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Philadelphia 76ers & Ebay's (EBAY) StubHub Make History: Ads Officially on Jerseys

Ebay Inc. (EBAY) subsidiary and ticket marketplace StubHub and the Philadelphia 76ers reached an agreement making the NBA franchise the first team in the four major U.S. sports to sell advertisements on their jerseys.

The 76ers announced Monday morning that StubHub will have its logo on the team's jerseys beginning in the 2017-18 season, when the NBA's three-year pilot program will start.

ESPN’s Darren Rovell today reported the following: “Sources with knowledge of the deal say the team has sold all three seasons at $5 million a year, with the option to extend the contract with StubHub should the league continue to allow the 2½-by-2½-inch logo patch to be on the jerseys in the future.”

“This marks another groundbreaking first for the Philadelphia 76ers and StubHub.  Our brands are now inextricably linked as we create lifelong memories for our fans in Philadelphia and around the world,” said Philadelphia 76ers CEO Scott O’Neil. “Our partnership with StubHub continues to generate progressive and forward-thinking platforms created to improve the fan experience and advance our industry.” 

NBA teams are allowed to have advertisements from any company excluding those involved in gambling, alcohol or politics. The NBA has given protected status to a number of its national partners. This means that the companies' competitors cannot show up on a team jersey.

Therefore, competitors of the league’s media, apparel, and on-court partners – Disney (DIS) subsidiaries ESPN and ABC, Time Warner (TWX) division Turner Broadcasting System, Nike (NKE) starting in 2017-18, Tissot, and Spalding – cannot strike deals with NBA teams to have their products advertised.

“This is strategic beachhead property for us,” StubHub CEO Scott Cutler said. “We, as a company, have been very transaction-oriented. We want to be more a part of the emotional experience fans have with their teams, and we think a deal like this gets us closer,” per ESPN.

According to Rovell, the money generated by selling sponsorships on jerseys will be divided in the following manner: one half will go to the NBA teams with one portion going to an individual team and the other portion going to a revenue sharing pool. The half that does not go to the franchises will be split amongst the players and will contribute to a rising salary cap.

NBA jerseys sold to fans nationwide will not have the corporate sponsor logo on them, but O'Neil said the 76ers do plan to sell jerseys with a StubHub logo. “We have a very strong opinion that little Scottie, [a hypothetical fan] who is 9 years old, will want to wear what the players are wearing on the court,” O'Neil said.

Ebay Inc. has a Zacks Rank #3 (Hold) and the news of this monumental partnership has had little effect on the company’s stock as EBAY is down only less than 1% on the day.

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