Add the Washington Wizards to the list of National Basketball Association teams seeking a jersey partner after a deal with insurance company Geico ends.
Monumental Sports and Entertainment, the company that owns the Wizards and National Hockey League’s Capitals franchise, is creating what it calls a “unified offering” to entice a new business partner. This includes combining the NBA G League, esports teams, and WNBA’s Mystics franchise into one asset worth a whopping $12 million. Industry sources, who wished to remain anonymous as the talks are ongoing, suggest the asset combination could bring in about $10 million, however.
In an interview with CNBC, Jim Van Stone, MSE’s president of business operations, often referred to the asset as a “unique opportunity,” with adding global companies as top goals. “We think it’s a global opportunity,” he said. “We feel good about the package and what we can bring together for the right partner.”
Will another Wizards makeover help?
Geico took over the Wizards shirt in 2018, but the team only made the postseason once during the partnership.
NBA jersey sponsors see greater engagement with their brands when teams are featured in national games on ESPN and Turner Sports, and especially during the postseason. That means Geico didn’t take advantage of TV and extra social media screenings as the Wizards failed to advance into the postseason twice.
But on the WNBA front, the Mystics Geico delivered winning results. The team made two WNBA Finals appearances in the same time frame, winning the championship in 2019. The WNBA’s viewership and stardom surrounding Mystics forward Elena Delle Donne also helped. Van Stone said Geico will remain a “legacy partner” with MSE, and the deal includes signage at the Capital One Arena location during NBA and WNBA games.
The Wizards are undergoing another makeover after signing a new head coach last month and trading All-Star Russell Westbrook for the Los Angeles Lakers. The team also agreed to a three-year sign-and-trade worth $54 million to acquire former Brooklyn Nets security guard Spencer Dinwiddie. It still has the All-Star appeal of franchise star Bradley Beal to tap into.
Van Stone added global players to the roster, including rising star Rui Hachimura (Japan), Davis Bertans (Latvia), Raul Neto (Brazil) and Deni Avdija (Israel), who can help lure international companies.
“If you look at our young players that we have, we have some talent,” said Van Stone. “We think the team will be exciting and profound. I think we have become much stronger,” he added.
Custom content included
Van Stone said the restructured jersey is “an all-year opportunity” with the addition of both the WNBA and the MSE’s NBA2K League team Wizards District Gaming.
The NBA’s esports games run from May to August and are streamed on Amazon-owned Twitch. Esports content games attract a Generation Z audience. Market research firm Newzoo estimated that the global number of esports viewers would reach 474 million this year.
“There is no downtime or off-season, and that gives our partner a lot more opportunities to promote their brand,” added Van Stone.
MSE aims to have a new partner for the 2021-22 NBA season by October. Possible candidates for the asset include fintech companies. Japanese e-commerce company Mercari and Volkswagen could also join MSE.
“We want to make sure it’s the right opportunity for the right partner,” said Van Stone. “Ultimately, when you look at big deals like this when it comes to the right to jerseys, you integrate a partnership. So we’re optimistic we can act quickly, but if we go a little bit into the season to find the right partner I think we’re fine with that.”
The Wizards generate approximately $231 million in revenue, according to Forbes. The club also has a sponsorship deal with Capitol One and international partnerships with Japan-based technology company NEC Corp. and China-based e-commerce giant Alibaba. Last May, Caesars-owned gambling company William Hill joined MSE to open its property in the sports complex in Washington, DC.
Van Stone said partners will also be introduced to the OTT streaming service and the ability to develop content in four different languages: English, Chinese, Japanese and Hebrew. “The ability to create custom language content provides even greater connectivity for a global organization,” he said.
Are jersey patches growing NBA revenue?
The Wizards are among the few NBA teams looking for new patch deals.
The Lakers contract with e-commerce company Wish expired after last season. That deal was valued in the $12 million to $14 million range. Research firm Nielsen estimated the media value of the Lakers jersey patch for the 2019-2020 season at about $200 million since the team won the NBA finals. Last February, the Lakers teamed up with outside agency Sportfive to find a new patch partner.
Meanwhile, the Philadelphia 76ers’ deal with StubHub expired, and chatter in sports circles suggests the team has found another partner and is finalizing the terms. In the patch market, the team wanted about $10 million a season, but industry sources suggest the 76ers would make about $8 million. The Sixers also have an esports team, but it’s not clear if their NBA patch agreement includes the club.
Excel Sports continues to seek a patch deal for the Minnesota Timberwolves after the team’s deal with Google’s Fitbit ended in June 2020. Since the team does not get many national matches and has not won, it is believed that their patch will not exceed seven figures per year.
The NBA posted $1.4 billion in total revenue linked to sponsorship last season, but it’s unclear whether revenue around patch sponsorship has declined or is stagnating. It made about $150 million after the patch was added in 2017. Last October, Amy Brooks, NBA president of team marketing and corporate operations, told CNBC that the league expected “significant growth” and she also estimated a 30% increase before the pandemic.
Teams have also taken advantage of the jersey patches during the NBA Summer League in Las Vegas, where NBA clubs can also seek deals to sponsor practice jerseys. The Wizards don’t plan to add training jerseys to their pack, but they aren’t ruling it out either.
“A few years ago the teams went into the shirt and thought it could get big internationally, but I think it was still a wait and see,” said Van Stone. “But the numbers and the value have proven it to be an international opportunity.”