is going to be exciting and deep. I think we got a lot stronger,” he added.
Customized content included
Van Stone said the restructured jersey asset is “a year-round opportunity” with the inclusion of both the WNBA and MSE’s NBA2K League team Wizards District Gaming.
The NBA’s esports games run from May until August and are streamed on Amazon-owned Twitch. Esports content games attract a Generation Z crowd. Market research firm Newzoo estimated global esports viewership would reach 474 million this year.
“There is not a downtime or offseason, and that gives our partner a lot more ability to promote their brand,” added Van Stone.
MSE wants to have a new partner in place by October for the 2021-22 NBA season. Possible suitors for the asset include fintech companies. Japanese e-commerce company Mercari and Volkswagen could also align with MSE.
“We want to make sure it’s the right opportunity for the right partner,” Van Stone said. “At the end of the day, when you look at big deals like this when it comes to jersey entitlement, you’re integrating a partnership. So we’re optimistic that we can move quickly on it, but if we go slightly into the season to find the right partner, I think we’re fine with that.”
The Wizards generate roughly $231 million in revenue, according to Forbes. The club also has a sponsorship agreement with Capitol One and international partnerships with Japan-based tech company NEC Corp. and China-based e-commerce giant Alibaba. Last May, Caesars-owned William Hill gambling company aligned with MSE to open its property in the Washington, D.C., sports complex.
Van Stone said partners will also have exposure to its OTT streaming service and its ability to develop content in four different languages – English, Chinese, Japanese and Hebrew. “Having the ability to do custom language content creates an even better connectivity for a global organization,” he said.
Are jersey patches growing NBA revenue?
The Wizards are among the few NBA teams seeking new patch deals.
The Lakers’ contract with e-commerce company Wish ended after last season. That deal was valued in the $12 million to $14 million range. Research company Nielsen estimated the media value of the Lakers jersey patch for the 2019-2020 season was roughly $200 million since the team won the NBA Finals. Last February, the Lakers partnered with third-party agency Sportfive to seek a new patch partner.
Meanwhile, the Philadelphia 76ers’ deal with StubHub expired, and chatter in sports business circles suggests the team secured another partner and is finalizing terms. On the patch market, the team wanted roughly $10 million per season, but industry sources suggest the 76ers would net around $8 million. The Sixers also have an esports team but it’s not clear if their NBA patch agreement includes the club.
Excel Sports continues to search for a patch agreement for the Minnesota Timberwolves after the team’s deal with Google’s Fitbit ended in June 2020. Considering the team doesn’t get many national games, and hasn’t won, their patch isn’t believed to exceed seven figures annually.
The NBA recorded $1.4 billion in total revenue tied to sponsorships last season but it’s unclear if revenue around its patch sponsorships has declined or stayed stagnant. It made roughly $150 million after the patch was added in 2017. Last October, Amy Brooks, NBA president of team marketing and business operations, told CNBC the league expected “significant growth” and she also estimated a 30% increase before the pandemic.
Teams have also leveraged the jersey patches at the NBA Summer League in Las Vegas, where NBA clubs can also seek deals to sponsor practice jerseys. The Wizards aren’t planning to add practice jerseys to their package but didn’t rule it out.
“Going into the jersey patch a couple of years ago, teams thought it could be big internationally, but I think it was still a wait and see,” Van Stone said. “But the numbers and value has proven that it’s an international opportunity.”
Source: Business - cnbc.com
