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.
Works Cited
"The Cheapest and Most Expensive NBA Playoff Tickets." ClutchPoints. N.p., 15 Apr. 2017. Web. 02 May 2017.
Hill, Adreine. "Ratings, Ad Revenue for the NBA Playoffs." Marketplace. N.p., 02 June 2016. Web. 2 May 2017.
"NBA ticket price first round playoffs 2014 | Statistic." Statista. Statista Inc., n.d. Web. 02 May 2017.
"2017 NBA Playoffs Tickets." SeatGeek. N.p., n.d. Web. 02 May 2017.
I agree that the playoffs generate a lot of revenue for the NBA. It increases total revenue for surrounding restaurants and vendors in the arenas. It is surprising how low some of the ticket prices are but, it is reasonable because of the low popularity of some teams. However, the association earns so much money that goes towards player and coach compensation, arena improvement, etc. that decrease that amount.
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Similar to Danya’s comment, I also agree that playoff games bring in a lot of revenue. This is especially true for teams that have not had as much success in the past making it to even the first round. I attended the last home playoff game for the Bucks and based on the number of people that attended, it’s no surprise that it brought in a lot of revenue for the city. The concessions stands were always packed, and the higher priced seats were just as full as the lower priced seats. It’s clear that the playoff games provide a positive benefit for the economic viewpoint.
ReplyDeleteThere is no question that NBA playoff games generate a great deal of revenue for all parties involved. However, though I may just be speaking for myself, I feel that general crowds are less interested in these playoff basketball games as they are in other postseasons -- such as the NFL playoffs, the MLB playoffs or even the NCAA's March Madness. Perhaps it's due to the fact that the NBA playoffs drag on for a great deal of time, but I feel that these other postseasons generate a great deal more publicity and interest than the NBA -- leading them to generate more revenue than the NBA's playoffs
ReplyDeleteIt is interesting to see the amount of revenue that is created by the NBA playoffs for both the NBA cooperation and businesses that compliment the tournament. More people attend these playoff games and it allows for more revenue from both the ticket seats, as well as concessions and third party parking structures that surround the stadiums. The demand for all these NBA playoff related products increases during this time, as the amount of consumers willing to purchase products increases. The NBA attempts to reach as much of this crowd through price discrimination, offering different prices to those willing to pay for different levels of seating and such. Overall, the NBA playoffs and a lot of playoffs generate an increased revenue ammount.
ReplyDeleteAs, only 16 teams get into the playoffs, demand for those games is increased. Especially in larger markets with more fans like Houston and L.A. Smaller markets don't do as well due to smaller fan bases, like Memphis. Revenue is a major part of keeping teams afloat and in there home town. If a team isn't get enough revenue or support,they will go out of business or move. The extra demand for NBA playoff tickets are great way to create more revenue.
ReplyDeleteI think that the reason demand for tickets in smaller cities like Atlanta and Memphis is because in bigger cities like LA or New York, many people visit the city and watch the game as well to experience the atmosphere and to visit the city, whereas most of the people attending games in Memphis are fans of the team that live near the city. In smaller cities, ticket prices are still higher than during the regular season due to the higher quality of basketball being played and due to the fact that there are usually more marquee players during the playoffs that fans want to see.
ReplyDeleteThe economic impact of the NBA playoff games is not only good for the NBA itself, but great for the cities that the teams play in. The bonus to tourism profits in cities with playoff NBA teams helps stimulate the economy and create economic growth.
ReplyDeleteI think that the income depends on the population and the competitiveness of the two teams that are playing. If a 1 and 8 seed play each other, the income will be less, because it's not that exciting and not that fun to watch if it's a blowout.
ReplyDeleteI agree that the NBA playoffs bring a lot of revenue in but it really depends on how popular the team is. A lot of the times it has to do with how much success the team has had in the past years. For example the Cleveland Cavaliers fell of the grid when Lebron James left in 2010. When he decided to come back in 2014 the team made a comeback with their ticket sales going up and making the front cover of espn. The population of the state is not the only thing that matters if a specific NBA team has a superstar player their ticket sales will go up no matter what.
ReplyDeleteI agree that the playoffs generate a lot of revenue for the NBA. It increases total revenue for surrounding restaurants and vendors in the arenas. It is surprising how low some of the ticket prices are but, it is reasonable because of the low popularity of some teams. However, the association earns so much money that goes towards player and coach compensation, arena improvement, etc. that decrease that amount.
ReplyDeleteNBA Playoffs has a great fan following, people use to wear their supporting team jerseys to represent them on event day. The Cleveland Cavaliers and Golden State Warriors are huge favorites to win the NBA Championship title this year. Don’t miss the chance to watch NBA Playoff live stream on 14th April.
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