NBA Alters Bylaws re: International Sponsorship Rights, Looks to Grow Revenues and Develop Fans Abroad
The National Basketball Association altered its bylaws prior to the start of the 2019-2020 season to allow teams to sell international sponsorship packages (Canada excluded) for the first time. League rules previously prevented teams from participating in any advertising campaign or sponsorship event outside of their home market. Chief innovation officer Amy Brooks said that the companies currently participating in the league’s jersey patch program - 2/3 of which have an international presence (see: Rakuten, Walt Disney Co.) - indicated that the time was right “to grow [the NBA] brand and our partners’ brands globally.” Clubs will have the option of making their jersey patch sponsor one of the two international partners permitted per team.
Howie Long-Short: It’s logical that NBA teams would be forbidden from marketing in a competing domestic market - the rule, which will remain in place, is in designed to “protect the teams and the brands” from cannibalizing one another - but it makes far less sense abroad where organizations aren’t staking claim to territories. Loosening bylaws surrounding international marketing rights should help the league to grow revenues and “build a connectivity with fans in outer regions.” Monumental Sports & Entertainment (parent co. of the Washington Wizards) CEO Jim Van Stone explained that the deals will give the league “the opportunity to be more authentic - to have boots on the ground in some of these international markets.”
The Washington Wizards were quick to take advantage of the rule change, signing an agreement - the first for an NBA team in Japan - with Japanese IT and network technologies conglomerate NEC. The hope is that the Japanese basketball fan adopts the Wizards as their favorite NBA franchise – if they haven’t already. The club made Rui Hachimura the first Japanese player to ever be selected in the first round of the NBA Draft in 2019. It reasons to believe at least a portion of his large following has already begun to regularly watch the team’s games (or digest original content on the Japanese version of WashingtonWizards.com). Van Stone called Japan an “emerging basketball market” and suggested that the club could become “the [unofficial] team of [the country].”
For those wondering, the NBA-China tiff had no impact on the formation of the international sponsorship program. In fact, parameters were agreed upon at the league meetings back in April - long before Daryl Morey fired off his tweet in support of Hong Kong protestors. The league does not have any restrictions on countries in which teams can do business, however Van Stone noted that “certain categories are protected - as there are here on the local level.”
With 45% of league merchandise sales revenue coming from outside of the U.S. and Canada and ‘authentic’ jerseys (see: includes sponsor logo) set to hit shelves abroad for the first-time next season, Van Stone believes “there is a likelihood” that patch sponsors will lean global during the next round of negotiations (the initial 3 year deals expire following this season). The increase in potential partners should drive up the price of the valuable real estate. To be clear, Van Stone was not indicating that the Wizards are looking to make a change (Geico also sponsors the Capitals and Mystics); he was speaking about the league in general terms.
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