Crypto deals help drive NBA sponsorship money to $1.6 billion

In this photo illustration, the Coinbase logo is displayed on a smartphone with the NBA logo in the background.

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Cryptocurrency firms helped drive NBA sponsorship revenue to a record $1.6 billion in the 2021-22 season, according to estimates by IEG, a sports association advisory firm.

That’s 13% more than the $1.4 billion in the 2020-21 season. During the 2018-2019 season, the National Basketball Association raised $1.2 billion in sponsorship contracts. Sponsorship deals can include deals for stadium naming rights and for companies to put their names or logos on players’ jerseys.

“The wave of crypto-class sponsorships is unlike anything we’ve seen before,” said Peter Latz, global general manager at IEG.

Crypto partnerships are now the second most profitable sponsorship category in the NBA, after the technology category alone. Among the cryptocurrency deals in the NBA this season was the league’s deal with crypto exchange Coinbase. CNBC reported that the deal was worth $192 million over four years.

According to IEG, other categories of the NBA are expected to pay more than $100 million annually that include banking, telecommunications and commodities. Companies that spend at least $50 million include Anheuser-Busch, Pepsi, and AT&T.

Among the four major sports leagues, the NBA ranks third in sponsorship revenue. The NFL ranked first with nearly $2 billion in sponsorship deals for the 2021 season, according to IEG. And in March, CNBC reported that MLB earned $1.7 billion in endorsements last season. The NHL received $676 million in sponsorships for the 2020-21 season.

The IEG predictions come as the NBA Finals kick off Thursday, when the Golden State Warriors host the Boston Celtics for Game 1 at Chase Center.

On the team front, the Los Angeles Lakers have agreed to a 20-year, $700 million deal for arena naming rights with platform Crypto.com. The Warriors signed a $10 million global rights deal with FTX, a crypto derivatives exchange. The company has also secured the arena naming rights for the Miami Heat.

0 Boston Celtics’ Jason Tatum heads to the basket during the game against the Golden State Warriors on March 16, 2022 at Chase Center in San Francisco, California.

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Advertisements for NBA jerseys are increasing

Another category that contributes to the NBA’s bottom line: ads on players’ shirts.

The NBA is expected to bring in more than $200 million this season from jersey patch deals. It includes Brooklyn Nets safety $30 million a season from brokerage platform Webull in September 2021. The deal led the NBA at the time, but the Warriors took first place earlier this month when they renewed their deal with Japanese e-commerce company Rakuten.

The terms of this agreement have not been made public. But league sources told CNBC that Rakuten will pay the Warriors more than $40 million annually. That’s more than $20 million for the previous deal.

The people spoke to CNBC on condition of anonymity because they cannot discuss the team’s deals publicly.

Jersey’s sponsorship in professional leagues has grown over the past year. The NHL, for example, has added patches to uniforms and helmets during the pandemic. MLB approved the team’s uniform corrections in its new player contract in March of this year. The NFL does not allow patches on uniforms.

Increased revenue from uniforms ads and other sponsorship deals could help the NBA reach its expected $10 billion total revenue this season. NBA commissioner Adam Silver said total revenue for the 2020-21 season was down about 35% from the previous year after the pandemic reduced the season to just 72 games. Revenue for the 2019-20 season, also partly affected by the pandemic, was $8.3 billion, compared to $8.8 billion in 2018-2019.

League sponsorship revenue is expected to continue to grow.

The league’s data rights deal with Swiss company Sportradar, valued at $1 billion, begins the 2023-24 season. The NBA television contract also expires after the 2024-25 season and sports executives expect it to exceed its current value of $24 billion, or roughly $2 billion per season. The NBA also has a merchandise deal with e-commerce powerhouse Fanatics and a deal with Dapper Labs, the creator of NBA Top Shot NFTs.

In league agreements, companies also agree to buy ads for NBA games.

For 2021-22 regular season games, domestic ad spend for NBA games was $470.7 million, according to media tracking company iSpot.

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