Wed. Jul 18th, 2018

When Corporate Greed Takes Over The Game

Allow me to vent for a minute. On Friday, Bloomberg reported that the NBA owners have approved advertising on jerseys. As soon as I heard of the decision my stomach began to ache. It’s a case of corporate greed rearing its ugly head again, and bastardizing the product.

adamI’m all in favor of every corporation, and employee making as much money as possible. If you’ve seen the movie “The Wedding Singer“, there’s a scene when Adam Sandler interviews for a job in a bank. During the conversation he’s asked if he has any experience. He responds by telling the interviewer “No. But I’m a big fan of money, I like it, I use it, I have a little, I keep it in a jar on top of my refrigerator, I’d like to put more in that jar, that’s where you come in”.

That’s probably the way I’d describe myself. I enjoy making a good living, and having the opportunity to provide and do well for my family. Wanting to be wealthy, and increase your profits is what most American’s hope for. There’s nothing wrong with that.

But when it’s all that you’ve become focused on, and it gets in the way of a brand’s integrity, that’s where I draw the line.

ad2I’m sure some of you reading this will take exception. After all, we include title sponsors on radio shows, feature product endorsements by on-air personalities, allow the movie industry to film scenes in sponsor locations, place advertiser messages on highway billboards, and look for as many avenues as possible to generate revenue.

That’s not my issue. It’s what this decision represents that concerns me. Is a 2.5 x 2.5 logo going to kill the game of basketball? Of course not. But, do you think this is where it ends? If so, wake up and smell the coffee.

NBAKeep in mind, the NBA has been profitable for a long time. They make money from multiple television and radio partners, merchandise sales, ticket sales, in-stadium advertising, and numerous other businesses. The growth of the internet, and social media, have opened doors to other revenue streams too.

Once doors are cracked open, it’s only a matter of time until money hungry owners are stampeding their way to the league offices in search of more. Even if it means compromising their own brand.

ad6Do you think they won’t put a second or third logo on the player’s jersey or shorts? Or a Home Depot logo on the hardwood floor? Or a windex logo on the backboard glass? Force their referees to wear sponsored suits from Men’s Wearhouse?

I want to believe that the owners wouldn’t be foolish enough to allow sponsors to own their team names, but as Ted DiBiase once said “every man has a price“.

Even if they consider sponsored team names off limits, do you think they won’t allow those opportunities for special events such as their annual All-Star Game?

ad1I can picture it now, the State Farm Insurance West Coast All-Stars tipping off against the AT&T East Coast All-Stars. The Dunkin Donuts Dunk contest where a player dunks a basketball with one hand and a donut with the other. The Three Musketeers three point shooting contest where the participants have to devour a candy bar after completing each rack.

You may laugh, and find it ridiculous, but it’s closer to reality than ever before. Just thinking about it makes my head hurt.

abAbout ten years ago, Major League Baseball tried to incorporate the movie “Spiderman” into their All-Star game by allowing a spider web design to be placed on their bases. The feedback was so negative that the league wisely reversed its course.

The New York Yankees also experienced backlash when they decided to eliminate Cracker Jacks in favor of Crunch and Munch. While that might not appear to be a big deal on the surface, it felt terribly wrong to fans when the line “buy me some peanuts, and cracker jacks“, came up during the seventh inning stretch.

In each case, baseball executives fell in love with dollar signs, and failed to consider the consequences of their poor decisions. To their credit, they recognized their mistakes, and fixed them. The NBA on the other hand has no such conscience.

ad3What troubles me about the decision to incorporate advertisers on every team’s jersey, is that the NBA has been viable for decades and shouldn’t have needed to do this. Owners aren’t facing poverty, and advertisers have plenty of opportunities to reap the benefits of being associated with the league. Were they really not going to continue investing in a business that delivers large audiences and helps them move product and make money?

What this all boils down to are two things.

  1. A pressure to generate revenue from corporations who are willing to sell their own souls if it helps them increase their economic position.
  2. Audiences valuing great content, and being willing to pay to remove sponsors from their viewing or listening experience.

wweBrands like SiriusXM, the WWE Network, YouTube, and countless others are providing a content experience minus sponsor intrusions, and fans are demonstrating a willingness to pay for it. The interference in the programming has bothered them enough to lighten their own wallets to eliminate it.

