Friday, April 7, 2017

Economic Impact of the NBA Season

Economic Impact of The NBA Season
Patrick Cullen

With just five games left in the regular season, the NBA Playoffs are fastly approaching. The NBA season can sometimes be a grueling one being eighty-two games long, but a lot can happen for each team from a game standpoint to the entire organization. Being the third most viewed sport in the United States has it’s benefits from an economic standpoint. In that long season of an NBA team, earnings come from all aspects of the organization. These things range from ticket sales, concessions, apparel sales, television views, and even on court success. For some teams the on court success is not the most important aspect to increase their total revenue.

Two teams who have had a long history of success in the National Basketball Association have had some trouble in recent years. The Los Angeles Lakers and New York Knicks are two big name teams in big time cities who have had a history of talented players such as Kobe Bryant and Carmelo Anthony to appeal to their large consumer markets. In 2016, the two teams had a combined record of 72-95. Despite these losing records they were the two highest incomes in the league with a combined revenue $5.7 billion. Here is a chart from forbes magazine showing the team’s net income broken down by category and how they match up to other teams in the league:


As you can see the least amount of money was made through the actual play of the sport for the Knicks and Lakers. The majority of money was made in the other three categories of Market, Arena and Brand. This goes to show how much more goes into the entertainment that we take from such a sport as basketball.  The arena makes money by providing things such as concessions and security. With these services are job opportunities. With the job growth within sports organization’s arenas, our country’s GDP is on the rise along with employment rates.

The NBA is more than just a source of entertainment. It is a source of job growth and a service provided to the people. Without sports leagues and associations such as the NBA we would be a much less successful nation with a much lower GDP.





Works Cited

Brautigan, Bailey. "Here's How Every NBA Team Makes Its Money, Visualized." Forbes. Forbes Magazine, 21 Mar. 2016. Web. 04 Apr. 2017.

"Sports in the United States." Wikipedia. Wikimedia Foundation, 31 Mar. 2017. Web. 04 Apr. 2017.

26 comments:

  1. I was surprised at some of the rankings for the revenue across the league. I find it hard to believe that the Atlanta Hawks and the Memphis Grizzlies are in the bottom 8 in revenue, while they have been consistent playoff contenders every year for the last ten. Also currently the Milwaukee Bucks are ranked second last. I wonder if after they get their new stadium if their revenue will increase.

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  2. I see where you're coming from, but all sports teams spend so much money on entertainment. In my opinion basketball can get really boring. Just watching the players run back and forth gets old really fast. So when people go to games they spend money on food and clothes to add to the fun.

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  3. I think it's interesting to note that the top two franchises in terms of value don't generate a solid portion of their revenue from the actual games. Although this does make some sense due to the fact that there are so many other ways to generate revenue in today's NBA. The new TV deal that just came up also has greatly increased the value of everything in the NBA contracts are booming to an all time high, and new stadiums are going up very fast as well.

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  4. Although the numbers may surprise some, it didn't surprise me as success often doesn't determine value. This is proven in the case of the Lakers, their tickets are very expensive and despite a bottom 3 finish they lead the league in road attendance.

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  5. I found it interesting, but not too surprising that the Lakers and the Knicks were at the top. Even though they have had less than impressive records they're still of the most historical teams in the league along with being in two of the most popular cities in the United States. The thing that I found most interesting was the position of some of these other teams such as Atlanta and Memphis. Those are two very popular areas that I thought would be producing a substantially higher amount of money then shown. Overall it was a great piece to read, and was interesting to find out how much a record really affects their numbers.

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  6. When you think about it, sports organizations create lots of different positive aspects for our country. They bring in lots of revenue like you spoke about, they create jobs not only for the players but for several other different jobs/career, and is a pretty valuable source of entertainment for a great amount of people. Without sport leagues like the NBA, NFL, MLB, etc., our country could be in a lot worse of a spot than we are right now, economically speaking.

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  7. The numbers that were produced didn't surprise me at all because Carmelo Anthony and Kobe Bryant are important to the franchises they played on, it brought in more revenue despite the teams records. People will buy tickets just to see these two players play even on road games, the attendance of road games when those two players are playing is the best in the league. Which overall will impact the total revenue of franchises just because of one person on a horrible team. It amazed me that Kobe's and Carmelo's income summed to $5.7 billion. It also helps that a lot of teams are trying to expand and have a new arena which helps the job growth and the community to come together and support their local team and watch other great players play in their town.

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  8. All professional sports have a huge economic profit for the cities they are in. NBA will now start to even how more of an impact with all postseason coming up soon. More demand to see the games will occur because now the games will have much more importance. Although I'm not that much of a basketball fan I even start to watch games when the playoffs take place.

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  9. The economics of sports teams are not surprising, as they create so much revenue. Cities center themselves around their stadiums, as they create traffic and cause people to spend money at local businesses. A good example is with the Milwaukee Bucks, as Milwaukee is building a whole new district around the new Bucks Stadium, because they know that it will have a positive externalize impact on the city. The opportunity cost of NBA teams is outweighed by the increase in demand for food and parking around the city.

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  10. The ting that surprised me the most was that the New York Knicks being at the top of the list for total team valuation. Although they in an extremely populated tourist location, their team isn't the greatest. I would expect the Cavaliers to make the most money because of their players.

