NHL’s Jersey Patch Opportunity Will Outweigh The Risk For Teams
A report by Forbes last December showed that the average National Hockey League team value fell 2% during the 2019-20 season, which was the league’s first decline since 2001. League revenue also fell 14 percent to $4.4 billion while the operating income fell to 68 percent to $250 million.
Like the other major sports leagues, the NHL also experienced operating losses due to the pandemic. When the Associated Press reported that the board of governors unanimously approved sponsor patches on jerseys beginning with the 2022-23 season, it wasn’t much of a surprise.
“Last year, there were two primary factors for this,” said Tuck Burch, Head of Brand Marketing for Excel Sports Management. “The lack of fans in the stands and drops in viewership. The first focus became how can we create new value for existing partners to mitigate some of that loss. Secondly, given the —in some cases — hundreds of millions in lost revenue for these leagues, what are the opportunities can be created to realize new revenue to help offset some of those losses.”
Burch and his team work with NHL partner Mass Mutual and have negotiated a number of NBA jersey patch deals — most recently, the Boston Celtics and Vistaprint partnership last Fall. Burch said there will be some nuances to how the NHL approaches their jersey patch deals that will be dependent upon the makeup of the individual organizations, the assets they have at their disposal to provide to potential partners and how they approach the partnerships.
Already having approved helmet sponsors for the 2021 season, NHL Commissioner Gary Bettman said teams received over $100 million from the helmet ads. The jersey patch ads will be in a 3 inch by 3.5 inch rectangle and the location of them will be up to the team. The placement of these patches will be critical as the speed of play isn’t beneficial from a broadcast visibility standpoint. If the NHL can replicate the success the NBA has had from their patch program, or come close, it will be an asset each franchise would want to utilize.
The NBA was the first of the four major North American sports leagues to include the sponsorship patches on their jerseys, introducing their pilot program during the 2016.17 season. The program has brought in well over $150 million in revenue since that time. IEG, a sports partnerships consultancy firm estimated the patch deals total sponsorship have grown by 70 percent. The current patch price range is from $5 million to $20 million per season for some teams.
There are sure to be some hockey fans that aren’t thrilled with an advertiser patch on the jersey of their favorite team just as there was when the NBA launched its program. As has been shown, those outcries for maintaining tradition lessen as long as there are compelling storylines to keep the attention on what’s important; the play of their favorite players and teams.
With some NHL teams already in the process of negotiating with potential partners, Burch says the consideration of the feelings of fans towards the patches is one teams will have to gauge seriously before making a decision. He also believes it’s the responsibility of the teams to incorporate their partners in a way that engages their fanbase. In the end, he believes that the money these patches can generate will be too substantial for any team to pass up.
“Each team will have the ability to pursue the [jersey patch] program or not,” Burch said. “If there are fanbases or marketplaces where the team and the ownership group believes the risk outweighs the revenue opportunity, perhaps, you might see some that decide not to pursue it, or they wait to see how it goes and pursue it in the second year. My guess is that the revenue opportunity for each organization is going to outweigh the risk and everyone in the league will attempt to find a partner.
“Also, as a brand marketer, activations are something we advise and encourage clients when approaching these partnerships. You want to take it beyond the logo placement and visibility on the jersey and focus on how you can move the needle with consumers from awareness to a more consideration point of view. You do that through activation and engagement.”