Even regular television which relies on paying households, and advertising to make money, have decided that protecting the user experience is more important to long-term business than sponsor dollars. That’s why the DVR exists. Clients are now ticked off because viewers can breeze right past their paid commercials and continue enjoying their favorite programs.

I can’t blame them for being mad about that, but rather than continuing to do things that frustrate the audience, how about working with the brand to create solutions that position the advertiser in a positive light without negatively impacting the customer?

ad11What’s frightening is that for over one hundred years, professional sports has existed without sponsors infiltrating the fronts and backs of the brands we love. We’ve made exceptions in little league, and Nascar, but when advertisers start messing with the NFL, MLB, NBA, and NHL, that’s a whole different ballgame.

So why is this happening? Is it due to the rising cost of player salaries? Might it be the result of television networks over extending themselves with bad rights deals and promising to fix the problem when the next opportunity arises? Or is it because the rich have no remorse for damaging a brand as long as it fattens their wallets?

It’s probably a mixture of all of the above, plus some other factors that the league will disguise as catastrophic problems, in an attempt to avoid paying its players what they’re worth.

ad13The one thing I wonder is if any of these geniuses considered the negative results that an advertiser can face if they place their company logo on a team’s jersey. If you’re a fan, and you don’t like advertising interfering with the products you enjoy, how are you going to view a company that places its business logo on your favorite team or player’s uniform? Are you going to buy more or less cheeseburgers from McDonalds when they place the golden arch on the Denver Nuggets uniform? Chances are, you’ll spend less.

How about when you go to Champs or Dick’s Sporting Goods, and you’re considering purchasing your favorite player’s jersey. Are you really going to wear a tanktop that includes the logo of Jiffy Lube or Wendy’s on it?

If a team jersey is sponsored by Bose, how is the league going to prohibit a player from endorsing Beats by Dre? We’ve already seen that exact scenario take place in the NFL with Colin Kaepernick. If you’re Bose, and you’re spending millions for this sponsorship, are you going to be comfortable with the team’s best player supporting your competitor?

I haven’t even touched on the overall value of the deal. NBA Commissioner Adam Silver says the addition of jersey ads will help the league generate an extra 150 million dollars per year. That sounds like a lot of revenue right? But now let’s examine it a little deeper.

The NBA has 30 teams, which means that each team will earn an extra 5 million dollars. Each team also plays 82 games per season. If you take the total amount (5 million) and divide it by the total number of games played (I didn’t even include the playoffs), each team earns a little more than $60,000 per game.

Now let’s compare it to the revenue generated during an actual game broadcast. A thirty second television commercial during an NBA Finals game costs a little more than five hundred thousand dollars. The regular season rates run much lower, and vary based on the team/market. Even if we reduce the rate drastically to 5-10K per commercial, would it make sense to a client to buy six commercials at 10K per game instead of a jersey ad sponsorship? The TV ads take up three minutes during the span of a three hour game broadcast. The jersey ad display is in place the entire time.

ad15If a client pays $60,000 per game for the jersey ads sponsorship, that amounts to a little more than $1,000 per minute per NBA game for the ENTIRE TEAM to wear their logo across their chest. Now let me ask you again, do you think the NBA is getting good value for this sponsorship? Is this really worth compromising brand integrity?

Fans don’t show up at arenas or sit down in front of their television sets to watch referees, team executives, commercials, or sponsor logos. They come for the game, and to watch the best players in the world perform. They accept that the league, and its teams need advertisers to cover costs, and turn a profit, which is why they endure commercials, logos on the screen promoting specific programming features, and in-stadium signage. But, when the brand is compromised for the sake of greed, sold at an undervalued rate, and presents an image that turns off loyal customers, that’s when the backlash begins.

The NBA has every right to do this. Just as fans have a right not to support it. Bitching and moaning won’t accomplish much, but if jersey sales decline, ticket revenues drop, jersey sponsors receive less support, and social media fury increases, fans will have the league’s attention.

If the past is any indication, I wouldn’t expect them to change anything. They clearly thought this through and determined that risking the integrity of their brands was worth the revenue they’d receive in return. The only way to change the course of history now is to do one thing – hurt them in the one place they fear most – their wallets!

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