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Data Snapshot: NBA 2021-22

The NBA’s domestic sponsorship portfolio is worth an estimated $694.25m (€625.33m) in 2021-22, up 15 per cent from $602m last season – itself a three-per-cent increase on the $585m valuation of the 2019-20 season.

At least $50m of this season’s uplift derives from two new tech sector deals, with cryptocurrency exchange Coinbase and mobile phone brand Google Pixel, while the inclusion of Wilson as the new ball supplier (in a deal announced in May 2020) plus three additional new deals and seven uplifts-on-renewal account for the rest.

In 2020-21, about 60 per cent of the valuation was in sponsorship IP and 40 per cent from licensing rights incorporated in the marketing agreements, most prominently in the nine-figure-per-year fees paid by sports brand Nike and gaming company 2K. This season’s increases were overwhelmingly marketing-led, skewing the ratio of the portfolio valuation close to 65:35.

Our valuation does not include NBA sponsorships in territories outside North America. In addition, it does not include contractually ‘baked-in’ advertising commitments with the league’s broadcasters like TNT and ESPN. It does, however, account for the value of advertising on NBA-controlled channels, including NBA TV, NBA.com, the NBA App and NBA League Pass.

New deals

Fifteen NBA central deals were renewed, created or upgraded ahead of the 2021-22 season; the biggest was the league’s first crypto-related sponsorship, struck with the Coinbase exchange (see Key Deals, below).

Google struck a deal to take up the new position as of presenting sponsor of the NBA Playoffs for its Pixel mobile phone brand, while in another tech-related play, online legal tech company LegalZoom became a full marketing partner across the NBA, WNBA and NBA G League.

New deals were also made for this season with cleaning products brand Clorox and FMCG giant Mondelēz International, while sporting goods brand Wilson is back as the league’s ball supplier, taking over from Spalding in a deal signed in May 2020.

Renewals were announced with long-term sponsors in payment service brand American Express, sports company Adidas, watchmaker Tissot, carmaker Kia and food and beverage company PepsiCo, which renewed last season around the All-Star game in March 2021. Car insurance company State Farm and sportsbook and casino operator BetMGM also renewed after the expiry of their deals at the end of 2020-21, but the multi-year extensions have not been officially announced.

And there were upgrades to authorised betting operator deals with FanDuel and DraftKings, both of which have risen to co-official sponsor status, the top level of the NBA’s hierarchy of betting partners (see Key Deals, below). Two betting brands included in last year’s report, Fox Bet and Bally Corp, did not take marketing rights in 2021-22. Also leaving the roster after last season is health screening company Clear.

MARKET ANALYSIS

Impact of Covid

Any ongoing dampening of the NBA’s sponsorship programme because of the pandemic has lifted in the 2021-22 season, according to industry experts.

The 2021-22 season is back to a full schedule and industry experts believe the NBA is no longer dealing with make goods to return sponsor value lost from the pandemic restrictions of the past two seasons. Some sponsors will be making additional payments this season after the NBA allowed them to defer payments during the pandemic.

Industry experts argue the NBA has emerged in credit from the pandemic, with one agency marketer saying the NBA did the “best job of all the US leagues in terms of getting ahead [of Covid-19]”.

They added: “Relatively speaking, they’ve enhanced their appeal in the sponsorship marketplace by being mindful of their business goals and objectives and being aware of and sharing with their sponsors what was going on and having a relatively open dialogue.”

Consumer changes

The NBA is well-placed to benefit from what’s been termed the biggest transfer of wealth in US history, from boomers, aged between 58 and 76, to millennials, aged between 26 and 41.

The NBA says it over-indexes on the 16-to-34-year age group by eight per cent compared to the national average and further claims to have the youngest live sports TV audience, the highest proportion of multicultural fans and the most engaged fans on social media.

One agency executive told SportBusiness Sponsorship: “The NBA has done a very positive job staying relevant among some of the younger Gen Z-focused demographics in addition to the millennials. By and large brands still view the NBA as capturing the hearts and minds of younger demographics, who may have more diverse interests and not just basketball. They may be interested in gaming, fashion and culture, so it’s really about how the NBA can they mine those additional pathways.”

The NBA highlights “cultural relevance” as accounting for 25 per cent of consumer product purchase decisions among 18-to-35-year-olds. Its own surveys reveal that 85 per cent of avid NBA fans believe the league is “very relevant to today’s culture” and 80 per cent believe “NBA partners become more personally relevant”.

RIGHTS-HOLDER ANALYSIS

The league achieved more than double-digit sponsorship value growth in the last 12 months based on leveraging emerging categories and creating new assets. Despite the Covid-19 pandemic and political problems in the Chinese market, it also continues to develop its global value for sponsors by prioritising international growth markets.

Emerging categories

The migration of emerging sector firms to the league is in part the consequence of sponsorship precedents laid down by NBA teams, which have frequently served as first sponsorship platforms for technology, fintech and cryptocurrency companies.

According to marketers, a presence – and evidence of success – for these firms at team level has boosted competition and hence fees at league level.

The opportunity to acquire jersey patch branding rights, from 2017-18, has been especially important to emerging sector companies aiming to build brand awareness. The first wave of NBA jersey patch partners introduced technology and fintech companies to the NBA. This season, the cryptocurrency sector emerged with three jersey patch deals involving the Portland Trail Blazers (StormX) Philadelphia 76ers (Crypto.com) and the Brooklyn Nets (Webull), preceding the league’s major deal with Coinbase in October.