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  11. I am a little surprised at how little performance has when effecting the NBA team markets. Some of the best teams in the league were in the middle of the pack when referencing the clubs income such as San Antonio and Cleveland. I would think that better performance would drastically increase revenue because more people would want to watch a top tier team. What didn’t surprise me was the amount of money made through marketing, the arena, and the team brand. Those three categories made up the majority of almost every team’s profits which is a tell tale sign that the team's income is based on much more than performance. Overall the sporting industry has made a positive impact on the economy and the NBA’s impact is no different. It is good to know that many jobs are being created and opportunities continue to increase as sports around the world continue to grow as well.

    Jaeger

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  12. In the visual you provided it's interesting to see how as the total revenue of the team decreased along the graph, their revenue of the sport seemed to have increased over the market, arena, and brand revenue. It is amazing how much revenue sports are able to bring in throughout varying categories all around.

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  13. There are 30 teams in the NBA who all make a big amount of money and that will help the economy a lot. You mentioned the Knicks and Lakers and how they make the most amount of money out of any team. They make the most money because where they are located. More wealthy people live in New York and Los Angeles making them able to spend money on these sports games. A lot of teams make discounts so that more and more people buy tickets and items making the organization get lots of income. I agree that the NBA is a big part of growing the economy and making jobs.

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  14. I have to admit, before taking economics and business I didn't realize how big and important the sports industry really was, not only as entertainment, but also as a growing business that brings in lots of revenue. The NBA definitely increases our country's GDP when you take into consideration the increase in consumer spending and investment spending when you get down to NBA championships and big games that people want to spend lots of money getting ready for. Bids, clothes, food, tickets...there is so much revenue that the NBA brings in. It's important to see how valuable a business like the sports industry is and how much it contributes to our economy; it's one thing to watch a game and appreciate the entertainment of it, but it's another thing to truly appreciate how much that game affects our economy in a positive way.

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  15. There is no doubt that the sports industry has a massive impact on the economy. Sports teams bring in massive amounts of revenue for their city every single year, we are talking millions of dollars every single year, and for teams that are successful it's an even higher the amount, as there is a direct correlation between how well the team plays and the attendance level at the games, and obviously with a higher attendance there is more revenue being brought in. Also the revenue doesn't just stop at ticket sales, there is also all the food and beverages sold at the arena, which is a large amount sold at a high price, and also all the team gear that is sold, because everyone has to be repping their favorite team.

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  16. I find it very interesting that the Knicks and the Lakers brought in the most revenue in 2016, despite their losing records. However, it's no doubt that the sports industry has a huge impact on the city they are located in, the surrounding cities (which might be negatively effected by revenue brought into another city besides theirs), and on the economy as a whole. I'd like to see how much more revenue these two organizations could have brought in if they had winning records and more people were attracted to go watch them play.

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  17. It is interesting how much the Lakers and Knicks make compared to other more successful teams but, I can see why. The two teams have a wide history in the NBA and they are in large cities that attract more people. I agree that the NBA and other sports associations generate a lot of revenue that comes from the consumers' willingness to pay. Many of them pay high amounts of money for tickets and merchandise which leads to the success of the association.

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  18. Obviously total revenue per team directly relates to the fan base that team has. It would be interesting to see if the size of the state the team is located or population of the city also aids in the team's sales success. It is a win win for teams who have high sales because this provides them more money to buy better talent, therefore winning more games. On the other hand teams like the pelicans won't have the money to pay for expensive players, so their record will take the hit, losing even more fan base.

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  19. Despite both the Knicks and Lakers losing records, the franchises are doing amazing for themselves. They would be worth much more if the franchises were winning. On the flip side, our own Milwaukee bucks are worth very little compared to other teams, yet are currently in the playoff with a sixth seed. It shows that the NBA is a very fair and competitive. If there's one thing people like, its a competitive sport. The NBA does a great deal for teams, players, and advertisers keeping a steady flow of cash from the fans.

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  20. Something that did not surprise me about the graph is how the Milwaukee Bucks have one of the lowest incomes. However, after this season I expect it will raise as they have made it to the playoffs this year. Another thing that may help raise their income will be the implementation of the new stadium. The current stadium isn’t what most people would consider ideal, however I’m sure the new one will attract new fans as well as old ones that may be more likely to spend money on goods at the games since it will be new.

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  21. I think on court success is the first thing NBA teams should worry about because it's the beginning of the chain to success. If a team loses more than half of their regular season games no only do they lose money in audience appearance but they dont get to the playoffs which is an opportunity to gain more money. If audience numbers are on the low that means concessions aren't selling, same goes with the apparel sales. NBA teams need to succeed on the court in order to succeed outside of the NBA

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  22. Looking at an economic stand point, New York, L.A. and Chicago are very populated so they would come in at a very high revenue but also you have to think about their Market, you can see that the Lakers also have a higher market than the sport it self so would the expanding market get bigger revenue? Or how the teams are doing in the season, because the Bucks have a very low income but they are in the playoffs.

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  23. In almost every professional sport teams with bigger cities generate more revenue because of a bigger fan base and higher demand for tickets. Although there are many teams with a lot of money who do traditionally not do very well in sports. Seeing the impact of the NBA in a city like milwaukee makes it very evident that it is a huge money maker. All of the restaurants and bars are full, parking garages full and roads busy. All these things bringing money. With a new area to come there is a lot of finical benefit in store from the bucks in the city of milwaukee.

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  24. For all sports the teams that have bigger cities will generally generate more revenue and make more money. But, their are a lot of other factors that go into revenue too. Even though the Knicks and Lakers had a really bad record, teams that generally make it to the playoffs more often will generally have a higher revenue. I know if the Milwaukee Brewers played better or had a better team their revenue would greatly increase. I know this is true because the Packers continually do good every year and they have a decent revenue. Also, the Bucks are in the playoffs right now and are all the hype which also helps revenue.

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