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The 5 Key Things To Know About NBA as a Business 

The 5 Key Things To Know About NBA as a Business 

Filed Under: Business

After soccer, basketball is among the world’s largest sports offering excellent NBA picks, and its income speaks for that. In the most competitive year of sports, the 2019-20 season, the 30 teams earned a total revenue of around $ 3.8 billion, only trailing soccer- this was a result of expanding its viewership to Europe and China. 

In addition to views, the teams have additional sources of income, like merchandising, broadcast rights, advertising rights, and concessions. Fans enjoy NBA picks to make money as they watch the matches.

Here is more about business-related income!

Page Contents

  • Television Deals
  • Ticket Sales And Concessions
  • Licensing Agreements And Sponsorships
  • Revenue Sharing
  • International Growth
  • Conclusion 

Television Deals

Although in the last 15 years, social media has taken over the world, live sports continue to be immune to these trends. As a result, television channels are paying unreasonably high amounts of money to air these live games.

A good example is in 2016 when Turner Sports and the NBA signed a contract with ESPN that would run for nine years. The two channels agreed to combine forces and pay a total of 2.4 million every year. Before that, in 2007, both networks paid $ 930 million yearly, representing a financial increase of 180% for the NBA.

Ticket Sales And Concessions

Although they are not their principal source of income, ticket sales continue to be an important source of income for the NBA. Trailed by the Los Angeles Lakers, the Golden State Warriors are now selling the most expensive ticket, approximately $81 per ticket.

Additionally, the Philadelphia 76ers have continued bragging about the most attended rates in the league for a couple of years now, selling approximately 20,628 tickets in the home seasons. In the 2021/22 season, tickets alone had their share, amounting to 22.38% of the total revenue.

Besides that, the Fan Cost Index (FCI) stood at $444 per family in the 2021/22 season, with over 10,000 families attending the game.

Licensing Agreements And Sponsorships

Since the NBA is popular, it is often sought after to sponsor other businesses that want to get known or market their products. You see certain companies pop up randomly on TV, or at the game, in an attempt to spread a message to as many people as possible. 

In 2015, after ending its contract with Adidas, the NBA signed an annual 1b with Nike, running for eight years, which increased their revenue by 245% from their previous contract. And as a result, Nike accounts for about 90% of all basketball ball shoes sold in the USA.

Additionally, the NBA earns large amounts of money from corporate sponsorships- every time you walk into a game, you will notice them seated at the arena with other brands. In the 2021/22 season, they made approximately $ 1.65 billion off sponsorships, representing 20% of their total revenue. 

Revenue Sharing

Like the NFL, the NBA also operates on a revenue-sharing program, meaning that revenue earned from this scheme is not part of basketball revenue. It instead addresses the unjust situations between large and small markets. Consequently, the teams put all their income together and redistribute it between them. 

The redistribution of the income from high to low-grossing teams ensures that the revenue they receive equals that year’s salary cap. In 2021/22, the total salary cap was about $112.4 million

The structure needs the smaller teams to generate about 70% of the total revenue to receive full benefits sharing revenue. 

International Growth

The other business angle that the NBA is an expert at is expansion. The NBA has many countries represented on its rosters, which has intensively grown it. During the opening night of the 2022/23 season, the league announced that it had 140 international players from 40 countries on six continents. 

Interestingly, the 11 top international players are either part of the team or were formerly part of the team. Among them is Giannis Antetokounmpo from Greece, the two-time holder of NBA MVP, earning the league billions of dollars due to international growth.

The 2022/23 season was the 9th season that the team had over 100 active players from other countries. It resulted from the league investing huge amounts of money in broadcasting and advertising the sport to other countries besides the US.

As a result, it increases merchandise sales and influences younger players to improve their skills with the hope of being part of the league.

Conclusion 

With its team valued at over $ 1 billion, a TV deal amounting to $24 billion, and continually expanding international deals make it a big deal. The NBA stands as among the most valuable and largest leagues in sports, which will continue to gain popularity as revenues increase in years to come. 

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