Inside the NHL’s decision to put ads on jerseys

The NHL will allow teams to sell advertising on their jerseys beginning in the 2022-23 season. The measure has been approved by the board of governors, and teams are already having exploratory conversations with potential sponsors.

To say those teams are salivating at the potential revenue the ads will generate is an understatement.

“It’s a game-changer for us financially,” David Morehouse, Pittsburgh Penguins president, told ESPN this week.

NHL teams see the placement of ads on their players as something that has the revenue potential to rival annual arena-naming-rights fees.

“We honestly believe that the overall program is worth hundreds of millions of dollars on a yearly basis. This is big,” said Keith Wachtel, the NHL’s chief business officer and senior executive vice president.

But fans are already asking whether the cost is too high. NHL sweaters have long been considered sacrosanct. The idea of an advertisement — besides the one for the gear maker — sullying the classic look of a Montreal Canadiens sweater is blasphemy for many. We might associate the Boston Bruins with a particular doughnut and coffee chain, but we don’t need to see their logo drawing our eyes away from the spoked “B.”

“We know the game is sacred. We think we have the greatest jerseys in sports. We are careful when we do these things,” Wachtel said.

Here’s an inside look at how the NHL arrived at selling advertisements on its sweaters starting in 2022-23. We dive into all the regulations the league is putting in place — such as the sponsors from which teams can or cannot accept ads — hoping to calm the fears it has heard in the wake of the decision.

How did we get here?

Ads on NHL jerseys appeared in 2010, when the Chicago Blackhawks and Calgary Flames placed sponsorship logos on their practice jerseys. (In true Chicago fashion, theirs was the Giordano’s pizza chain.) Teams like the Detroit Red Wings soon followed suit. The NHL was actually behind the curve here, as the NFL had previously sold practice-jersey ads.

The NHL didn’t see the practice-jersey sponsorships as a slippery slope to game-jersey ads. “We are not actively considering changing that rule, at least at this point,” deputy commissioner Bill Daly said in 2010. “But who knows what the future might hold.”

Meanwhile, the AHL, ECHL, NWHL and European pro leagues had made jersey sponsorship commonplace.

In 2015, the NHL announced a seven-year partnership with Adidas, making it the official outfitter of on-ice uniforms and licensed apparel beginning in the 2017-18 season. NHL commissioner Gary Bettman pushed back on the idea that the partnership meant ads on jerseys were inevitable, given the association Adidas had with commercialization of uniforms in European soccer.

“There’s been speculation that this deal means there will be ads on jerseys, and that’s just not true,” Bettman said. “The fact of the matter is we are not currently considering putting advertising on NHL jerseys.”

Instead, they put ads on exhibition-tournament jerseys. The first sweaters created by Adidas were for the 2016 World Cup of Hockey in Toronto, a joint venture between the NHL and the NHLPA. Those jerseys had a large sponsorship patch for SAP on the shoulders.

Although that door cracked open, Bettman said the NHL “certainly won’t be the first” of the big four North American sports to allow ads on regular-season or playoff game jerseys. “You’d have to drag me kicking and screaming,” he said, before acknowledging, “We know what our exposure is worth. Can somebody go through that math and come up with a number? The answer is yes.”

What changed for the NHL in recent years to allow jersey ads?

In 2017, the NBA announced it would allow 2.5-by-2.5-inch ad patches on its game jerseys for the 2017-18 season. Despite initial pushback by fans and media — the Los Angeles Times lamented that the NBA was “turning its players into running, jumping billboards” — the program was a success, generating over $150 million in additional revenue and attracting new advertisers to the NBA.

The NHL began exploring the potential for advertising on its own players more aggressively. But the COVID-19 pandemic’s impact on the league’s economy proved to be an accelerant to that process.

“Gary knew we had to come up with additional revenue streams,” Brad Alberts, Dallas Stars president, told ESPN this week. “It certainly had an impact on him, to push him over the line and have us do this. But we discussed this for a number of years.”

Morehouse said the first time he heard realistic planning for ads on jerseys was in November 2020. At the following month’s board of governors meeting, the league discussed its helmet-advertisement program for the 2020-21 season, which it saw both as a way to open up a new revenue stream and as a trial balloon for jersey-advertisement sales — a way to gauge both public sentiment and the marketplace’s enthusiasm for sponsorship.

During the 2020-21 season, teams were given permission to start exploring jersey-advertisement sponsorship opportunities. They took their findings to the NHL.

