The NHL's New $100 Million Advertising Program

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Hey friends,

The National Hockey League plans to add advertisements on the front of team jerseys for the first time starting in the 2022-23 season, according to Sportico.

After finding out that most teams supported jersey advertisements earlier this year via a league-wide survey, the NHL’s board of governors formally voted and approved the program earlier this month.

The logo placement will be left up to individual teams — most teams have centered logos, but the Rangers have diagonal lettering — and with the rectangular patch being 3-inch-by-3.5-inch in size, the patches will be slightly larger than the NBA’s 2.5-by-2.5-inch logo.

As for timing, the NHL has instructed teams that they are free to start negotiating with potential partners for the 2022-23 season.

Judging by the general sentiment on Twitter, most hockey fans appear to be upset about this. Corporate advertisements are prevalent across professional sports leagues & teams in Europe, but NFL, NBA, MLB, and NHL jerseys have long been considered sacred here in the United States.

I don’t think most NHL fans are against the league making money, but they seem to be more worried that the league is heading in this direction.

That’s an extreme example, obviously, and I would actually make the argument that this isn’t as big of a deal as some NHL fans might think it is.

Sure, it’ll take a little time to get used to seeing a 3-inch-by-3.5-inch corporate logo on the jersey, but the NHL already added helmet sponsorships last year. How many people did that bother? Better yet, did you even notice it?

The reality is that people were just as upset about that, but the logos were barely noticeable and generated about $100 million in revenue for the league. Remember, the NHL has a salary cap that is tied to revenue.

That means that an additional $100 million in cash flow is instrumental to team finances, player income, and the overall competitiveness of the sport, especially when you consider that COVID-19 caused league-wide revenue to drop for the first time since 2012.

After watching the NBA institute their jersey patch program in 2017 and quickly scale up to $150 million in annual revenue — the average NBA team brings in $5 million annually from their jersey patch sponsorship — other leagues took notice.

Now, almost every major professional sports league in the United States either has an apparel sponsorship program in place or is actively discussing the implementation.

It’s important to keep in mind that the NHL has three main revenue streams:

• Media Rights

• Tickets & Merchandise

• Sponsorships

The problem is that media rights and tickets & merchandise are essentially fixed due to the long-term contracts, the price sensitivity of fans, and arena capacity requirements. That leaves sponsorships as the last remaining variable for the league to exploit through creativity.

If the NHL can pocket another $100 million annually, similar to the helmet decals they introduced last season, that’s $200 million in total sponsorship revenue added, which would represent a ~5% increase in league-wide revenue. That’s certainly substantial, but the key for fans will be making sure the NHL doesn’t go much further than that.

Have a great day, and I’ll talk to everyone tomorrow.

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