The Business of Basketball
By Redmon Wallace
With October coming to a close, and November about to swing into full bloom, the NBA season has gotten underway. Each NBA team tries to draw as many fans to their games to create as much revenue as possible. Some franchises have an easier time of getting people to their games than other franchises, as we all know that if a team is good, if a team is winning, more people will go to see them. This in turn, you would think, would show a trend in the league that the better teams are estimated at a higher value, and the teams towards the bottom of the standings bring in the least amount of annual revenue. Although this is true for some teams, like the Philadelphia 76ers, who ranked dead last in the league last year, and rank 28th in current value. This rule is also true for a team like Golden State, who reached the NBA Finals last year and rank 6th in current value in the league. But this rule that makes logical sense is not particularly true for many teams. Annual playoff contenders such as the Memphis Grizzlies or the Atlanta Hawks rank 24th and 25th respectively, while teams that consistently are outside of the playoff picture such as the Los Angeles Lakers and the Brooklyn Nets rank 2nd and 7th respectively. So why do these good teams rank so low in current value while other poor teams rank so high on the list?
Many would argue that the market these teams are in have a great deal to do with it. Teams like the Nets and Lakers, although they don’t perform the best, reside in cities like Brooklyn and Los Angeles, cities with larger markets and more people wanting to watch basketball. Teams like the Grizz and Hawks, although they perform well, don’t necessarily reside in large markets where people want to view NBA basketball. One thing that can generate buzz, which can generate revenue and value in these cities with small markets is possibly a new stadium. That is something that we witnessed in the Sacramento Kings, who ranked very near the bottom in the league in revenue and operating income, but with a new stadium, in a city with not a lot of fans interested in NBA basketball, created a buzz around the community in the capital of California, and made their 1 year value change increase by 16%, and they moved up over 10 spots in the current value NBA rankings. This is what I argue will happen with your own Milwaukee Bucks. Like the Sacramento Kings, the Bucks play in one of the oldest stadiums in the NBA, with no real renovations being done to the stadium in some time.
That is why a new stadium is necessary for the Milwaukee Bucks to become relevant in the NBA again. A team with no fans supporting them cannot go very far in the playoffs. Look at the previously mentioned Grizzlies or Hawks, even though they are playoff contenders every year, they don’t make it far in the playoffs because of the decimated fan support. A new stadium for the Bucks would vault them not only in the current value rankings, where they rank 2nd last right now, but it might also possibly vault them up the NBA standings, as the buzz from the new stadium would lead to more fans coming to the games and more excitement in the community. More excitement in the community would lead to more excitement in the players and in the games, leading to wins and hopefully championships. The new stadium being built in downtown Milwaukee is a great thing for the Milwaukee Bucks organization.
Works Cited
Save, By Pick N. "Bucks Release New Arena Renderings Ahead of Design Submission to City | Milwaukee Bucks." Milwaukee Bucks. N.p., n.d. Web. 01 Nov. 2016.
McDonald, By Ryan. "Examining the 10 Oldest Arenas in the NBA | Deseret News." DeseretNews.com. N.p., n.d. Web. 01 Nov. 2016.
Bartwell, Stan. “Forbes The Business of Basketball” Forbes. N.p., n.d. Web. 23 Oct. 2016
I would agree. I think something that will specifically increase revenue for the bucks is their new stadium. Although it costs a great amount, it will be very beneficial for them as their stadium is quite outdated and this new stadium will allow the bucks to increase revenue and be valued higher overall.
ReplyDeleteI find the connection between the first graphic and the second graphic very interesting. For the most part, teams that have an older stadium are the ones who are on the lower half of the spectrum when it comes to value. There are exceptions to that, but for the most part there is a correlation. For the Bucks the fact that they are located in a smaller market, have an older stadium and do not get a lot of airtime on national television also contributes to both the lower revenue and profit for the Bucks. Since other NBA teams like the Celtics, Bulls and Knicks have stadiums that are larger than the Bucks, play in a larger market and have more airtime on national television stations, their total revenue is higher which would then increase their profit amount as well.
ReplyDeleteI am not one to really support the Milwaukee bucks and I agree with what you said. The bucks have a reputation, at least to those who aren't avid basketball fans, to not be that great. With a new stadium on the other hand, would make things more interesting. People would go to see the new arena generating more revenue and hype around the team. This would cause value of the team to eventually increase even though the stadium is an expensive cost.
