Is There Room for Sports to Get Even More Commercialized?

Sports fans know as well as anyone that marketing, like nature, abhors a vacuum. On practically every previously unmarked surface in stadiums and arenas—floors, walls, fences, scoreboards—corporate sponsors have planted their flags.

So it was only natural that one of the last unclaimed surfaces in a major U.S. sports league recently made way for an advertisement. Last month, for the price of $5 million, the Philadelphia 76ers agreed to place a small patch with StubHub’s logo on its jerseys, an inch or two above the hearts of each its players.

As the first team to broker such a deal, the Sixers got some good publicity for their marketing savvy, but other teams are likely not far behind. “I probably think there's another five or six deals, if they're not done, they just haven't been announced, or they're very close to being announced,” says Bill Sutton, a professor of sport and entertainment management at the University of South Florida’s Muma College of Business.

Sutton has long been expecting on-jersey advertisements in the NFL, the NBA, the MLB, and the NHL. In one of the Powerpoint decks he uses for lectures, he has for years been including crudely photoshopped images of athletes such as Derek Jeter and LeBron James wearing logo-bedecked jerseys, in order to give students a glimpse of the future. For the NBA, Sutton says, “It'll be unanimous pretty quickly—don't worry about that. And then it'll change probably within three years to the whole jersey.” He thinks the NHL will be next.

When it comes to corporate sponsorships, what will American sports look like in three years? What about 10? What surfaces will be left? An understanding of why advertising in some sports—consider Nascar drivers’ jackets, busy with sponsors—has come to look so different from that in others can provide a useful way of thinking about what’s to come.

Even if advertisements have asserted themselves more and more strongly in sports over the years, games a century ago were hardly some noncommercial Eden. After all, Major League Baseball’s second-oldest stadium, Wrigley Field, is named for a chewing-gum company. The first corporate signage in stadiums appeared in the late 1800s, and two of baseball’s biggest early sponsors established themselves about a century ago. In 1907, Coca-Cola signed the legendary hitter Ty Cobb as a celebrity spokesperson—“Coca-Cola between the games refreshes me to such an extent that I can start the second game feeling as if I had not been exercising at all, in spite of my exertions in the first,” one ad quoted him as saying, a bit clumsily—and Detroit’s Chalmers Motor Company started giving a car each year to the league’s MVP around that time.

Sponsorships came into their own as communications technologies evolved, and in 1922, AT&T became the first corporate sponsor of a game broadcast on the radio. “When games began being broadcast on radio and then TV, then the opportunity for sponsorships took off,” says Kirk Wakefield, a professor of retail marketing at Baylor University.

“Today,” Wakefield adds, “the media deals are one of the primary sources of revenue for sports properties, with the broadcast companies and the properties selling ad time to sponsors. Without sponsors—‘This game is brought to you by…’—we wouldn’t have games to watch, so it’s funny when anyone complains about sponsorships.” This is how sponsorships proceeded for much of the 20th century: Professional sports leagues needed money, so companies gave it to them, usually in exchange for the occasional commentator shout-out or some stadium signage.

For the leagues, this worked out nicely. But for the companies, the case for sponsorship deals was sometimes harder to make. “Some just liked having the affiliation with sports. They thought it was cool. Others wanted to support the local team, for the sake of the community,” explains Jim Kadlecek, an associate professor of human performance and sport business at the University of Mount Union. One way marketing researchers try to determine the effectiveness of sponsorships is by talking to fans as they make their way out of a stadium, asking them for the names of the brands they remember seeing. “A lot of times, people couldn’t name anything,” Kadlecek says. Worse, he adds, “They’ll say companies that aren’t actually there”—often competitors.

Sponsors weren't pleased with findings like this. Kadlecek remembers attending a sports-marketing conference in the ‘90s, where he heard a talk by an executive at a brewing company. Kadlecek says it was called “But Will It Help Me Sell Beer?” It was a brewery-specific variant of a question that, for whatever reason, few sponsors had been asking.

But once they did, the arrangements they made with teams changed, which was reflected in the preferred terms to describe those arrangements: What were once “sponsorships” became “partnerships.” When negotiating deals with sponsors, teams started figuring out the specific marketing goals of each client. Few of the old marketing tactics disappeared, but teams felt more pressure to offer new, more effective ones. The most pressing question companies now had for teams was, in Kadlecek’s words, “How can we be part of the game, and not just a static sign on the scoreboard?"

Over the years, even well before the ‘90s, marketers have found creative ways to answer that question. Sometimes directly: Decades ago, the name of the cigarette company Chesterfield used to be printed on the scoreboard at Brooklyn’s Ebbets Field, and the H and the E in “Chesterfield” would light up after a hit and an error, respectively. And for years, advertisers have sponsored contests or games during timeouts or breaks between innings to embed their name in the action, as well as bought naming rights to stadiums. The latter, while relatively expensive, is considered highly effective, because stadium names make their way into press coverage and everyday conversations.

One clever (and presumably lower-priced) deal that captured the spirit of selling off a stadium’s naming rights was when, for a time, the Chicago White Sox bumped the starting time of their weeknight home games, 7:07, back four minutes at the behest of a sponsor. At the time, 7-Eleven’s spokesperson told ESPN, “Every time the media announces the game's start time it will be a gentle reminder of our sponsorship.”

