Béisbol Ready to Patch New Revenue?

What: MLB may be the next major U.S. sports league to add uniform patch advertising to its revenue sources.
Why it matters: The NBA has already cashed in on patches, and other leagues have experimented on practice gear. Baseball uniforms may be considered more sacred by its fans, though.

While many marketers look to sports gambling as the next big revenue stream for teams and leagues, state by state regulations are making that windfall look to be years away. In the meantime, there are other untapped areas of revenue that leagues continue to poke at, and one league, the NBA, has already cashed in on: uniform advertising.

For fans of global futbol, or for that matter most team sports outside the United States and some in the U.S. (MLS (@MLS) and the WNBA (@WNBA) being the two best examples), the novelty of brands investing in player uniform signage is not just older school, it is a proven revenue driver. Some of the world’s greatest clubs (Emirates (@emirates) / Real Madrid (@realmadriden): $80 million per year, Chevy (@chevrolet)/ Man U (@ManUtd): $68 million per year, Rakuten (@RakutenUK) / Barcelona (@FCBarcelona): $60 million per year, Yokohama / Chelsea: $51 million per year) sell prominent signage and secondary logos on uniforms without the blink of an eye in multiyear deals that have a massive return as part of a multitiered sponsorship, but in the U.S., the practice has been off-putting despite the revenue stream.

CHANGING FOCUS IN THE U.S.

That practice has slowly changed, with Major League Soccer’s early on adoption of sponsored kits, and the WNBA’s addition to the mix several years ago. The NBA, NFL, and NHL have allowed sponsor logos on practice uniforms for the last several years, and then the NBA broke the practice by allowing teams to sell patches to sponsors three years ago. That move has taken shape, and now all 30 franchises have found a sponsor, with the teams taking in more than $150 million/year in revenue. In April of 2016, Adam Silver projected patch sponsorships would generate +/- $100 million in newfound revenue – so the league has overshot its goal by over 50%.

The money goes into the bottom line, and more people come out because ticket prices are less.

Is baseball (@MLB) next to take the step? The answer may be found just South of the Border. Last month the Cincinnati Reds and (@Reds) the St. Louis Cardinals (@Cardinals) played a short two game series in Monterrey, Mexico (the second of three MLB series in Mexico this regular season) and the Cardinals landed the logo of the Ford Motor Company, (@Ford) a key sponsor of the series, on their helmet, which sent the social media and sports business world buzzing.

While it is not the first time MLB has had logos on uniforms (sponsor logos have been permitted on MLB uniform sleeves and helmets for games played outside of the U.S. since 2000), and MLB International Senior Vice President Jim Small told Front Office Sports that patches have been displayed on uniforms during the 2000, 2004, 2008, 2012 and 2019 Japan events (with this year’s games including MGM Resorts sleeve patches) the move to a global brand with designs on engaging in a targeted marketplace are making that real estate, helmet or patch, more valuable and less off-limits than ever before.

NEED FOR NEW REAL ESTATE

“Teams realize they need to have more inventory to gain revenue or they will continue to price the average fan out of the market,” said Ray Katz, co-founder of ROI Sports and a professor at Columbia University. “You can’t keep raising ticket prices to bring in more dollars; patches and helmet signage would be a big step, and an easier sell to fans, if it coincided with making games more affordable to attend. The money goes into the bottom line, and more people come out because ticket prices are less. Everyone wins." Katz saw the value of baseball’s sponsorship program first hand while working with Brand USA during the World Baseball Classic, bringing in Subway (@SUBWAY) as a patch sponsor. “Fans will adjust, it won’t be that intrusive and the NBA has already set the bar for acceptance.”

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Outside of the States, even in baseball, patch programs are normal and accepted, with Asian professional teams often taking the name of the sponsor into all marketing around team business. For the World Baseball Classic (@WBCBaseball), MLB works with the participating nations to find key sponsors who engage in patch programs. They have included Japan, China and Chinese Taipei with Asahi soft drinks (@asahiinryo_jp), Venezuela with Maltin Polar (@mimaltinpolar) malt beverage, and Panama donning Cable & Wireless Panama. Japan has also worn the video game company Konami (@Konami) on their helmets to name a few, so the continued sell in for MLB could continue to come as fans adjust and demand grows.

