New Source of Revenue Coming to MLS in 2020

MLS mirroring the trend in other leagues around the world.


Miami, FL (Wednesday, January 23, 2019) by Kenneth Russo –

Major European leagues have it. The trend has been adopted in North America by the NBA. And now, your local Major League Soccer club will have a new look with the 2020 season.

In an announcement last October 23, 2018, the league approved clubs to add a sponsored sleeve patch on team uniforms. In addition to the sponsor on the front of a kit (jersey), clubs will be able to place a second sponsor on the right sleeve of the game shirt. The league’s badge will remain on the left sleeve, tailored to match the club colours.

The size of the sponsored sleeve patch will replace and be roughly the same size as the existing MLS logo on the right jersey sleeve, which is roughly 2.5 by 2.5 inches (6.35 x 6.35 cm).

The league badge will remain on the left side.

The league will allow clubs to create their own sales strategies. Clubs can also decide whether the sleeve sponsor patch will be sold on shirts sold at retail. There are currently restrictions on some categories, such as alcohol and gambling, but those are under review by the league. There are also restrictions aimed at providing protection for some current league partners. For example, Nike cannot negotiate a sleeve sponsor deal, as the league has an apparel supplier contract with Adidas to supply all uniforms. (see Official Apparel Supplier) Securing a sleeve sponsor is also only available to those clubs that have already secured a primary kit sponsor.

The sleeve sponsor initiative will be for a four-year term to begin with, though given the additional revenue it will generate (Sleeve Sponsorships), I foresee the program being extended.

“The sleeve patch is a premium opportunity for brands to be connected with our League and clubs in mutually beneficial ways,” said Gary Stevenson, president and managing director, MLS Business Ventures. “As our League continues to expand, and with more fans in the U.S. and Canada viewing our matches, attending our games, and engaging on social media, the visibility of the sleeve patches will be substantial.”

Creating space for additional corporate sponsors is a growing trend that has only recently been embraced by some North American sports leagues.

Last season (2017-18), the NBA allowed jersey ads for the first time, and now all but three of the league’s 30 teams have sold the space, driving a wide range of revenue. The defending champion Golden State Warriors have a three-year, $60 million USD deal with Japanese e-commerce giant Rakuten, Inc., also the kit sponsors of FC Barcelona, while the Utah Jazz have a deal with Qualtrics LLC’s cancer charity for $4 million USD per year. The Miami Heat have a sponsor patch deal with Weston, FL based Ultimate Software. Heat partner with Ultimate Software

The basketball league’s 21 patch deals in place last season generated $493 million worth of media awareness, according to valuation firm GumGum Sports. According to Forbes and GumGum Sports, the 2.5 by 2.5-inch patches are generating over $350 million worth of value just through exposure on social media (75 percent of the value), with 25 percent of value coming from TV broadcasts.. The only other signage in the NBA that generates that much revenue is the Nike logo stitched on NBA jerseys.

Many sponsorship deals for the NBA patches started as low as $5 million over three years, yielding a return on investment of 70 percent for the sponsors. Others have paid between $20–60 million for these sponsorship spaces and still see an ROI of over 5 percent. In contrast, the NFL, NHL, and MLB have all resisted the trend, thus far.


Related:

Bloomberg article – 2018-10-24/major-league-soccer-lets-teams-sell-more-ad-space-on-jerseys

Juventus, Adidas Renew Kit Supplier Contract For 6 Years

Miami, FL (Saturday, January 5, 2019, by Kenneth Russo)

The first week of the new year sees the leaders of Serie A, Juventus, reaching a six-year extension of their contract with Adidas. The German company will now continue to supply kits and merchandise for Juve until 2027. The contract extension is worth $58 million USD per year. The new agreement begins at the start of the 2019-2020 season.

The Serie A champions’ previous six-year agreement with the kit supplier was set to expire in 2021. Under terms of the contract extension, Adidas will pay Juventus $464 million USD over the course of the next eight seasons. Adidas will also be the technical partner of the club’s youth side. Other terms and conditions of the existing contract remain unchanged.

Juventus have made a concerted effort to increase their marketability, highlighted by signing last summer of global superstar Cristiano Ronaldo for a fee of €100 million ($114 million USD). They also had a special shirt featured (see cover photo) in this year’s edition of the EA Sports series, FIFA 19.

Juventus releases a statement about this new deal with Adidas: “During this period, Adidas will be the technical partner of all Juventus teams for a minimum fixed consideration of €408 million. The consideration does not include additional royalty payments upon exceeding a threshold of sales and sports performance bonuses.”

The club news release added: “With respect to the excellent performance of the commercial partnership and to the increased visibility of the Juventus brand in 2018, Adidas recognised an additional bonus of €15 million for 2018, which will be paid prior to 31 December 2018.”

In a separate agreement, Adidas will also grant Juventus a $17 million USD bonus as a result of the club’s successful 2018 season, in which the Torino based club won Italian soccer’s Scudetto for a seventh consecutive year.

It’s been another stellar season thus far for La Vecchia Dama. They sit nine points clear of rivals Napoli and are favourites to win an eighth consecutive Scudetto. Massimiliano Allegri’s side have only having dropped four points in the first half of the season.