Another way for companies to draw attention is to get their names onto players’ jerseys—a commercial incursion that some leagues have felt economically compelled to oblige more than others. The piece de resistance of jersey sponsorship in American sports is Nascar jackets, many of which are plastered with an overwhelming number of logos. Kadlecek points to Nascar sponsorship as an example of effective advertising. “How many people get really excited to go out and buy Tide detergent?” he asks, adding, “But when Tide detergent is a sponsor on my favorite driver's car, then that's the only thing I buy.”

Kadlecek says that marketing research suggests that Nascar fans are unusually loyal to the sponsors on their favorite drivers’ jackets. He mentions research indicating that they prefer those brands’ products even to ones that they are told are cheaper and demonstrably superior. Perhaps one of the best illustrations of the effectiveness of Nascar sponsorships is the way fans dress themselves. “If you go to a Nascar event, the people are sponsoring the sponsors,” says Kadlecek. “They walk around in jackets that are like the cars, in their Tide jacket or their Pepsi, GoDaddy, whatever it is.”

If jersey sponsorships in Nascar have been so effective, why is one of the U.S.’s four major sports leagues only just now beginning to follow suit? There is of course the theory that, even if sports are a business, leagues do benefit from promoting the illusion that they are fundamentally about athleticism, not money—and anything puncturing that illusion could upset fans.

But the bigger factor is how leagues bring in money. Nascar’s revenue streams differ quite a bit from those of MLB, the NBA, the NFL, and the NHL. In those Big Four leagues, one of the biggest sources of income is the media deals each team signs with broadcasters—on any given autumn Sunday, there are a dozen football games being played in a dozen different cities, and teams have no trouble convincing TV stations to pay good money to show their games. For that reason, no matter how revenue-hungry it may be, the NFL doesn’t feel a ton of pressure to extract more revenue from other things, like sponsorship deals.

In contrast, a Nascar race takes place in a single city, and all the racers (or “teams,” to complete the analogy) are competing at once, so individually they don’t have much of a case to make to TV networks. “Each team has to look at, ‘How do we generate revenue for us, specifically?’ And their main opportunity to do that is going to be signage on their cars,” says Kadlecek. Major League Soccer has made a similar calculation: Because it doesn’t have as large of a fan base to draw on as Big Four sports, it doesn’t generate as lucrative of TV deals, and, sure enough, MLS jerseys feature sponsors prominently.

As Nascar and the MLS (and the league it was patterned on, the English Premier League) demonstrate, the reason jersey sponsorships have been slow to catch on in Big Four sports is not, as one might suspect, that leagues fear their fans will be repelled by increased commercial presence. Instead, Sutton suggests, teams are in the process of sorting out the financial side of jersey sponsorships. In the NBA, for instance, money made from jersey sales counts as what the league calls “Basketball Related Income,” which triggers union provisions that guarantee players a cut; Sutton views the relatively small patches that will start showing up on NBA teams’ jerseys as a test run to see if the space can be sold on every team’s jersey, and how the resulting revenue will be divvied up among players and teams.

While Sutton predicts that fans won’t be bothered by another instance of sponsorship in sports, the true test of jersey advertisements will be when teams with iconic, minimalist uniforms, such as the Lakers or the Celtics, announce sponsorship deals. “Those are the ones that are going to draw attention, because those are the fabric of American sport,” Sutton says, adding, “If there's going to be a large outcry, it's going to be about the New York Yankees.”

So if jerseys will likely make way for sponsors, what will be next? Sutton, who calls jerseys “the last untapped frontier of revenue in U.S. sports,” says that this is the end of the line. “If you put it on the uniform, the only thing left is the skin,” he says. (This is not a cheeky comment: The NBA has actually established the precedent—necessitated by a forehead tattoo planned, but not undertaken, years ago by the Chicago Bulls star Dennis Rodman—that for the purposes of regulation, a player’s skin is part of his uniform.)

Sutton may well be correct that after jerseys, there’s nowhere else to go, and he certainly knows a lot more about sports marketing than I do. But I would be surprised, from what I know about capitalism, if marketers ran out of clever ways to make their way into fans’ lives.

Last month, I wrote about the Philippine Basketball Association, a league whose commercialism makes American sports sponsorships look like they’re stuck back in the era of Ty Cobb and the Chalmers Motor Company. In the PBA, teams are owned by corporations and are used as marketing vehicles for their owners’ products, which leads to some dazzlingly strange team names: Over the years, one franchise has gone by, among other things, the Purefoods Hotdogs, the Purefoods Tender Juicy Hotdogs, and the Purefoods Corned Beef Cowboys.

Given that there is an MLS team named the Red Bulls, I can’t help but wonder if team names represent another “untapped frontier.” Sutton shot that theory down, arguing that in major American sports, there is too much brand equity built up in teams’ names and logos for this to happen. Still, considering that the past century of American sports has seen an expansion of commercial presences that would probably have alarmed previous generations, there is always the possibility that someday, we will all be Corned Beef Cowboys fans.

This article is the first installment in a week-long series about the business of sports.