The NBA Finals tip off Thursday with a marquee matchup for league executives, as the Boston Celtics and their historic brand square off against TV ratings darlings, the Golden State Warriors.
Another reason for optimism: a booming sponsorship climate.
NBA sponsorship revenue rose 12.5% during the 2021-22 season to a record $1.64 billion, according to a new report from consultancy IEG and its Sponsorship Intelligence Database. The total is up 90% from five years ago. A bevy of new arena naming rights and jersey patch deals added an additional $180 million to NBA coffers this season, with cryptocurrency pacts responsible for roughly 70% of the new money.
“The NBA has always been test-and-learn thinkers,” 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 the crypto spending in the NBA, it makes perfect sense.”
Crypto companies spent more than $130 million on NBA sponsorships this season, compared to less than $2 million in 2020-21. The category shot up from the 43rd biggest for the NBA to the second highest-spending sponsorship sector, behind only technology.
Five brands (Crypto.com, Webull, Coinbase, FTX and Socios) were responsible for 92% of the spending, according to IEG. They included naming rights deals, as Staples Center was rebranded Crypto.com Arena ($700 million, 20 years), and FTX Arena ($135 million, 19 years) replaced AmericanAirlines Arena. The Brooklyn Nets landed Webull as its jersey sponsor in an agreement worth $30 million annually.
Pricing of crypto assets has been hammered over the past month, which hurts the bottom line for exchanges like FTX and Crypto.com. “It is a new category, and the money they are spending is very real, but I’m not sure anyone knows what this industry looks like in 90 days, much less three years.” Laatz said.
When it comes to sponsorship revenue, the NBA is closing in on the NFL, which has much tighter rules around deals on its blockchain partnerships. IEG estimated football’s sponsorships at $1.8 billion for last season and had MLB at $1.13 billion for 2021.
The last time the NBA witnessed a sponsorship bump this large was the 2017-18 season when the jersey logo patch was introduced, and the new inventory drove a 30% increase. New assets or sectors are the quickest way to increase revenue. Some 60% of NBA sponsorship spending occurs at the club level.
Nine teams signed new jersey patch sponsors, including the Los Angeles Lakers’ $100 million, five-year deal with South Korean food brand Bibigo. Arena names also saw unprecedented turnover with five existing venues getting new partnerships. Material science firm 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 companies are brands that need awareness,” Laatz said. “The Pepsi and Banks of America don’t need awareness from these big properties.”
While crypto hypercharged sponsorship growth, the traditional categories have maintained their spending in the league. Technology companies spent at least $170 million, while banks, telecom and footwear/apparel join cryptocurrency in the $100 million-plus tier. Beer, insurance, gaming, automotive and retail all committed more than $70 million.
The biggest individual spenders are all 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.