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Jersey ads are low-hanging fruit for NHL

Jersey ads are low-hanging fruit for NHL

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Corporate sponsors in Europe and Asia have spoken loud and clear for decades about the value they place on jersey sponsorships in professional sports. Over that time, jersey sponsorship deals have become one of the major sources of revenue for pro sports teams in those parts of the world.

On this side of the Atlantic, none of the NFL, NBA, MLB or NHL have embraced the benefits of these sponsorships until now. The NBA is jumping in with both feet this season. Eighteen NBA teams have deals to display small jersey patches on the front of their uniforms, with the Golden State Warriors’ deal with Rakuten reaching $20 million per year. With these types of numbers, it is mind boggling that the NHL, NFL and MLB have been reluctant to exploit these sponsorships, and in particular the NHL.

Currently, the NHL does not permit sponsorships on game jerseys but since 2010-11 has allowed the sale of sponsorships on practice jerseys. The NHL dipped its toe a little bit further into jersey sponsorships during the 2016 World Cup of Hockey when a patch displaying SAP’s logo was displayed on each team’s game jerseys. Financial terms of that sponsorship were not made available publicly and the patch was a very discreet placement on the shoulder of the jersey.

The main reason given for the NHL’s reluctance to embrace sponsorships on game jerseys is the same as other sports; namely, a fear that fans will be turned off by the further commercialization of the sport, and in particular, marring the many iconic NHL jerseys with corporate logos. This is a dubious argument, particularly when no evidence of reduced fan interest resulting from jersey sponsorships has been shown in the leagues that have them.
If ever there was a case of “picking the low hanging fruit,” NHL game jersey sponsorships has to be it.

Based on the NBA jersey sponsorship deals reported to date, NBA teams with deals for the 2017-18 season are averaging $6.5 million to $9.5 million in revenue per team. If one conservatively estimates that NHL teams would average deals equal to 50 percent of the NBA deals, it translates to total potential revenue for the 31 NHL teams at between $100 and $150 million per year. With 50 cents of every dollar of hockey-related revenue going to player salaries, NHL players are missing out on $50 million to $75 million per year, translating to a possible $100,000 per player per year. The National Hockey League Players’ Association ought to be insisting during collective-bargaining negotiations that the NHL at the very least permit teams to sell patch sponsorships on its game jerseys.

While they are at it, the NHL should also explore other equipment naming sponsorships. In hockey, the most obvious and easily exploitable sponsorship would be on the front of the players’ helmets. Exposure of player helmets to TV audiences provides incredible potential value to sponsors. There are often player close-ups after goals are scored, during stoppages in play and on face-offs.

For years, European hockey league teams have been successfully selling and displaying corporate sponsorships on helmets, as has the International Ice Hockey Federation for the annual World Ice Hockey Championships. And unlike the NFL, there are no historic team logos on NHL player helmets, so there is little reason to worry about upsetting historical logos.

Taken one step further, teams could sell separate jersey or helmet sponsorship patches for higher dollar amounts for games against premium opponents or for different periods of the game. NHL teams already have variable ticket pricing for premium games when demand is much higher for tickets. If research shows that the third period generally has more viewers than either earlier period, sponsorships could be sold for a higher amount for the third period. Teams already rotate signage on rink boards between periods in locations with the most exposure to television cameras. No one complains that the sport is being overly commercialized as a result of that.

In summary, it shouldn’t be “if,” but only “when,” we will see the NHL follow the NBA’s lead on exploiting jersey patch sponsorships. The time has surely come.

Jeffrey A. Citron (jeffcit@gmail.com) is a corporate finance and sports lawyer in Toronto.

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