U.S. Markets closed

As Finals Near, Here's How Stocks Sponsoring the NBA Performed This Season

Benjamin Rains
1 / 5

Stock Market News For Nov 16, 2018

Wall Street finished in the green reversing its five-day negative trend on Thursday following news that United States and China have ramped up their efforts to resolve lingering trade disputes

The NBA Finals begin Thursday night, with two of the league’s biggest stars, LeBron James and Steph Curry, set to face off for the NBA title. But while many will look at how the Cleveland Cavaliers and Golden State Warriors played up to this point, it’s also a great time to check out how some of the NBA’s biggest sponsors performed during the season.

Sports Apparel

The common thought among many investors is that Curry’s star power hasn’t helped Under Armour UAA stock much over the last year, as it tries to adjust to life as a much bigger company. Curry’s direct impact is debatable, but the company’s stock price has performed rather well since the start of the 2017-18 NBA season in mid-October.

Let’s take a look at how it has stacked up against the NBA’s official jersey sponsor and basketball shoe juggernaut, Nike NKE, as well as Adidas ADDYY.

 

Investors will see that despite some of the recent love thrown Adidas’ way, both Nike and Under Armour stock have greatly outperformed the German sports apparel powerhouse since the start of the NBA season. Clearly, there are many other factors impacting these stocks aside from the exposure that the NBA provides, but it is a fun exercise nonetheless.

Jersey Sponsors  

Nike, which became the official jersey sponsor of the NBA this season, greatly outpaced its two closest rivals. With that said, this season also marked the first time the NBA allowed jersey sponsorship patches. In total, 21 out of the 30 teams played with a patch during the first season, with companies paying an average of $6.5 million per year to place their logo on a team’s jersey—worn by both the players and fans.

The inaugural jersey patch season saw some major publicly traded companies join in on the NBA’s growing business. This list includes General Electric GE, Disney DIS, Harley-Davidson HOG, Western Union WU, Fitbit FIT, Lending Tree TREE, Sun Life SLF, Ultimate Software ULTI, and Goodyear GT.

Clearly, some of the bigger names on the list have all gone through a massively disappointing stretch during their first year as official team jersey sponsors. It’s also worth noting that three out of the four conference finals teams that had a sponsor this year—the Warriors and Japanese electronics firm Rakuten RKUNY; the Cavaliers and Goodyear; and the Boston Celtics and GE—all saw their stocks prices fall over 25% since the start of the season.

But don’t be surprised if underperforming companies continue their sponsorships as these investments offer a ton of exposure for a relatively small amount of marketing dollars. This becomes even more likely when looking at the NBA’s television ratings, which saw an 8% surge across the league’s four TV-network partners, Disney’s ABC and ESPN, Turner’s TWX TNT, and NBA TV.

TV Partners

Investors might remember that the NBA is currently benefiting hugely from its nine-year, $24 billion rights deal with ESPN and Turner that runs through the '24-25 season. This is significant money even for these entertainment giants, which means it’s worth taking a look at how ESPN parent Disney and Turner owner Time Warner have performed throughout this season.

Biggest Corporate Sponsors

Lastly, it is worth taking a look at some of the NBA’s overall corporate partners, which not only advertise heavily but also sponsor the league. Three of the league’s biggest corporate partners are American Express Company AXP, Anheuser-Busch InBev BUD, and PepsiCo PEP via Frito-Lay, Mountain Dew, and Gatorade.

Obviously, all of the companies touched on throughout this article have much larger priorities beyond their affiliation with the NBA. Therefore, none of this stock price movement is a direct reflection on the NBA’s growing business, which saw its overall sponsor revenue surge 31% to $1.12 billion—placing it not too far behind the NFL.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Time Warner Inc. (TWX) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Anheuser-Busch InBev SA/NV (BUD) : Free Stock Analysis Report
 
Pepsico, Inc. (PEP) : Free Stock Analysis Report
 
The Ultimate Software Group, Inc. (ULTI) : Free Stock Analysis Report
 
General Electric Company (GE) : Free Stock Analysis Report
 
Fitbit, Inc. (FIT) : Free Stock Analysis Report
 
LendingTree, Inc. (TREE) : Free Stock Analysis Report
 
American Express Company (AXP) : Free Stock Analysis Report
 
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
 
The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Adidas AG (ADDYY) : Free Stock Analysis Report
 
Under Armour, Inc. (UAA) : Free Stock Analysis Report
 
The Western Union Company (WU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research