In a move that could end up revolutionizing the sport business world, the NBA green lighted jersey sponsorship as a way for teams to produce additional revenue. As part of the agreement, teams are allowed to have a small patch with the company’s logo on the shoulder of the jersey. The Warriors are one of 16 teams to have a jersey patch after they reached a deal with Rakuten.
Rakuten (pronounced Rack-ten) is a Japanese tech company that may be unfamiliar to many American sports fans, but the company established its American headquarters in the Bay Area in 2015. The Warriors provided a brief bio of the company in a press release announcing the partnership.
Founded in 1997 in Tokyo, Japan, as the world’s first successful merchant-focused e-commerce marketplace, Rakuten now encompasses over 70 businesses spanning e-commerce, digital content, communications and fintech that reach more than 1 billion members around the globe. Since 2012, Rakuten has been ranked in the top 30 of Forbes Magazine’s annual ‘World’s Most Innovative Companies’ list. In line with its growing investment in the United States and its vision for global innovation, Rakuten established its Americas regional headquarters in the San Francisco Bay Area in 2015.
The partnership ranges beyond the jersey patches fans see on the court as the Warriors will be highlighting a number of Rakuten’s products and services during the lifetime of the agreement. The Warriors explained the products the team would be highlighting throughout the season.
As part of the partnership agreement, Rakuten will also become the Official E-Commerce Partner, Official Video-On-Demand Partner and Official Affiliate Marketing Partner of the Warriors. In addition, Rakuten Group company Ebates, a leading membership-based online cash-back site in the U.S., will become the Warriors Official Shopping Rewards Partner, the global mobile voice messaging service Rakuten Viber will become the Official Instant Messaging and Calling App Partner and the Rakuten Kobo eReaders will become the Official E-Reader Partner of the Warriors.
Why are the Warriors and other teams risking cluttering jerseys with logos? It is proving to be financially lucrative as Darren Rovell reported the Rakuten deal is a three-year, $60 million agreement. To put the deal in perspective, Draymond Green’s salary is $16.4 million for the 2017-18 season. On a per year basis, the Rakuten deal pays for Green’s salary with an additional $3.6 million left over.
The jersey patch partnerships is part of the NBA’s three-year pilot program. If there is major pushback from fans, the NBA can pull the plug on the program, and teams would no longer be able to put patches on jerseys. Given the early results of how much money these deals are bringing in for teams, the NBA appears to be entering a new frontier when it comes to sponsorship activation, and it seems likely the patches will become a permanent part of the league after the three years of testing is complete.
Given the Warriors proximity to Silicon Valley, it makes sense for Golden State to partner with a global tech company. Several Warriors players have business interests in the tech industry, including Kevin Durant and Andre Iguodala. Over the off-season, Durant invested in a cloud computing startup known as Rubrik.