Warriors want advertisers to pay up to $20M for jersey patch
The Golden State Warriors are asking for $15 million to $20 million per year for the rights for a company to put its logo on their jersey starting in the 2017-18 season, sources told ESPN.
It is believed that the Warriors, who won the NBA title in 2015 but lost in the Finals to the Cleveland Cavaliers in seven games this year, are asking for more money than any other team.
The NBA recently approved a three-year pilot program to allow teams to sell 2-inch by 2-inch patches on the upper left of jerseys, opposite what will be a swoosh from Nike, which will begin its deal as the league's official apparel-maker after the 2016-17 season.
Only one club has consummated a deal since the league allowed teams to start doing business in mid-May. The Philadelphia 76ers' three-year deal with StubHub is worth $5 million a year, according to sources.
The Warriors are making a case to companies that star power -- which now includes Kevin Durant -- combined with their huge market and local television ratings make the high cost of doing business worth it.
What companies will ultimately pay is said to be based on how much is included in the package beyond the logo on the jersey, such as whether they get sponsor category exclusivity, arena signage inventory and breadth of use to a team's logos for marketing.
Category competitiveness will also play a part, as a company in the tech sector with hundreds of competitors would likely pay more than a soft drink company, which features a main battle of Coca-Cola versus Pepsi.
Officials with the Warriors declined comment.
Eric Smallwood of Apex Marketing Group, a sponsorship evaluation company that has been hired by some teams to help maximize their logo patch deals, said the greatest value is based on how many national television broadcasts a team will have, which is largely based on how good the team is.
Smallwood said the concern from sponsors would be if a three-year deal is signed and key players leave.
"Sponsors have to have a player contingency put in these deals," Smallwood said.
In the 2013-14 season, for example, Miami had 25 national television games and Cleveland had four. LeBron James then went back to Cleveland, and the next season, the Cavaliers were featured in 21 games while Miami had 16.
Smallwood said that -- based on his calculations of total exposure that includes TV broadcasts, social media and internet exposure -- the Warriors would have a patch worth $12.9 million to $19.3 million if they had at least 30 national TV games. That doesn't include playoffs, Smallwood said.
A three-year Warriors deal could present some challenges. Stephen Curryand Durant could be gone by the time the patch deal would start in 2017-18. A patch deal could also tie in to a new arena for the 2018-19 season, which isn't on a definite timetable yet.
While many elements are included in a patch deal, teams have to declare what the value of just the patch itself is. That's because the value of the deal must be divided into two -- 50 percent to the teams and 50 percent to the players. Of the 50 percent that the teams keep, half of that goes to the team that did the deal with the other half going to a revenue-sharing pool.
The corporate logos will not be on jerseys at retail nationwide. Teams can elect to sell the jersey with the corporate logo in their team stores. The 76ers said they would offer that option to fans.