The challenge for the NBA, according to one expert, is that the league has “done such a good job in opening new sectors, there are limited categories left for them to add”.

One opportunity under consideration is the fan token model promoted by blockchain-led businesses such as Socios.com. The NBA has reserved judgement on the offering and limited its clubs to marketing tie-ups with Socios.com that do not have fan tokens attached, though this may change in 2022-23.

New assets

The emergence of new tech brands has coincided with the NBA’s opening of new inventory created for branding or tech integration purposes.

These include the presenting sponsorship of the NBA Playoffs, acquired by Google Pixel, which followed the presenting deal for the NBA Finals agreed with YouTube TV in 2018. Experts believe presenting rights to the eastern and western conferences could be next on the market.

While here was no marquee presenting sponsorship associated with the Coinbase deal, the crypto exchange was awarded a new asset in a branding position on the basket stanchions for all nationally televised games.

The NBA has also been active in opening rights for its clubs, which are increasingly interested in apparel-based rather than courtside branding. Having sanctioned jersey patches for exploitation in the 2017-18 season with an initial three-year limit, evidence of the programme’s success can be seen in the number of renewals for the 2020-21 to 2022-23 cycle.

The NBA has also opened a new apparel-type play on warm-up jerseys from 2021-22, which may not necessarily achieve visibility in broadcasts, excepting shots of pre-game layup lines or bench players, but are increasingly valuable to brands thanks to round-the-clock coverage of the league on digital and social media.

International

Despite a slowdown in international growth because of Covid-19, NBA commissioner Adam Silver said in January there were still huge opportunities to grow outside of the US. “The goal is to focus on a business [that is] consumers-oriented and to engage the fans in a direct way through a more personal and interactive experience,” he said.

The return to normal of the NBA’s relationship with China, its biggest external market, is key to growth . The moratorium on NBA broadcasts by state-owned broadcaster CCTV remains in place but games can still be viewed on streaming service Tencent. Activity among NBA global sponsors and NBA China sponsors is recovering.

The NBA is also interested in growth to be gained in the wider Asia Pacific region and Latin America where Mexico City has gained a franchise in the development NBA G League. Meanwhile, NBA Africa, a new entity set up to conduct the league’s business on the continent, was set up in May last year, and will oversee the Basketball Africa League (BAL) – a partnership between the NBA and the International Basketball Federation (Fiba). At this early stage, this is considered a sports development play rather than commercial opportunity.

Commissioner Silver is also in talks about the potential collaboration on a new European league with Fiba and EuroLeague, however the league’s active approach to international expansion in Europe was stymied again in 2021-22. The league last hosted a match in Paris in 2020, but cancelled the 2021 international fixtures, known as the Global Games, amid the pandemic and is not planning to take any regular season games to Europe this year.

Without the Global Games, NBA Europe – the London-based hub for the NBA’s European business – is focused on its broadcast rights operation, with the sponsorship division primarily concerned with managing the activation of global NBA deals on the continent.

In European countries, where there are specific but limited sponsorship opportunities because of the presence of an individual athlete from that country in the league, the NBA has scope to outsource its sponsorship business. Last year, for example, the NBA agreed a deal with the Sportfive agency to represent the NBA’s sponsorship business in Germany and the wider DACH region and build on the momentum created by the NBA success of the German player Dirk Nowitzki, who retired in 2019.

KEY DEALS

DraftKings

In November, DraftKings expanded on its existing NBA relationship, acquiring a suite of rights not included in the ‘authorised betting operator package’ the company picked up in 2019-20.

DraftKings became the exclusive presenting sponsor of NBABet Stream, the league’s betting-focused telecast distributed via NBA League Pass and the NBA TV app. During this weekly alternative betting-focused broadcast, DraftKings odds, lines, props and other forms of gaming-centric content are integrated into the live-game experience, highlighting the company’s continued evolution in the media and content spaces.

DraftKing’s co-official sponsorship – shared with rival daily fantasy sports platform FanDuel, also signed in November – grants access to league data and branding that creates a more immersive and authentic fan experience.

As well as its NBA deal, DraftKings maintains team sponsorship with the Charlotte Hornets, Detroit Pistons and Indiana Pacers.

Coinbase

Coinbase signed as the NBA’s first cryptocurrency partner in October, a multiyear sponsorship covering the NBA, WNBA, NBA G League, NBA 2K League and USA Basketball.

The $40m-per-season deal gives a brand presence during nationally televised games plus presenting partner rights to the WNBA Commissioner’s Cup and USA Basketball men’s and women’s national team exhibition tours. It will also serve as a partner of NBA G League Ignite, the G League’s developmental/exhibition team.

SportBusiness Sponsorship understands the CAA agency represented Coinbase in negotiations and that the NBA was able to pick from several major companies in the space because the NBA fanbase over-indexes on consumers with an interest in cryptocurrency.

The NBA actively sought a cryptocurrency sponsor with its due diligence focused on to whether prospects were financially stable and able to pay. According to experts, Coinbase paid a premium not only because of sector competition but the contentiousness of the sector.

The deal is global, despite the fragmented regulatory environment for crypto around the world. Cryptocurrencies are mostly legal in North America, South America and Europe, and mostly illegal in Asia, including China. The US is home to the largest number of crypto investors, exchanges, trading platforms, crypto mining firms and investment funds.

$1 = €0.90073

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