Sports sponsorship is a two-way street. In exchange for providing funding to a team or organization, the sponsor is able to raise their brand awareness and reach out to a potential new audience of millions.
Fans are loyal, and if they see a company getting behind their franchise, they are more likely to consider their products or services. In exchange for that boost in sales, their team receives vital revenue which they use in a number of ways.
Big Attraction
As the top level league within its sport, the National Basketball Association and its thirty teams attract billions of dollars in sponsorship each year. Whether it’s a financial organization, a clothing company or a sports betting outlet looking to promote its NBA odds markets, the association is a huge deal.
It may seem like a cash-rich league such as the NBA doesn’t need to attract significant extra revenue, but this isn’t the case. The funds raised from sponsor deals are invested back into the club in many different ways.
Naturally, the team wants to improve, so extra revenue helps them to attract big-name trades, while paying the type of salary that the top-name players demand. NBA franchises also aim to improve their facilities at a time when demand for the sport continues to increase.
In the last fifty years or so, we’ve seen many of those NBA teams move stadium to accommodate extra supporters, while others have developed their existing grounds. All of this costs millions to put in place, so additional sponsor revenue is vital.
Money is also ploughed into the grass roots game to help develop the next generation of players. Sponsorship is big business in the NBA, but which are the most important deals in the history of the association?
Success Stories
Some organizations are so big that they don’t even have to use their name in the corporate logo. Perhaps the best example of this is Nike, whose unmistakable tick can be seen on every player’s jersey in the NBA.
Nike are synonymous with the association and are said to own around 90% of the basketball footwear market. The initial deal with the NBA saw the company win complete outfitting rights with the league in a deal worth a cool $1 billion.
Revenue of that size is vital to any sporting body, and it will have been boosted by merchandise sales across North America and beyond.
State Farm Insurance are a distant second in the race to be the NBA’s biggest sponsor. The firm pays around $60 million each year to be a part of the association, and while they trail Nike by some distance, State Farm enjoys center stage at times.
The insurance company were the principle sponsors for the NBA’s Rising Stars game, and they also lead the way on All-Star Saturday night.
Creative Engagement
The nature of basketball offers a number of unique ways for sponsors to get involved. In most sports, there is a drinks cart waiting behind the coaching team, and there is a battle for companies to attach their name to it.
At present, the appropriate drinks sponsors to the NBA are Pepsi/Gatorade, who pay around $35 million for the privilege to be seen around court.
Return on Outlay
As we’ve just seen, major brands pay serious amounts of money to be involved with the National Basketball Association, but can they expect to see a return on their significant investment?
It’s impossible to quantify how many consumers make a purchase based on a firm’s involvement with their favorite sport. Companies such as Nike and Pepsi can measure sales in and around the stadium, but there are clear links between NBA sponsorships and improved results in the stock market.
In fact, studies have shown that there is even a boost to performance before the deal is officially announced. Once the rumor mill is set in motion, the markets respond and the sponsor sees early benefits.
T. Bettina Cornwell of the University of Oregon is quoted as saying: “There is a significant effect for sponsorship announcements in the pre-window. Not on the day of the announcement, but in the days preceding it.”
Following that initial boost in shares, the markets tend to slow down, but there is still a clear advantage for any sponsor looking to get involved with an organization as big as the NBA.
All of these companies have benefited from their arrangements with the NBA and raised their considerable profiles. In return, the association and its franchises have earned millions of dollars in revenue, which can be used to plough back into the sport.
The corporations enjoy the spoils of those sponsorships, but so do the fans. The league continues to improve, build new stadiums and attract the best players from all over the world, so the spectacle that is the NBA gets even better.