“Once we compiled that analysis, we decided to get into the logistics of it. What are we selling? How are we selling it?” Wachtel said. “It’s really about what the clubs perceive the value to be.”

The back-and-forth between the teams and the league helped develop the standards for the jersey-advertisement program starting in 2022-23, from the size, location and number of the ads to the fact that teams aren’t required to sell them if they choose not to.

The NHL’s board of governors formally approved jersey advertisements during the offseason, and teams were given permission to start selling for the 2022-23 season.

“We had a unanimous vote of all 32 clubs. But that doesn’t mean that all 32 clubs will sell it,” Wachtel said.

What will the ads look like?

The NHL jersey ads will be slightly larger than the NBA’s. They’ll fit into a 3-inch-by-3.5-inch space on the sweaters. Rather than a square patch, they’ll use whatever logo the sponsor requests, provided it fits.

“That’s the allowable space. We believe we’ll have our partners in that 3-by-3.5-inch space,” Wachtel said.

How many ads will the jerseys have?

One. Surprisingly, it wasn’t the NHL that pushed for the restriction to one jersey sponsor, but rather the feedback it received from teams that established that standard.

“There’s the law of diminishing returns,” Wachtel said. “The more logos you put on there, the less value there might be. So the clubs wanted to go with the one ad. That’s what we’ll have for the foreseeable future. There was never a discussion about multiple [ads]. It’s one brand on the sweater.”

But Bettman has also bristled at the idea of ad saturation on hockey sweaters, according to Morehouse.

“Gary’s never going to let anything be put on our jerseys that’s going to make them look like NASCAR or European league hockey,” Morehouse said. “Gary’s been very hesitant and very systematic in how he’s approached this.”

Where will they be located?

Hockey jerseys are a blessing and a curse for advertisers. They clearly have a larger canvas on which to place logo art. But they have their own logos that make any uniformity of ad placement difficult — a logo on the top-right chest area for one jersey isn’t going to work on the New York Rangers‘ sweaters with their diagonal lettering on the front.

So the NHL has designated four spots for jersey ads: left and right shoulders, and left and right chest.

“We decided we wanted to provide a lot of options because our jerseys are unique. That was part of the problem: Where are you going to put these things?” Wachte’ said.

While the marketplace will ultimately dictate this, it’s believed that the logos on the front will drive a higher price than the ones on the shoulders.

“The person or the company that ends up writing the check for us will have a say and have an opinion. Hopefully that will merge together with our opinion,” Alberts said.

On how many jerseys can they sell advertisements?

According to Wachtel, teams are permitted to sell ads on two jerseys, most likely their home and away editions.

“Some markets might have a lot of interest, and some might have one sponsor willing to pay the value to have all of the sponsorship on both jerseys,” he said.

That’s the aim for the Stars: to have one company sponsor them at home and on the road. “We would hope to sell the whole season to one sponsor. For us, that’s where we would start,” Alberts said.

How much revenue could this generate?

NHL teams believe that advertisements on jerseys will rival, and perhaps surpass, the money generated by their arena-naming-rights deals. “We value it along the same lines as naming rights in an arena, but this is more personal. Your brand, and anything that comes with it … this is bigger than impressions,” Morehouse said.

The Penguins president said that many teams pull in between $4 million to $6 million in arena-naming-rights revenue. He believes that the revenue for jersey ads will be closer to $6 million, but “maybe a lot higher in certain markets.”

The Stars’ Alberts is in the “a lot higher” camp. He believes many arena-naming-rights deals generate between $6 million and $10 million annually for NHL teams, and sees no reason the combined ad revenue for two jerseys can’t match that.

“I’m curious for how some will perceive the value, but we’re going to be shooting for something in that range,” he said.

On the high end of that scale, for 32 teams? That’s a $300-million-plus revenue stream the NHL is opening.

Hitting that number will be difficult, but not impossible, given that the league’s teams are approaching this sponsorship program with an eye on global domination. Due respect to local pizza chains, but NHL teams are thinking about the audiences that will see these ads as they watch games from overseas as well as in the U.S. and Canada.

“This isn’t just a Dallas-Fort Worth reach. This is a global reach. The NHL is a very global sport. Look at our team. Very international roster,” said Alberts of the Stars. “So I think European companies are definitely approaching [us] on this. Finding this sponsor will be very different than how we sell dasher boards. That’s a very local flair.”

Are there certain categories of ads the league won’t allow on jerseys?

