Economic Impact of NBA Playoff Basketball
By: Jack Gohlke
In the NBA, each team gets 41 home games every year. This allows for their arena to generate ticket, concessions, and merchandise sales at each one of these home games. It also allows the surrounding restaurants and venues additional opportunities to host fans and generate revenue, especially with the much higher demand on the premium brand of basketball that's played in the playoffs. That’s just one of the many positive externalities of a city's franchise getting to play more basketball in the spring.
The stadiums themselves bring in a large amount of extra revenue for teams since it’s the playoffs. Almost every game is a sellout, and teams hike up ticket prices due to the higher demand. In just the first round, average ticket prices hover right around $220. With the second round, it’s important to note that ticket prices for the second round typically range from $129 to $379. The conference finals is ratcheted up another notch with prices falling somewhere between $194 and $786. These numbers stand alone to prove how having a playoff basketball team allows that much more opportunity for a franchise to make revenue.
Some teams however, that aren’t in the big markets like New York City or Los Angeles don’t benefit quite as much from these rises in playoff ticket prices. These prices represent the league as a whole, and getting into games in Atlanta or Memphis is much cheaper than one would expect. A seat in the nosebleeds would only run you $30 which seems like an anomaly due to the demand for playoff basketball. However, in reality it makes sense because those teams have large arenas, Memphis’ seating over 18,000, and filling those seats that are perceived to be a mile from the floor can be tough. As you can see in the graph, prices for the bigger cities are much higher on average than those of smaller markets creating a disparity in the market. The main reason that selling these nosebleed seats is tough on small market franchises has to do with how they’ve developed their fanbase. The fans are so into their team and want to not just watch the product from afar but experience it up close and personal while being a part of the action.
Overall, the impact on these NBA cities is a great one as there truly isn't much of an opportunity cost to opening up the arena for additional opportunities to generate revenue besides extra traffic in the city. The amount of new ticket and merchandise sales for each franchise and the league as a whole is a win for everyone.
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