The NBA, the famous American basketball league, has just started, on October 19, the 77th season in its history. Since its creation in 1946, the league’s revenue has continued to grow and during the 2021-22 season reached the symbolic bar of ten billion dollars in revenue. Focus on the commercial and financial activity of one of the most powerful sports leagues on the planet.
NBA: returns after the health crisis
The health crisis caused the end of the 2019-20 season, the NBA’s financial results were negatively affected, as revenues decreased by almost one billion dollars, from $8.8 billion in 2019 to $7.9 billion in 2018. The Aftermath of the COVID-19 Crisis continued and negatively impacted fiscal year 2021: $6.4 billion generated, down nearly 30% compared to 2019.
Two consecutive years of decline erased with a wave of the hand of the historical balance, which will be established in 2022, when the ten billion dollars of annual income will be crossed. The NBA has quadrupled its revenue since 2001 ($2.5 billion) and tripled since 2012 ($3.7 billion).
Also read: Ranking of Ligue 1 club budgets for the 2022–2023 season
Where does NBA revenue come from?
The NBA bases its revenue on three pillars:
- TV rights;
- sponsorship agreements;
Since 1992, and the arrival of Dream Team at the Barcelona Olympics, the NBA kept reiterating its desire to internationalize. Thirty years later, the bet has paid off as the games are broadcast worldwide, via specialized channels, but also thanks to their own offering: NBA League Pass. International broadcast resources that come on top of the colossal sums US channels spend to acquire NBA TV rights in the US. A nine-year, $24 billion deal was signed in 2014 with the TNT, ABC and ESPN channels, which earned nearly $2.1 billion in revenue per year. season. The contract expires soon, it must be renegotiated in the coming months, and according to several specialists, the amount could be around 75 billion dollars.
In addition to television rights, the NBA continues to develop partnerships with the biggest brands in the world. Sponsorship revenue has tripled since 2010, from $536 million to $1.6 billion this year. The main reason for this growth? The contract, signed with Nike in 2015, provides the opportunity to generate one billion dollars over the last eight years. After becoming the main supplier of the teams, the league would have generated almost 200 million dollars by the year 2021, all thanks to this little comma sewn on every garment of the thirty teams in the league.
In 2017, the NBA allowed sponsors to appear on NBA jerseys and concourses to adopt a strategy of naming. Decisions that also partially explain the rapid growth in income related to sponsorship/merchandising.
Thanks to this historic year, the NBA is now the second highest-grossing American league, trailing the NFL (American football) at $18.7 billion, but just ahead of the MLB (baseball) at $9.6 billion. The NHL (ice hockey) ranks 4th at $5.7 billion, well ahead of the MLS (soccer) at $1.2 billion.
Also read: the increasingly crazy budgets of American football stadiums
NBA: Which franchises are the most profitable?
Thirty teams compete for the NBA title each year. If sports performance is the tip of the iceberg, the financial performance of each franchise is among the biggest concerns of each owner. According to Forbes, the average value of an NBA franchise is $2.4 billion, a 13% increase over the previous year. In 2001, this figure was estimated at $200 million. In 20 years, the average value of an NBA franchise has increased 12 times.
If we talk about average value, it is because each franchise is not valued in the same way. Several factors affect the value and profitability of a franchise:
- Location: a franchise located in a big city will be more attractive as the population pool is larger and therefore likely to attract more viewers, local viewers, tourists. The most glaring example: New York, which despite mediocre sports results in recent years remains the most profitable franchise (see below).
- Sporting success: Long-term sporting success allows the franchise to have greater media exposure.
- The emergence of a superstar: the individual sporting success of a person can allow his franchise to enjoy greater media coverage
However, the last two factors mentioned are of minor importance compared to the first, as shown in the Top 10 of the most valued franchises:
- New York Knicks – $5.8 billion
- Golden State Warriors – $5.6 billion
- Los Angeles Lakers – $5.5 billion
- Chicago Bulls – $3.65 billion
- Boston Celtics – $3.55 billion
- Los Angeles Clippers – $3.3 billion
- Brooklyn Nets – $3.2 billion
- Houston Rockets – $2.75 billion
- Dallas Mavericks – $2.7 billion
- Toronto Raptors – $2.47 billion
Eight cities are represented in this ranking: they are all among the fifteen most densely populated cities in North America, proof of the importance of the city where the franchise is located. Conversely, the Memphis Grizzlies, Minnesota Timberwolves and New Orleans Pelicans are the franchises with the lowest valuations, estimated at less than $1.5 billion. These cities, considered secondary on the scale of the continent, suffer from their location: the population there is smaller and the income is consequently also linked to the three criteria described above.
Read also: Ranking of the budgets for the clubs in the Top 14 season 2022-2023