How did COVID-19 affect the NBA financially?
By: Evan Murphy
With the unpredictable appearance and growth of COVID-19 across the globe and especially in the United States, many businesses, restaurants, and stores had to shut down for a while in order to ensure people’s safety. But how did COVID-19 affect the sports world, and more specifically, basketball? COVID-19 hit the U.S. hard in the middle of basketball season, forcing the NBA to shut down the rest of the season and quarantine along with the rest of the country. But how did this affect the revenue for the NBA?
In the graph above, you can see that the estimated revenue the NBA missed out on from the regular season ALONE was near an estimated $650 million dollars according to statista.com. With the gate revenues making up about $400 million, and non ticket revenues making up the other $200 million dollars. With over 259 games left to be played across the league, the NBA took a major financial hit by having to cancel the NBA season due to COVID-19.
Not only does the NBA miss out on a lot of revenue, but as a result, so do the players. Every season, the NBA comes up with a salary cap for the season - or the maximum amount of money a team can spend on salaries that season. Because of COVID-19 hitting the US, the NBA lost tons of money, as I mentioned before. In fact, according to yucommentator.org, it is estimated that the NBA could miss out on up to $1 billion dollars including both the regular season and playoffs. If this is true, the salary caps for each NBA team will be lowered from the previous year. If the NBA still manages to bring in $6 billion dollars of revenue, the cap space for each NBA team will still be $7 million less than last year, and $14 million less than it was projected prior to COVID-19. This means that the players looking for new contracts this offseason or players who are free agents will likely be in for smaller deals than anticipated, and may not be inclined to sign as long of a deal since it won’t be worth as much money.
Recently though, the NBA restarted in what they call the “bubble” where they quarantine as a league in Walt Disney Orlando’s resort (as pictured above), hosting all league members including players, coaches, and other staff and league officials. The NBA bubble has given the NBA the chance to continue their season, and they are currently in the conference finals of the playoffs. But without fans, the NBA is missing out on gate revenue, which makes up for about 40% of their revenue according to marketplace.org. On top of this, the NBA announced that their cost to operate the bubble is roughly $150 million dollars. The NBA is still missing out on tons of revenue by having the bubble instead of the normal playoffs, but at least the NBA will still make money now off of TV revenue. Yet despite everyone being stuck at home, NBA ratings are actually still down, as some major teams like the Bulls, Knicks, and Warriors weren’t even invited to the bubble.
In conclusion, the NBA has been drastically affected by COVID-19 financially. The NBA has missed out on lots of revenue from fans, TV revenue from the regular season, lost some cap space, and had to spend lots of money on the bubble. Hopefully in the near future, the COVID-19 pandemic will slow down and the NBA will be able to completely re-open by next season. But if they don’t, be prepared for the NBA to experience another big financial burden.
Works Cited
“COVID 19's Impact on NBA Salaries.” The Commentator, 7 Sept. 2020,
yucommentator.org/2020/09/covid-19s-impact-on-nba-salaries/.
Gough, Christina. “NBA Revenue Loss Due to Coronavirus 2020.” Statista, 18 June 2020,
www.statista.com/statistics/1104004/coronavirus-revenue-loss-nba/.
“NBA ‘Bubble’ a Success, but How Are the League's Finances?” Marketplace, 14 Aug. 2020,
www.marketplace.org/2020/08/14/nba-bubble-covid-19-playoffs-league-costs-disney-world-orlando-tv-contracts-ratings/.
Pincus, Eric. “How Much Money Will NBA Players Lose Due to Coronavirus Pandemic?” Bleacher Report,
Bleacher Report, 2 Apr. 2020,
bleacherreport.com/articles/2884678-how-much-money-will-nba-players-will-lose-due-to-coronavirus-pandemic.
Great blog post Evan. Obviously I am a basketball fan myself so this article definitely caught my attention and it had a lot of good information that I didn’t even know about. The NBA shutting down obviously had a huge effect on the NBA, but I really like how you went into greater depth about how it impacted the revenue and salary cap for each team and then took it a step further by saying how that will impact free agency and players signing new deals. Great insight and good job bringing the struggles that the NBA will be facing during the offseason to light!