Yes. Teams have said they’ll have a higher threshold for advertising on the jerseys than on their dasher boards. While the NHL won’t specifically say what ads it won’t approve on jerseys, ones that advertise alcohol, tobacco and marijuana products won’t be permitted. Ditto anything sexualized.

“We think we take a conservative approach. We think the advertising on the dasher boards are different than what’s being worn on a player,” Wachtel said.

But, for the first time, the NHL is going to allow ads for sportsbooks on players’ uniforms.

What are the rules on gambling ads?

The NHL didn’t permit teams to sell ads for sportsbooks on their helmets last season. The league said that prohibition will continue next season. It will allow it for both helmets and jerseys for the 2022-23 season, with some restrictions:

  • The sportsbook ads will be sold only on home uniforms. “We don’t want that jersey going to away markets where it’s not legal,” Wachtel said.

  • They can be sold only if single-game sports betting is legal in the team’s state/province.

  • Only one sports betting company is allowed to sponsor a team. You can’t have William Hill on the jersey and DraftKings on the helmet, for example.

Most NHL teams that have legalized sports wagering in their localities have actively accepted sponsorship from sportsbooks. Teams like the New Jersey Devils have branded lounges in their arena. The Washington Capitals‘ Capital One Arena became the first U.S. professional sports arena with a sportsbook inside its building.

Alberts said that Texas doesn’t have single-game sports wagering yet, but he hopes that changes by the 2022-23 season. If so, the Stars will gladly explore sports-gambling sponsorships.

“I have no problem with it. I think sports gambling is the future of our business. I think it’s here and it’s only going to continue to get bigger. There’s no stopping that freight train now,” he said.

What if players aren’t cool with wearing a certain advertisement?

“We’ve had that discussion with the players’ association,” Wachtel said. “There are prohibited categories. We’re not concerned. They’re the ultimate professionals. And we’re not the first league to do this, and certainly won’t be the last one to do this.”

The teams also don’t seem to be concerned about players rejecting an ad.

“If a player came to us and said that they had a problem with it, we’d listen to them,” Morehouse said. “But in the end, the players understand as much as anyone how much money was lost in the last two years. If it’s done tastefully and respectfully, I don’t think there’s any problem with it.”

The revenue from the jersey advertisements will be fed into the hockey-related revenue pool, which is split between the owners and players 50/50.

Can fans buy jerseys without the logos?

Yes. According to the NHL, the majority of jerseys available for sale will not have the advertising logos on them. “There are going to be certain places where you can buy it with the logo, so you can wear what the players are wearing. But for the person that doesn’t want the logo on the jersey, they will be able to get one,” Wachtel said.

Replica jerseys available on the NHL’s online store will likely not have the logos the players wear on the ice. Wachtel said that the NHL is following the NBA’s model and seeking to sell the jerseys with the advertisements on them in team stores and inside arenas, but that could change according to demand.

The NHL hasn’t indicated whether there’ll be a price difference between an authentic jersey with an ad or without one.

How does the league square concerns that fans have about jersey ads ruining the sanctity of NHL sweaters?

Morehouse is fully prepared for the backlash about the NHL’s jersey-advertisement program, which has already begun on social media.

“Remember with the helmet logos, everyone was going a little nuts about them, and then you never really noticed them,” he said.

The NHL claims it has the best interests of the jerseys in mind: by limiting the sales to one sponsor, by allowing teams to move the ads around to four different locations and by not requiring teams to sell jersey-sponsor branding at all if they choose.

“We think we do a very good job of balancing the sanctity of the sport and the progressive nature of the commercial business. We have a great track record of tasteful brand exposure,” Wachtel said.

Still, many fans are worried about the trend that led from practice-jersey ads to World Cup jersey ads to helmet ads to jersey ads beginning in 2022-23. The NHL has continued to find ways to sell every inch of its rink to sponsors — please recall we now have virtual advertising floating around during broadcasts — so there is concern that those other unused areas of the hockey sweater will eventually house corporate logos as well.

But the NHL is adamant that it won’t head down that road.

“We’re not going to look like European hockey federations,” Wachtel.

Morehouse understands the concerns that fans have about the sanctity of the NHL jersey. But the counterargument has become too rich to ignore.

“The value of having one tastefully done patch on a jersey for that sponsor is worth more to us as a revenue source than any kind of sanctimonious argument that I could make about not wanting to put that on a Penguins sweater,” he said.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button