We've all heard it, the NHL says that ads on their jerseys are "coming" and they estimate that this would generate about 120 million in revenues for the league. However, no one has really asked the question, how would this be done and what would the repercussions be?
First, if we look at the jersey side of thing, the NHL's current contract with Reebok will expire in 2016. Many companies including Adidas, Bauer and possibly Under Armour are expected to bid on the license which, according to SportsOneSource analyst Matt Powell, generally costs about 50 million dollars up front and 10% a year in royalties. It's not nearly as much as the potential of sponsors on NHL jerseys but would any of those companies agree to pay this amount (or more) if there were other sponsors on the jerseys? Not only would there be many companies overpowering their branding on the jersey but it would complicate the production and most likely hurt their sales.
Next, I think we can all agree that these sponsors would be negotiated on a team-by-team basis. The NHL teams are owned by 30 billionaires, most of which own a large corporation or who have an arena already sponsored by a large corporation. Are there any companies who have the money to spend on advertising that wouldn't come in conflict with any of those owners? I doubt it.
If sponsors are negotiated on a team-by-team basis, it would likely be each team's decision to put sponsors where they wish. Do you really think Geoff Molson would put a bunch of corporate sponsors right around the Montreal Canadiens logo on the front or Rocky Wirtz on the Chicago Blackhawks jerseys or MLSE on the Toronto Maple Leafs jersey? Not a chance. The only real option would be to put them as shoulder patches which would be more discrete, probably wouldn't upset as many fans but then again it probably wouldn't be worth 120 million a year.
The other aspect that hasn't been considered is the impact of the market for fake NHL jerseys on this. For the purpose of this example, let's say Bell is willing to pay a few million dollars a year to put their logo as a shoulder patch on the Montreal Canadiens jerseys. Yes it would bring them additional exposure but it also means that you would have dozens of unlicensed factories in China replicating the Bell logo. A quick look on the Bell website led me a document with many rules on how the Bell logo can be used, a specific CMYK colour and so on. If you're Bell or any other large corporation that is generally picky about the use of your logo, do you really want your logo replicated like that in the wrong font and colour? Do you want thousands of fans walking around with a Montreal Canadiens jersey with your logo on the shoulder in the wrong colour? I highly doubt it.
So with all that said, yes the idea of generating additional revenues is certainly appealing for the NHL but I don't think all teams would agree to this and I think it would be very difficult to find sponsors willing to put their logos on the jerseys. The idea will likely be tested on the World Cup jerseys in 2016 but I have a feeling that it won't go much further than that.
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