ReplyDeleteIt is interesting to note all the little pieces to the puzzle that is the NBA, and more specifically, their revenue. For example, the fact that although they do have their season which is bringing in revenue, you stated that roughly 40% of their total revenue is from the gate prices, and with no fans they aren't receiving that. The idea of the bubble is great, though, and I wonder if other sports will/have adopted the same practice? Do you think the lower ranked players will take a financial hit from this revenue loss?
ReplyDeleteFirst of all, I thought that you piece was very interesting and made me look at what the NBA was losing from the shut down that happened. The one thing that surprised was how even though no one has anything to do the ratings are down and that is interesting because no one has anything to do and even though the big markets aren't in the bubble I would think that the ratings would be up because people waited for months to see basketball and I think that it is really something to do with also not having the Pelicans and Zion in the playoffs also. Another thing that I found interesting was that the NBA makes a lot of money just off of the regular season and before I didn't really think that they made that much but by them not having those games will hurt the income of the NBA for a while and that will also affect the salary cap going forward. Overall, I thought that your blog was very informative and really made me learn about how the NBA is losing money during this time even though they are running the bubble.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI loved how you brought up the cost of how much it's costing the NBA to host the bubble. A question from me is, how much is the NBA making from the bubble? You brought up TV Revenue, but specifically how much is that revenue? Another fact you brought up was the bubble not including huge market teams including the knicks, bulls, and the warriors, which probably plays a key factor for bubble income. You had lots of key facts that added a ton to your piece, Great piece Evan!
ReplyDeleteIt is certainly hard to argue the financial impact that COVID-19 has had on our country hasn’t been drastic. However, I feel as if sports are underestimated or under recognized when it comes to issues as a result of the pandemic. Professional sports represent a big part of most Americans’ lives, as indulging into their favorite sporting events every weekend has become a generally well accepted pastime here in our country. Think about what things would have been like if organizations like the NBA weren’t able to make the most of the situation at hand and continue on with the season and postseason. Without this integral aspect that our society relies on and looks forward to (professional sports), we almost feel disconnected from one another, as that common bond that we share over these sports events has been lost during and throughout the pandemic. It’s fortunate that most professional sports have taken extreme and intelligent precautionary measures to ensure that us Americans receive the luxury that is being captivated by professional sports. This shouldn’t be the end of movements and the implementation of such measures, other economic industries should take notice and apply these measures into their own work; as doing so would allow our country to get through this pandemic with ease, at least relative to other possibilities.
ReplyDeleteI thought your blog was very informational and gave in depth detailed information. I specifically liked how you broke down with a graphic how much the NBA is losing in specific areas, for example ticket sales. Lastly, the fact of the smaller salary cap really caught my attention going into next year. This can have all kinds of repercussions because the free agency market changes completely. I wish you touched more on this change because free agents are less likely to sign big deals because less cash. That means 1-2 year deals so they can switch teams again. Good Job!
ReplyDeleteI found it interesting that you chose to look at the sports side of Covid-19 which no one really does since they are more focused on economics and recovery. The NBA is losing a lot of money as you pointed out because of the cancelled games. I do think it was a good idea for them to continue their season inside the bubble even though they couldn’t allow all teams in, because this still allows fans to get a sense of normalcy and watch the playoffs, and it allows the NBA to continue to make money and support the league. It will be really interesting to see how the NBA plays out next season. If Covid-19 is still around by then, the NBA will have to make serious adjustments. It will be difficult for them to find a solution to allowing all the teams to be able to play. In addition, they would probably have to shorten their season and have each team play less games.
ReplyDeleteI do wonder if other sports are doing the same when it comes to the "bubble". Some sports might need it more than others. Say hockey, there is a lot of physical contact, but say Esports, they wouldn't need it at all.
