The NBA Finals kick off Thursday with a marquee game for league leaders, as the Boston Celtics and their historic brand take on TV ratings darlings, the Golden State Warriors.
Another reason for optimism: a booming sponsorship climate.
NBA sponsorship revenue rose 12.5% in the 2021-22 season to a record $1.64 billion, according to a new report from consulting firm IEG and its Sponsorship database. Intelligence. The total is up 90% from five years ago. A slew of new arena naming rights and jersey patch deals added another $180 million to NBA coffers this season, with cryptocurrency pacts accounting for about 70% of the new money.
“The NBA has always been a test-and-learn thinker,” Peter Laatz, IEG’s global managing director, said in a phone interview. “They have a younger audience [than the NFL], a more diverse audience and a more global audience. If you look at crypto spending in the NBA, it all makes sense.
Crypto companies have spent more than $130 million in the NBA this season, compared to less than $2 million in 2020-21. The category has grown from the 43rd largest for the NBA to the second highest spending sponsorship sector, behind technology alone.
Five brands (Crypto.com, Webull, Coinbase, FTX and Socios) were responsible for 92% of spend, according to IEG. They included naming rights deals, as Staples Center was renamed Crypto.com Arena ($700 million, 20 years) and FTX Arena ($135 million, 19 years) replaced AmericanAirlines Arena. The Brooklyn Nets landed Webull as jersey sponsor in a deal worth $30 million a year.
The pricing of crypto assets has been hammered over the past month, hurting the bottom line of exchanges like FTX and Crypto.com. “It’s a new category, and the money they’re spending is real, but I’m not sure anyone knows what this industry will look like in 90 days, let alone three years.” said Laatz.
When it comes to sponsorship revenue, the NBA is getting closer to the NFL, which has much stricter rules regarding agreements on its blockchain partnerships. IEG estimated football sponsorships at $1.8 billion for last season and MLB at $1.13 billion for 2021.
The last time the NBA witnessed such a significant sponsorship increase was in the 2017-18 season, when the jersey logo patch was introduced, and the new inventory resulted in a 30% increase. New assets or sectors are the fastest way to increase revenue. Approximately 60% of NBA sponsorship spending occurs at the club level.
Nine teams have signed sponsors for the new jersey crest, including the Los Angeles Lakers’ five-year, $100 million deal with South Korean food brand Bibigo. Arena names have also seen unprecedented turnover with five existing venues gaining new partnerships. Materials science company Footprint (Phoenix Suns), insurer Gainbridge (Indiana Pacers) and online payroll provider Paycom (Oklahoma City Thunder) joined FTX and Crypto.com with their names on buildings.
“These new businesses are brands that need brand awareness,” Laatz said. “Pepsi and Banks of America don’t need the notoriety of these big properties.”
As crypto’s boosted sponsorship growth, traditional categories have kept their spending in the league. Tech companies have spent at least $170 million, while banking, telecommunications, and footwear/apparel join cryptocurrency at the over $100 million level. Beer, insurance, gaming, automotive and retail all committed more than $70 million.
The biggest individual spenders are all the official league partners, as Nike, Microsoft, Anheuser-Buch InBev, PepsiCo and AT&T paid more than $50 million per IEG. New league-wide sponsors this season included Coinbase, Google, Caesars Sportsbook, LegalZoom and Wilson.