GE hopes alliance with Celtics will underscore corporate reinvention

The Celtics and GE unveiled their new logo partnership on Wednesday morning. GE and the Celtics

Boston Celtics co-owner Steve Pagliuca knew General Electric chief executive Jeff Immelt wanted to use the company’s move to Boston as a way to help change its image and to boost its global profile as a digital industrial giant.

So Pagliuca approached Immelt, an old friend from his Harvard Business School days, almost immediately after GE arrived in August with a proposition: Sign up as the Celtics’ first jersey sponsor, and also become a tech partner with the team, to take advantage of a new NBA rule allowing corporate logos on uniforms.

The concept was unusual for GE. But Immelt was intrigued and passed the concept along to a couple of his top lieutenants.

Executives at both organizations unveiled the results of the ensuing negotiations at a press conference Wednesday: a small, circular GE logo that will go on Celtics jerseys, starting with the 2017-2018 season and continuing for at least two more. The partnership also makes GE the Celtics’ official data analytics partner.

The multimillion-dollar arrangement represents pocket change for a company that had $124 billion in revenue last year. But it could benefit GE in a number of ways.

First, the move is an efficient way of interlocking GE’s brand with Boston. It broadcasts GE’s arrival in a place Immelt picked as his new home because of the city’s innovation ecosystem. And it communicates to GE’s new hometown the kind of outsized role the company wants to play here.

“The Celtics are classic Boston, they’re iconic Boston to some extent,” said Matthew Katz, a sports management professor at the University of Massachusetts Amherst Isenberg School of Management. “It’s definitely an attempt to build that association between GE and the history and culture of Boston.”

But this isn’t just about Boston. Storied NBA teams such as the Celtics have become global brands, offering international exposure for companies that attach themselves to the teams. Rich Gotham, the team’s president, called attention to the potential overseas exposure, saying, “We have 5 million people watching a Wednesday night game, live-streaming a game in China, where GE happens to do business.”

That worldwide stage is one of the reasons mutual fund manager Putnam Investments became a Celtics sponsor two years ago, with its name emblazoned on the famed parquet floor. “This is a brand that has traveled and done well for us,” said Mark McKenna, Putnam’s head of global marketing.

The GE-Celtics partnership also underscores GE’s increased emphasis on digital technology and data analysis. The company, long associated with washing machines and light bulbs, has been reinventing itself as a company that builds digitally-connected industrial products and the software that helps make them more efficient. That drive toward efficiency translates in an athletic arena.

“Sports is about performance,” said Linda Boff, GE’s chief marketing officer. “It’s about optimization. That’s kind of what we think about when we think about being a digital industrial company.”

With that change in strategy, GE is serving more corporate customers and fewer consumers. Boff said the logo’s visibility will help GE keep its image in front of the broader public. A prominent brand helps GE recruit workers and connect with the communities where it operates.

The team will also benefit. The deal brings new money, of course, although both sides declined to say what GE would pay the Celtics. Revenue from these agreements is split among the Celtics, other NBA teams, and the players.

GE will also work with the Celtics to analyze data across the organization, such as on-court strategies and business programs. In particular, Gotham said, he is interested in ways GE can crunch health-related data to better prevent injuries: “Nothing means more to wins and losses on the court than player availability.”

Additionally, GE will play a role in shaping the Celtics’ upcoming practice facility, which is expected to open in 2018 in Brighton. GE technology, such as energy-efficient lighting and medical equipment, will be integrated into the facility.

The Celtics-GE partnership became possible after the NBA last year launched a three-year pilot program allowing small sponsorship logos near the players’ left shoulders starting in the 2017-2018 season. Jersey advertisements, a major revenue driver in European soccer, are used by Major League Soccer and WNBA teams in the United States.

But the NBA is the first of the four major US sports leagues to let teams sell jersey space, and this could test fans’ appetite for advertisements.

“You’ll hear a lot of people bringing up [legendary Celtics coach] Red Auerbach and what Red Auerbach is doing in his grave because of this,” said Katz, the UMass Amherst professor. “People will make a short-term fuss but I think it will be pretty easy for fans to get over it.”

Pagliuca said Celtics owners had long discussions about how fans would react to a jersey sponsor. Gotham, the team’s president, said the deal provides more money for payroll and equipment. But more importantly, he said, the players now have GE’s brainpower on their side.

Pagliuca invoked Red Auerbach to defend the decision, saying Auerbach once told team executives that “the number one thing you guys ought to do is win.” Pagliuca added, “And this is going to make the team more competitive.”

While the Celtics are just the third team to sign up a jersey sponsor so far, they probably won’t be the last. The Philadelphia 76ers have an agreement with StubHub, while the Sacramento Kings uniforms will feature Blue Diamond Almonds next season.

Pagliuca said he expects other teams are taking their time to sign up sponsors because they are considering multiple options. GE was the only potential sponsor the Celtics pursued for the jersey spot, enabling the team to get a deal done more quickly.

Katz said he expect the Celtics-GE deal could prompt other teams to take the big step.

“I wonder if the salespeople at the [Miami] Heat can go to their ownership and say, ‘This is what the Celtics did,’ ” Katz said. “I think there needed to be a major market benchmark set.”