ReplyDeleteAfter reading Evan’s article I was able to get more of an insight, on how not only it shut down but how this impacted the revenue side of it. I think it was also important that you stated that they are still able to play but obviously with some restrictions. For example you stated “Recently though, the NBA restarted in what they call the “bubble” where they quarantine as a league in Walt Disney Orlando’s resort (as pictured above), hosting all league members including players, coaches, and other staff and league officials. The NBA bubble has given the NBA the chance to continue their season, and they are currently in the conference finals of the playoffs.” I thought this was very valid information because it is very up to date.
ReplyDeleteI thought this was a well-written, insightful article! Although it was well-known that the NBA had to shut down because of COVID, I don't think may people, including myself, knew about how impactful this was on the NBA and it's players. The fact that they lost over $650 million dollars in revenue was very shocking to me. Although it has been seen that the bubble has been successful, COVID wise, seeing as according to Market Place that the bubble has had no COVID cases in the past 4 weeks, the market place also states that, "The NBA said the cost to operate the bubble at Walt Disney World in Orlando, where players and coaches eat, sleep, practice and play games, is more than $150 million. There also aren’t any fans there, and 40% of the league’s annual revenue comes from ticket purchases and in-game spending." Because of this, it is seen that it does cost a lot to keep the bubble up and operating. With this being said, I wonder if the money they roll in from viewers online will cover all the expenses that the NBA needs to account for, like paying their players, etc. It will be interesting to see what the future is for the NBA with this virus.
ReplyDeleteIts crazy to me how we think about smaller business so much and how Covid is effecting them but we fail to think or talk about how all of this is effecting money and sports. What really stands out to me is how the chart in your blog showed that the NBA lost 650 million dollars from just one season. Not only is this bad for the economy but it is also bad for the players. The blog also showed that players are not gaining as much money to spend with their team. It must be hard for them as they are used to the same thing which is money, and now they are limited. I really liked how you formatted your blog and gave detail from different perspectives and showed us a graph and pictures. Good job!
ReplyDelete
ReplyDeleteI never really thought about how COVID was financially affecting sports. Although it is obvious that the sports market has lost a lot of revenue because of COVID, I never thought that it would affect that many other aspects. Some of those aspects include the cap amount of money a team can spend on all of their players. It will be interesting to see what teams like the Bucks do in the offseason with trades and picking up players with their limited amount of money. In addition to just the NBA, do you think other sports such as golf, football, and soccer have been as greatly financially impacted? Although these sports are being allowed to play now, are the players still making the same money they did before? Now that COVID is forcing more people to watch sports solely online, do you think the price for advertisements went up and that's how these teams are staying afloat financially? I find it interesting that only some NFL teams are allowing fans inside the stadiums for games. Hopefully teams like the Packers will find a safe way to allow a limited number of fans in. As a whole, I hope that all sports find a safe way for their teams to play and their fans to watch so they can succeed financially.
Personally for me, basketball isn't a huge part of my life, but it definitely is for my family. Time to time I'll watch a game with my family and hear them yell at the tv, but I never know how big of an impact covid had on the NBA. It's super interesting to hear how they are dealing with the effect of losing millions of dollars. It makes complete sense why they are losing so much because fans aren't going to games, season tickets aren't being purchased, no concessions, or merch. It's extremely sad to hear this because so many players are losing money and this is what is supporting their family (of course most of them are already very wealthy it can still affect how they live). I think Evan wrote it very easy to understand for those who aren't familiar with basketball and it was very enjoyable to read. If covid canceled their season next year because of covid, what will happen to the NBA?
ReplyDeleteThis post really caught my eye especially since I am a Bucks season ticket holder so I felt that I could actually relate to this post since many season ticket holders had bought playoff tickets right before covid hit. I can imagine how this would take a financial toll on the NBA especially with many people demanding refunds for their playoff seats and the few regular season games that were also canceled. Also, what you said about players expecting new contracts makes me wonder if it will potentially cause them to switch teams for a better contract or not? Overall this blog post was very interesting to read and I enjoyed how you chose something that many people can relate to or are passionate about.
ReplyDeleteFor some reason, I never really consider businesses like the NBA that are being effected by this pandemic. It is crazy to see the statistics that you added about the money loss that they experienced and how bad it actually was. I'm very curious about the bubble though. What if somehow, some player contracts COVID while in the bubble? Then, the rest of the players that are inside the bubble now could be in contact with that player and the whole thing could get ruined. It is a great idea, but I just don't know how they can keep the players from getting the illness in a different way.
