Stacy Danley: How Does the NBA Make So Much Money?
The NBA continues to shine and grow even more since the 1980s. Contributing more to its growth, the league has focused on expanding overseas to China and Europe.
Basketball is, no doubt, among the most popular sports in the world. With its growing viewership, revenue in the NBA has increased dramatically. In fact, during the 2019-20 season, the league, its players, and all of its 30 NBA teams have generated over $8 billion in revenue.
The money-making machine that is the NBA gets funding from numerous sources. Today, Stacy Danley looks at three of these sources.
Ticket Sales, Concessions, and Parking
Ticket sales are not the main revenue stream of the NBA. That said, ticket sales are still important for teams to make money.
The Philadelphia 76ers continually have some of the highest attendance rates in the NBA. In the 2019-20 season, the organization had an average attendance of 20,628 people for home games. The New York Knicks used to have the most expensive tickets in the league; however, the Golden State Warriors now have the highest ticket prices, followed by the Los Angeles Lakers. The Knicks still have some of the most expensive tickets and hold the position of third most expensive tickets in the league, according to Stacy Danley.
While examining the Fan Cost Index (FCI), which is the cost that a family of four has to pay for an NBA game, one can see that fans pay top dollar to watch the games and experience the action. This metric includes the cost of tickets, parking, and concessions. According to Chicago’s Team Sports Marketing, the FCI for an NBA game during the 2019-2020 season was $430.25.
Licensing Agreements and Sponsorships
In 2015, the NBA ended its multiyear partnership with Adidas and signed an eight-year, $1 billion contract with Nike. Stacy Danley said this was a 245% increase from its previous deal.
Nike, which had previously produced replica NBA jerseys, began sponsoring official team uniforms at the start of the 2017-18 season. Before the deal, Nike had played an important role in basketball shoes and apparel. Today, it is estimated that Nike controls 90% of U.S. basketball shoe sales. It’s also important to note that most of the NBA’s biggest stars have endorsement deals with the footwear behemoth.
Over the past 15 years, NBA TV viewership has somewhat declined. Stacy Danley says this decline can be attributed to technological advances such as online streaming services and DVRs. That said, live sports have been more or less immune to this trend. Because of this, networks are paying exorbitant amounts of money to televise games.
In 2014, the NBA announced a nine-year, $24 billion deal for media rights with ESPN and Turner Sports. It is a 180% increase from the previous deal. The deal also increased ESPN’s television, digital, audio, data, highlights, and international NBA rights. NBA games will air on ESPN and TNT through the 2024-25 season, giving fans many reasons to celebrate and the league more funding than ever.
Stacy Danley is the President and CEO of SLD Sports Management Group, a premiere management consulting, sports, and special event marketing and management company specializing in providing quality event management corporate consulting, strategic planning, fund-raising, new business development, sales, and corporate marketing. For more posts from Stacy Danley, visit this site.