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Sweater Sponsors: Only a matter of time before we see ads on jerseys in the NHL

With the NBA becoming the first to put ads on game jerseys, the door is open for the NHL to follow suit.

Over the past five years, fans have seen many changes in the hockey industry, such as the use of advanced analytics, technological innovations and rule changes. But NHL executives, including league commissioner Gary Bettman, have maintained that selling jersey sponsorships would not be included on that list.

Rumors regarding tapping this additional source of revenue go back to 2014 when Sports Illustrated reported: “During a meeting of NHL team presidents last year, league officials estimated they might generate $120 million annually by allowing corporate sponsors to put their logos on jerseys.”

Following the league’s announcement in 2015 of a jersey deal with Adidas, worth an estimated $70 million per year, the rumors escalated. Bettman was quick to respond, saying at the time that jersey sponsorship was “far, far, far from the front burner.”

In 2016, however, the NHL tested the idea of jersey sponsorships at the World Cup of Hockey. They struck a deal with SAP, the German software company, to be the sponsorship advertiser for all the teams’ jerseys. This decision prompted widespread speculation that the NHL was seriously considering jersey advertising. Not surprisingly, Bettman once again tried to put an abrupt end to the conjecture: “Our sweaters are iconic. We certainly won’t be the first. 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.”

How much is “a lot” of money? In 2016, the NBA announced it was endorsing jersey sponsorships, by allowing a company logo on a small patch on the front of a game jersey. NBA jersey sponsorship deals, according to Jeffrey Citron of Sports Business Daily, “are averaging $6.5 million to $9.5 million in revenue per team.”

If one conservatively estimates that NHL teams would average deals equal to 50 percent of the NBA deals, it translates to total potential revenue for the 31 NHL teams at between $100 and $150 million per year. That equates to between $3.25 and $4.75 million per year for every NHL team.

This new revenue source would go a long way to reducing the number of franchises that lose money. For example, Forbes, in its annual report on NHL team financials, estimated that six teams – Anaheim, Arizona, Carolina, Columbus, Florida and the Islanders – sustained losses during 2017-18 ranging from $1.7 million to $21 million. Revenues from jersey advertising could’ve reduced the number of teams reporting losses to three while reducing the losses for those teams by an average of 34 percent.

The NHL-NHLPA collective-bargaining agreement expires no later than September 2022, and potentially as early as September 2020 if either side exercises an opt-out clause. The subject of jersey sponsorships could be on the table and be one of the few agreed-upon topics. According to Citron, “jersey sponsorships are the low-hanging fruit” for NHL owners and players. Organizations can bolster their sponsorship revenues, therefore increasing the amount allocated to players. “With 50 cents of every dollar of hockey-related revenue going to player salaries, NHL players are missing out on $50 million to $75 million per year, translating to a possible $100,000 per player per year,” Citron said. “The NHLPA ought to be insisting during collective-bargaining negotiations that the NHL at the very least permit teams to sell patch sponsorships on its game jerseys.”

Game jersey sponsorships are surely a question of “when” rather than “if.” Bettman rarely turns his back on an opportunity to show NHL owners the money, and the league and the players’ union are bound to agree during the next round of collective bargaining.

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