ReplyDeleteI never really considered how much revenue the sports market had lost during COVID. Now that COVID is forcing more people to watch sports solely online, do you think the price for advertisements went up and that's how these teams are staying afloat financially? It is certainly hard to argue the financial impact that COVID-19 has had on our country hasn’t been drastic. I think they should really focus thier attention on advertisement as it's one of the only ways to get people engaged with sports right now.
ReplyDeleteI don't watch much sports, so it's interesting to read about what else, on top of countless other things, that COVID-19 impacted. Not only did COVID-19 affect sports entertainment for people, but I didn't even think about how it affected sports financially. It's unfortunate how much the NBA has lossed. Regarding the bubble, it's good that it has been seen to be helpful, but I wonder how long it can help them and if it can continue to help them in the long run.
ReplyDeleteI never actually considered how much sports would be impacted by COVID-19. I know I have seen people pay to put their face on a cardboard cut out and they have fake fans in the stands, but this could not possible make up for the amount of loss the NBA has faced.
ReplyDeleteEveryone everywhere was hit very hard by the pandemic. Many people have been vouching for small business that are taking major hits. I think that people are failing to realize that sports have also been greatly impacted by COVID-19. While the NBA won't get shut down, nor will players not make enough money to live, they still are being hit by the pandemic just as hard as the rest of us. Seeing the difference in the games before the pandemic and after is insane. Not just that they are no fans, but the role those fans have to the players. I know a lot of players say they play better when there are fans there. It can definitely open up people's eyes and see just how much COVID-19 has effected our world and lives.
ReplyDeleteI don’t think I’ve ever had a moment where I’ve sat down and thought about how the coronavirus impacted sports… I knew people just shut down everything and I knew sports followed behind, but I didn’t think it was this bad… People pay in order to have their pictures in the stand, that’s something I did know, but I’m shocked that the sports industry lost so much because of the virus.
ReplyDeleteI think an interesting thing to note which corresponds with the state of NBA basketball is the trade off the NBA was forced to make. From a Wisconsin perspective the dip in ratings may seem very odd and may one may believe them to be a consequence of an absence of in person attendees. However I'd argue a part of the dip can be easily attributed to the miss eight teams that couldn't fit inside the bubble. The Bulls, Atlanta, Golden State, New York, Minnesota, Charlotte, Cleveland and Detroit are all absent. That's practically a third of the entire NBA audience who has to team to root for. Also considering some of the most interesting rookies like Zion Williamson and Bol Bol are getting practically no playing time. With this in mind the the effects of corona virus aren't directly ruining the reviews it's the size of the bubble and it's because of the corona virus that the bubble is made a necessity.
ReplyDeleteThis was such a well written article! I loved how you started with big picture statistics and then narrowed it down to the impact on individual players. The bubble is a super interesting concept to me. A family friend of mine is the head trainer for the Bucks and so their entire family had to quarantine for two weeks so that he wouldn't put the entire NBA at risk. It is just so interesting to me that one person can have such a major impact these days - if they contract COVID. I'm sure you heard about Richaun Holmes who was kicked out of the bubble because he ordered a food delivery. Each person is responsible for everyone else in this unique situation, so I wonder what major changes were made to the contracts of everyone involved. I also wonder why it is that so many major teams opted out of playing in Florida (besides the obvious health risks)? Was the decision partially based on financial opportunity costs? I would be intrigued to research the statistics on what teams were the most profitable this year, and how the decision to play or opt out was a factor in that. Incredible work Evan!
ReplyDeleteThis article was very interesting and informative. I never really considered the multiple aspects that sports industries, in this case the NBA were effected. These industries are extremely wealthy and in fact forgotten many times because we always assume that the NBA or the NFL will be just fine because they have a lot of money. The concept of the bubble was super unique and something that intrigued me, however, I'm glad to now know what the financial state of the NBA is in this day and age and the changes that occured due to the pandemic.
ReplyDelete