Economics of The NBA Finals
This past weekend marked the start of the 2016 playoffs which will continue until the middle of June. Incredible matchups between teams will be happening constantly until only two teams remain, and many think these two teams will be a rematch of last year between the Cleveland Cavaliers and the Golden State Warriors. Considering the Warriors broke the record for most wins in the regular season and the Cavaliers are still dominating the eastern conference this matchup wouldn’t be much of a surprise, but it would still have a major economic impact on both teams and players.
Last year before the NBA Finals the Warriors team value was about $1.3 billion, but now it is currently evaluated at $1.9 billion (Forbes). This nearly 50% increase in value can do a lot for a team, and more importantly the area around it. Many people forget that any professional sports team is a major part of a city’s identity both socially and economically. For example businesses around the arena will most likely increase their profits because of the increase in attention to the area. In addition to this more businesses will realize this and want to make investments for their businesses in that area to take advantage of these profitable opportunities. This trend will likely continue if the warriors can continue their playoff success and get put into the conversation for ones of the best teams in NBA history.
The Finals also had a large impact the players of these two teams. None more so than Stephen Curry. According to Repucom, a large social analytics firm, Steph became the top ranked NBA player on appeal, and was ranked third on people recognizing his name behind only Lebron James and Kobe Bryant. With his astonishing regular season this year these stats most have increased even more, which would in hand increase demand. This would also increase the price level for his products because of the rising popularity of his name.
One last major impact of the NBA Finals is on the TV station. For the last few years ABC (which is owned by Disney) has bought out the rights for the NBA finals and many other playoff series. This is a pretty safe investment for them considering the magnitude of the event, but last year it really paid off for them with the best ratings for the finals since Michael Jordan played. As the supply of basketball begins to fall more viewers typically funnel into the biggest series of the year, in fact last year there was an average of 19.2 million viewers per game throughout the 6 game series, which was an increase of about 25% from the year before (Forbes). If the series does end up being between Golden State and Cleveland ABC could undoubtedly advertise it as one of the greatest series of all time. With the phenomenal regular season accomplishments of the Warriors as they are seeking a repeat championship they are faced against a revenge hungry Cavaliers team led by Lebron James, which was also plagued by injuries during their playoff run last year.
Overall no matter what teams play in the Finals this year there will be a great financial impact for the teams, players, and the companies behind the scenes. However if it does come down to a rematch of last year then these impacts will become even larger, and might even break some records for TV ratings. Without this large championship at the end of the season there would be far less profits in the NBA, which shows how everything put into it can financially change the outcome of the league.
Works Cited
Badenhausen, Kurt. "2015 NBA Finals: Winners And Losers." Forbes. Forbes Magazine, 17 June
2015. Web. 19 Apr. 2016.
I enjoyed this post because it is true the NBA Finals are a big deal both economically and socially. One thing I did not know was that the Warriors team value increase by 0.6 billion! That is a substantial amount of growth within one year. Is that growth credited due to the fact that the Warriors won last year, or are other factors involved too? Additionally, I was thinking about the ticket prices. If there is a rematch, I can only imagine what the ticket prices would be like. Overall, great job!
ReplyDeleteWow I can't believe that the NBA finals cost increased by nearly 50% in just one year. This proves the consumer tastes of people in the U.S. are more attuned to the finals because of the rising popularity and hype of the game. Now that you mentioned how well Stephen Curry has been playing lately, I can see why the prices of his products increased. I wonder if the products of his team also increased as well because of the unexpected rise in demand. This was an interesting article to read, nice job!
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