The Sounders are offering sponsors not only the jersey, but soccer pitch advertising rights at CenturyLink Field and – for the first time -- naming rights at the Starfire training facility in Tukwila.
Inside sports business
The news seemed to come out of nowhere: the Sounders last week announcing they’d hired the prestigious WME-IMG talent firm to help search for a naming-rights partner a full year-plus before their current deal with Microsoft Xbox expires.
But anybody following the story about NBA teams preparing to sew advertisement patches on their jerseys for the 2017-18 season might understand the Sounders’ eagerness to explore the market. At least 10 NBA teams are going the patch route and the companies involved and numbers being generated have grabbed the Sounders’ attention.
The NBA finalist Cleveland Cavaliers in May signed a three-year deal worth a reported $10 million annually with Goodyear. That’s to sew one 2.5-inch-by-2.5-inch patch on the upper left of the team’s jerseys as part of the NBA’s new three-year pilot project allowing clubs to test such revenue streams.
Now, imagine what that could mean for the defending Major League Soccer champion Sounders, who’ve allowed the Xbox logo to be splattered across their entire jersey front going on nearly a decade. And they are offering sponsors not only the jersey, but soccer pitch advertising rights at CenturyLink Field and – for the first time – naming rights at the Starfire training facility in Tukwila.
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“That was kind of eye-opening,’’ Sounders majority owner Adrian Hanauer said of the NBA patches. “To see some of the numbers being generated by those deals made us believe we have some significant upside for our rights.’’
WME-IMG was hired to seek patch deals for the Atlanta Hawks, Boston Celtics and Los Angeles Lakers. The Celtics have signed a three-year deal with GE for a reported $7 million annually.
Those numbers may seem paltry in the big-money NBA world, but they can fund an MLS team’s entire annual payroll.
The Sounders get about $5 million annually for their Xbox jersey deal. But Toronto FC, New York City FC, the Los Angeles Galaxy and the incoming Los Angeles FC expansion franchise have deals approaching $6 million and $7 million.
“There are teams in our league that are getting more than we are,’’ Sounders chief operating officer Bart Wiley said.
Wiley added that Microsoft Xbox has been a fantastic partner, willing to pay for rights back when the team had few concrete viewer and attendance figures to support them. But a decade later, he adds, the team now has plenty of numbers it feels justifies seeking higher amounts.
“The league is different and the landscape is different,’’ he said.
The Sounders have partnered with Microsoft Xbox since their inception in 2009. Since then, they’ve grown from a $30 million expansion franchise to a squad Forbes estimated last September as worth an MLS-best $248 million.
Wiley said the team was attracted as much by the iconic brands WME-IMG and other firms were lining up for NBA patch deals as anything else. Disney, StubHub and Western Union have joined GE and Goodyear in inking patch contracts.
The question is whether the Sounders can approach what NBA teams are commanding.
While MLS national television audience numbers are dwarfed by what the NBA generates, the Sounders in local TV typically average ratings higher than two-thirds of NBA teams. Also, with the Sounders averaging more than 40,000 fans per home game, they certainly put local eyeballs on jersey advertisements both in-person and on local TV.
Nationally, that isn’t as much the case. The Sounders do get on national TV often, generating 500,000-plus viewers for bigger games. But the NBA champion Golden State Warriors are frequently showcased on national TV as well and can draw 10 times that viewer amount.
ESPN’s Darren Rovell reported the Warriors are seeking $15 million-to-$20 million annually for advertising patches.
So, how the Sounders might fare is open to debate.
Hanauer wouldn’t rule out sticking with Microsoft Xbox after the current deal expires following 2018. Last October, Hanuaer and Xbox were giddy about the “brand activation’’ approach their partnership had taken, coinciding with a Gears of War 4-themed day at CenturyLink Field where Sounders players dressed as video-game characters and posed for photos with fans.
“Those are the folks going to the Sounders games in the stadium, that are watching the games on TV,’’ Aaron Greenberg, head of Xbox game marketing for Microsoft, told me at the time about his company’s video-gamer clients. “And so, to be able to pay a hot team like the Sounders and be able to associate it with a No. 1 type of video game right now … is just great timing.’’
Nearly a year later, timing may be pointing the team elsewhere. Hanauer says his Sounders “owe it to ourselves’’ to test the market.
“Given the assets that we control, we have very few opportunities to have game-changing moments financially for us,’’ he said. “We don’t have our own stadium. We haven’t been able to generate a giant local TV deal to date. And so, the front of the jersey and some of those associated assets — like our training facility — are a giant piece of the puzzle that we need to optimize.’’
The Sounders opened the season seventh in total MLS payroll compensation at $10.3 million — down three spots from last year according to figures released by the players’ union. Meanwhile, the Toronto FC team the Sounders beat in last year’s MLS Cup final — and the favorite to capture this year’s title — was more than double that at $22.5 million.
So, every extra dollar helps. And the Sounders hope for more of them in their quest to stay on top of their competitors.