Why would a multinational conglomerate corporation founded in 1892 be interested in brokering a multi-year partnership with a National Basketball Association franchise, breaking barriers by becoming the third brand to earn a jersey sponsorship? The strategy may be simple -- General Electric (GE) recently moved its headquarters to the region where the basketball team plays its home games.
Earlier today, it was announced that GE signed a deal with the Boston Celtics that will provide GE with real estate on the Celtics' jerseys. As such, GE becomes the third corporation to earn a patch on an NBA team's jerseys at the start of the 2017-18 NBA season. The Philadelphia 76ers were the first franchise to strike a jersey sponsorship deal (with Stubhub), which was followed by the Sacramento Kings reaching an agreement with Blue Diamond Growers.
"As a newcomer to Boston, I see this sponsorship as a way to associate GE with Boston and an iconic representation of Boston," says Sport Management Professor Matthew Katz of the UMass Amherst Isenberg School. "I think it's a great fit for GE in that regard - what better way to build equity in the minds' of Bostononians than to build an association with the beloved Celtics? I find it interesting that a more "traditional" Boston company did not take advantage of the opportunity, but I completely see the strategy on the part of GE."
The Celtics could have waited on securing a jersey sponsorship. As stated, the franchise is only the third in the NBA to broker such a deal to date. However, the opportunity with a company like GE may not have been a possibility in the future, and the organization decided to strike while the iron was hot.
"I think a lot of teams have been waiting," adds Professor Katz. "The 76ers struck their deal pretty quickly, and then it's been pretty slow. The NBA set up a 3-year "trial period" of sorts, and i think a lot of teams are sitting and waiting. I'm not convinced there's any great benefit - the contract period is pretty short because of the mandatory three-year window. There's always a chance that the market dictates higher or lowest costs moving forward, but for such a relatively short window. But going early does allow the team to affect the larger jersey patch marketplace a little more."
Thus, the Celtics may have hedged a bit of risk by agreeing with GE in the early stages of jersey sponsorship signings, but also may not be leaving all that much money on the table (if any at all). The specific price tag is unknown, as the deal is part of a larger multi-year agreement between the Celtics and GE, which also affords GE with benefits such as becoming the team's exclusive Data and Analytics Partner.
Did GE feel threatened at all about a competitor coming in and taking away the jersey patch sponsorship?
"I don't know of any other brands that were in contention for the sponsorship," says Katz. "I thought Dunkin Donuts could have been a fit - they could have really incorporated their "America/Massachusetts runs on Dunkin" campaign well through the Celtics. Imagine a great fast break highlight with a Dunkin Donuts patch on it? "The Celtics run on Dunkin" - I always liked that angle. I have no idea if Dunkin Donuts actually considered such a move, but when I thought of potential sponsors they were the first."