ReplyDeleteEven though the Milwaukee Bucks have been ranked towards the bottom the last couple of years, a new stadium help them tremendously. I agree that the new space will bring more energy to the team and fans and ultimately generate more fans as a while. This will lead to more revenue. They currently do not have the best reputation as even in our own area, many times they are not the fan favored team - this could change over the next year as the stadium would produce lots of publicity for the Bucks. Despite the expensive cost of the new stadium, it would be very beneficial for the Bucks since it would help their value and status as a program.
ReplyDeleteI am very surprised with the facts that you brought up, like the Brooklyn Nets being evaluated as the 7th franchise in the NBA and the Knicks as the 2nd franchise in the NBA. Even though these teams are highly evaluated based on their brand, sport, market, and arena, they are some of the worst teams based on their record. I don’t really agree with how you said that a team with no fans cannot succeed because a team like the Hawks don’t really have a huge fan base, but they are very successful, making and succeeding in the playoffs year after year.
ReplyDeleteI agree that location of teams bring in more revenue than others. The Nets and Knicks are in the heart of the largest city in the U.S. which would lead to the amount of viewers at their games compared to teams in less popular cities. I also agree that the new Buck's stadium will bring in more excitement to the area, therefore causing an increase in demand for tickets.
ReplyDeleteAnother reason for a team being highly valued that you did not mention is global recognition. A team like the Los Angeles Lakers is able to be the 2nd most valuable team in the NBA because they have a storied history of success, regardless of how terrible they are now. For people that live in another country or even a city without an NBA team, it is easy for them to become a Lakers fan because it is the most widely know NBA team worldwide. The same is true for the Knicks because they also are a popular/valuable team because of their history and recognition. This is true in other sports as well with teams like the New York Yankees and the Green Bay Packers.
ReplyDeleteI found your first graphic very interesting. I had always thought that brand was the largest factor in a team's value with players like Michael Jordan and Kobe Bryant being annual top 10 jersey sellers even after their career ends. I though this revenue was the biggest contribution to the value of a team so I was surprised to find that market was the largest factor. However, this makes sense as a team can only sell as many jerseys as their fans will buy and having a larger number of potential fans would be a big boost in value.
ReplyDeleteEven though I am not a huge Bucks fan, the new stadium has peaked my interest in the franchise for the first time in years. The media generated from this can create new revenue to jump the bucks up from 29th, replicating the success the Kings franchise. However, with the Wisconsin market being much smaller than the California market, the growth won't be as large. With growth being closer to half or even a bit less. Overall, the new stadium will greatly increase revenue for the Bucks and is a great investment.
ReplyDeleteI think that is a huge part of the reason for the new stadium. Like you said, you may not be an avid Bucks fan, but the new stadium as you heard over social media and the news peaked your interest. This new stadium will bring many fans who may not love the game of basketball or love the Bucks to their games which I think is very important for the overall success of the franchise and the city as a whole.
DeleteIn the short run, I don't see how the benefits of the new Bucks basketball stadium justifies its new cost. However, from a long run perspective, this investment in the franchise might pay off considering the fact that we would build a new stadium sometime in the future anyways.
ReplyDeleteI agree with the post that we should build a new Bucks Stadium. Teams that do quite well in their season all have a large fan base cheering them on. Imagine playing a game with little to no fans in the stands. You wouldn’t be as excited, as pumped up, as motivated to win. That’s why if we open a new stadium, it will bring in so much revenue because of the vibe it will give them, hopefully making them suck less. Lots of people are against the new stadium because they don’t want to pay the taxes for it, but I think the potential outcomes outweigh the extra tax dollars we’ll have to pay.
ReplyDeleteAlthough the stadium may be great for the team, there is no telling how great it will be for the city. The amount of money that the city and its tax payers have to pay will be very substantial and there could of been areas of more importance where the city could use money on. There is a chance though that it can help bring a championship to Milwaukee and tremendously help the city.
ReplyDeleteI agree with what you said that the Bucks need a new arena. It would increase their worth, and increase the amount of fans and excitement for the Bucks. With that being said, the Bucks could also draft or trade for better players to improve their record and chances to make it to the playoffs, and increase the number of fans visiting the games. The reason I say that is because a couple years ago the Brewers made it to the post season and Miller Park was sold out.
ReplyDelete