How do you grow revenue if you are the NHL? Continuing growth is rather difficult to do in any business and the way the NHL has gone about it has been rather smart with new partnerships, expansion franchises, and gambling partnerships. While new revenue sources are always difficult to uncover, there is one staring the NHL in the face: sponsored logos on team jerseys.
Now fans may want to harp on me for saying this, but I think the NHL should allow their franchises to sell a tastefully sized portion on their jersey to sponsors. Nothing over the top and the sponsorship should make sense, choosing local companies that mean something to the teams surrounding communities.
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When the NHL announced their seven-year deal with Adidas in Sep. 2015, there were initial thoughts that the NHL would head down the sponsored jersey path. But on the day of the press conference, NHL Commissioner Gary Bettman shot the idea down rather quickly.
“Our sweaters are iconic,” Bettman told Sports Illustrated in 2015. “We certainly won’t be the first [to allow advertising]. You’d have to drag me kicking and screaming. It would take a lot, a lot, a lot of money … it’s not something we’re considering right now.”
Bettman and NHL Have History of Flip-Flopping
But Bettman has a history of flip-flopping on topics once the money is placed in front of him. For example, the long-time commissioner had a complete reversal on his thoughts on sports gambling.
“We’re not prudes on the subject,” said Bettman in 2012 deposition testimony. “We’re concerned how gambling and betting affects the NHL game and changes the perception of and challenges the integrity of the NHL game.”
That line of thinking was consistent from Bettman over the years, even after the Vegas Golden Knights were introduced as an expansion franchise. But with more and more states legalizing sports gambling, the NHL wanted a cut of the action. In 2018, the NHL announced its first-ever sports betting partnership in MGM Resorts.
So, with a history of Bettman flip-flopping on issues, there is a chance he does the same when it comes to allowing franchisees to sell sponsored spots on their uniforms.
NBA’s Path Should Be NHL’s Blueprint
The NBA has had patches on the chest of their jerseys for the past two seasons as phase one of their three-season test of the sponsored-jersey look. While the NBA and the NHL typically aren’t following the same trajectory, the success the NBA has had with the program is rather impressive.
According to Sports Business Daily, NBA teams have been able to generate over $150 million in incremental revenue in adding the patches. Executives in the NBA are even predicting 20-30% price increases in the next iteration of the patch, as well.
However, it is unlikely the NHL could rake in the same dollar amounts for sponsors that the NBA does. The potential incremental value of adding the logos onto the sweaters is tempting. Based on the revenue variation ($4.54 billion vs $8.01 billion) between the NBA and the NHL, it is easy to imagine the NHL being able to bring in anywhere from $70-80 million by adding sponsored portions to their sweaters.
And of course, any entry to this space should be tasteful with a small logo like the NBA rather than a massive logo on the chest like MLS. Doing it in a way that doesn’t tarnish the overall look over the jersey is critical. But it can be done and, if done right, is an easy way to drive incremental revenue for the NHL. Question stands: is that $70-80 million number considered “a lot of money” to Bettman and the NHL?
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According to Forbes, six NHL franchises had a negative operating income in 2018. Just a hunch, but I would imagine that they would jump on this opportunity. For any hate that Bettman and the league would generate by the move, they can point to the NBA and in a follow-the-leader-type announcement.