The G-League: 12 Takeaways On NBA's New Deal
- What does the NBA stand to gain or lose from its new partnership with Gatorade? Here are 12 thoughts on the G-League and the NBA's decision to rename its development league.
The NBA and Gatorade announced a multi–year partnership Tuesday, agreeing to rename the NBA Development League the "NBA Gatorade League"—or the G-League. The name change will become effective in the 2017–18 season. This deal marks the first time a U.S. professional sports league has been named after a sponsor.
The deal is a win for the NBA, which continues to find ways to improve its fledging developmental league. Here are my 12 key takeaways from the deal:
1. The NBA will receive different kinds of value in exchange for giving Gatorade a license over the league’s name and intellectual property. While neither the NBA nor Gatorade has revealed the financial terms of their deal, it stands to reason that Gatorade will pay the NBA for the license. The NBA will also benefit by gaining scientific expertise from the Gatorade Sports Science Institute (GSSI), which employs scientists who study how nutrition interacts with the human body before, during and after physical exercise. G-League teams will obtain advice and counsel from GSSI scientists on how to maximize player health and performance.
2. An association with the leading company in an industry—sales figures show that Gatorade is the most popular sports drink—should boost the reputation of the D-League. By virtue of being an associated minor league, the D-League is inferior to its big brother, the NBA. Aware of this dynamic, the D-League markets itself as a league for players who, though talented, are not yet sufficiently developed to play regularly in the NBA. The D-League stresses that some of its players will eventually become favorites of NBA fans. The D-League can cite player success stories, including those of Hassan Whiteside and Jeremy Lin, both of whom transformed themselves from D-League stars into well-known NBA players. Still, many basketball experts would argue that the D-League’s overall quality of play is decidedly inferior to that found in other pro hoops leagues, including the Euro League and Spain’s Liga ACB. Part of the challenge for the D-League is its comparatively low salary structure. D-League players earn one of two salaries—$19,500 or $26,000—for the six-month D-League season, whereas players, including Americans, who play in top leagues abroad can earn six- or even seven-figure salaries. But by teaming up with Gatorade, the D-League, rebranded as the G-League, moves away from its inferior identity. The D-League will soon be associated the very best of one well-known product line in the sports industry. This should only help the league’s marketing.
3. There is very little, if any, emotional attachment to the D-League’s name, imagery and other intellectual property. The D-League is a relatively new creation, with its founding in 2001—there’s no great history or tradition to protect. This lack of established history facilitates a name change and accompanying re-branding.
4. There is precedence for the D-League changing its name: it was known as the National Basketball Developmental League (NBDL) until 2005. Fans are thus already accustomed to this league changing its name. This likely makes the D-League name change less disruptive than it might have been as a first-time name change.
5. Minor leagues are often regarded as the right setting for experimentation. For the NBA, the G-League experimentation is merely to test the naming of a league after an important sponsor. Such a change does not alter the game in any way. The NBA is not, for example, experimenting by having the D-League adopt a 4-point line for what are now very deep three-point shot attempts. Other leagues, however, are experimenting in ways that alter the game. Major League Baseball may soon experiment by having certain minor leagues adopt a rule where there is runner on second to begin every extra inning. The rebranding of the D-League as the G-League? It won’t change the game of basketball at all.
6. Businesses re-brand for many reasons, including as a device to generate consumer excitement and capture media attention. Today’s announcement gives the D-League, which is normally an afterthought in national sports coverage, significant attention from major media companies for at least one news cycle.
7. The D-League’s deal with Gatorade is likely welcomed news for other businesses that work with the D-League. Facebook Live, for instance, streams D-League games. While YouTube offers highlights and other videos To the extent that the D-League becoming the G-League makes D-League games more marketable, Facebook Live and YouTube will financially benefit.
8. The D-League is in a transformative stage, making it an opportune time for a new name. The league, which currently has 22 teams, is expanding, with the Hawks, Grizzlies and Bucks expected to own expansion teams that enter the G-League over the next two years.
9. The timing for a renaming of the D-League also works well with the new collective bargaining agreement between the NBA and the NBPA. The new CBA calls for greater interaction between NBA and D-League rosters. Most importantly, there will soon be “two-way contracts” for players who are paid different rates depending on whether they are assigned to an NBA team or that NBA team’s G-League affiliate. Although details on two-way contracts have not been announced, it’s expected that two-way players, while assigned to G-League teams, will earn pro-rated pay based on an annual salary worth somewhere between $50,00 and $75,000. In contrast, when those same players are on NBA rosters, they will likely earn pro-rated pay based on the NBA minimum salary. Currently, the NBA minimum salary for players with no prior NBA experience is $543,471, an amount that will climb in the 2017–18 season.
10. Naming rights deals are common in sports and in other industries because they provide substantial revenue. These days, most arenas, stadiums and ballparks are named after corporate sponsors. Golf tournaments, such as the WGC-Accenture Match Play Championship, are also often named after sponsors. The same is true of NASCAR's "Monsters Energy NASCAR Cup Series." Even some business schools and law schools are named after sponsors, who are wealthy alumni rather than companies. While it’s unprecedented for an U.S. sports league to be renamed after product, the D-League becoming the G-League falls along a continuum with which American consumers are already familiar.
11. Other leagues will be watching. While the NBA and NFL likely won’t sell off their names anytime soon, consider the position of analogous minor leagues, such as the American Hockey League—the primary developmental league for the NHL—and assorted minor leagues affiliated with Major League Baseball. If the G-League succeeds as a brand, would it be hard to imagine the American Hockey League becoming the Bauer Hockey League or the CCM Hockey League?
12. I end with a question: Will the D-League becoming the G-League make it more attractive to 18-year-old basketball stars who would prefer to be paid rather than attend college as they wait out the NBA’s eligibility requirement? For U.S. players, the NBA’s eligibility rule requires that they be 19 years old plus one year out of high school. The D-League’s eligibility rule, however, permits players who are straight out of high school. My guess is the rebranding of the D-League will have only a negligible impact on the decision-making of young basketball stars. While playing in the G-League does sound cooler than playing in the D-League, unless salaries climb in the D-League, it seems unlikely that many top prospects would pass up a year of playing in a top college basketball program—and being showcased on national TV—for a year in a much less visible G-League.
Michael McCann, SI's legal analyst, provides legal and business analysis for The Crossover. He is also an attorney and a tenured law professor at the University of New Hampshire School of Law.