For the brand side, where is the value? The Chicago Bulls for example, sold their patch to Zenni Optical, which the company has used to trumpet their arrival as a growing disruptive player in a crowded marketplace. “The Bulls brand is iconic and global and Zenni aspires to have that same domestic and international relevance someday, said Julia Zhen, co-founder of Zenni Optical at the time of the announcement. “We know this will be a significant step to creating awareness that eyewear, especially prescription glasses, can be affordable, high quality and stylish at the same time. We're excited about amplifying our brand in the Chicago market and beyond wherever the Bulls are being seen around the world.”

Then you have the value of nontraditional brands using the patch to grow partnerships. While companies like Harley Davidson (@harleydavidson) and Goodyear (@goodyear) are among the list of NBA adopters, there are also Squarespace (@squarespace) and PayPal (@PayPal) and even Bumble, the women’s dating site which saw an opportunity to tell their story through a deal with the Los Angeles Clippers.

"There is a lot of fear that women are having in a time that women should have a voice, and having men who support that is incredibly important for us as women," Alex Williamson, Bumble's chief brand officer, told CNN Sport when the announcement was made last year. Bumble has leveraged the partnership into creating activations in and around not just NBA games but the Super Bowl as well, giving them an audience which is unconventional but effective as they look to penetrate a space with their unique point of view.

So is a traditional sport like baseball where we will see patch action next in across the States, with teams looking for revenue and brands looking for more ROI? With baseball’s demo still being heavily Latino and Mexico and the Caribbean a continued point of fan and player engagement, could a disruptive brand, or one like Ford, with deep aspirations to engage that marketplace, go the patch to make noise at a price beyond what was spent in Mexico? MLB officials are very quiet on the subject, but those in the marketplace are not.

“Everyone is looking at the success the NBA has had and trying to figure out what works, and that decision for a sport like MLB or the NFL will have to take into concern factors way beyond just the dollars,” added Chris Lencheski, a longtime sports marketing expert now CEO of Winning Streak Sports. “It won’t happen tomorrow but all the testing off American soil has shown there is great value, both from a media and a fan engagement standpoint, and that value will keep going up. MLB has used their apparel logo, be it Adidas or Rawlings or Nike, subtly on jerseys for years, and other commemorative patches have been accepted without pushback, so the stage is set now more than ever, especially as the search for dollars to keep prices affordable, to see where this goes.”

Where it goes, outside of Mexico or Japan or even the World Baseball Classic, will be watched closely in the coming months, and may be tested again in places like the Minor Leagues or even Independent Baseball, but make no mistake, the market has been set by the large orange ball. Will béisbol be next? Don’t bet against it.

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Joe Favorito @joefav

Joe Favorito has over 32 years of strategic communications/marketing, business development and public relations expertise in sports, entertainment, brand building, media training, television, athletic administration and business. The Brooklyn, New York native has managed the day-to- day activities in strategic communications for: Two of the world’s hallmark sports and entertainment brands (the New York Knickerbockers and Philadelphia 76ers), the world’s largest professional sport for women (the WTA Tour), the world’s largest sports National Governing Body (the United States Tennis Association) and the world’s largest annual sporting event (the US Open). He also oversaw the strategic planning, investor relations, communications and digital business development of the International Fight League during its two year run as a Mixed Martial Arts venture and a publicly traded company. Favorito serves on the boards of the Weinstein Carnegie Group, New York Sports Venture Capital, the National Sports Marketing Network, the Drexel University Sports Business program, and Columbia University’s Sports Management program (where he is an instructor in Strategic Communications and Director of Industry Relations). Joe also maintains a well trafficked blog on the sports marketing and publicity field, “Sports Marketing and PR Roundup,” on the website joefavorito.com, as well authoring the first- ever text on the sports publicity industry (“Sports Publicity” published in August 2007 by Reed Elsevier and updated in 2012 by Taylor Publishing with a third printing coming in 2018), which is used in over 60 sports management programs in the U.S. He has been a guest speaker on sports marketing, social media and communications at a host of institutions, including Princeton University, the Wharton School at the University of Pennsylvania, Georgetown University, the University of Florida Law School, New York University, the Stanford University Graduate School of Business and many others. He is also a frequent spokesperson on the industry for publications ranging from Ad Age and The New York Times to NPR and CBS News. A graduate of Fordham University, Joe, his wife and two children reside in River Vale, New Jersey.

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