The NBA Losing Money
Aiden Burkemper
The NBA lost a lot of money with the shutdown and loss of fans in the stands during the 2020 NBA season as according to sports.yahoo they fell 1.5 billions dollars under the projected revenue. According to ESPN they lost about 10% of their revenue, which includes 800 million lossed in gate receipts, 400 million lossed in sponsorships and merchandise as well as 200 million deemed net negative impact. In the previous season they made almost 9 billion dollars in revenue so that is a lot of money to lose out on especially when the NBA should be gaining more and more money each year rather than losing it.
This isn’t just a problem of last season but will also continue to be a problem for this season as players were not exactly ready to get back to playing seeing as the championship just wrapped up in october. Before the leagues announcement to start the season on the 22nd of december it was projected that they would lose anywhere from 500 million to 1 billion in revenue. Because Christmas is such a huge event for the NBA and the Christmas Day games usually bring in upwards of 500 million dollars each year which the league was luckily able to capitalize on starting just before the holidays. However making this decision could cause some long term effects later on during the season. With the early start to the season the quality of play has been ok at best as many of the teams that played in the bubble are coming back from a very short offseason which is causing fatigue and because of this could lead to decreased viewership. We have already seen some injuries such as Ja morant who likely had some fatigue after playing in the bubble. Without Ja morant playing for the grizzlies this will likely decrease the viewership of their games with no real star on the court for them. We have also seen teams rest their players in these first few games which isn’t something that we usually see at the start of a season but because of how short the offseason was teams like the heat and the lakers who made it all the way have had to rest their stars in games in order to keep them from the high risk of injury.
The fatigue isn’t the only thing looming over the NBA season that will lead to decreased production of money for the league but the loss of fans is a huge deal and according to CBS sports could cause a 4 billion dollar loss this year because of how much money they bring in with fans. With covid still threatening the league and the continuation of the league, they will have a big decision to make. The league will have to decide whether or not it will be worth it to try and let fans in sooner rather than later if they want to minimize the loss in profits.
With all this loss in money it brings into question the consequences it will have for the league and while there is no way of truly knowing all the effects I can say that it will almost 100% affect the salaries of the players. Right now in the league top tier players are making 30 to 40 million dollars a year. And with these new big contracts being handed out this offseason for even smaller players such as Kyle Kuzma who signed a 3 year 40 million dollar deal and Luke Kenard who signed a 4 year 64 million dollar deal both players at best are 4th options on their respective teams if that. For the bigger players like Giannis who just signed the supermax which gives him a 5 year 228 million dollar deal and the Contract extension for Rudy Gobert making him the highest paid center ever. Just the Supermax contract extension will eventually lead to over 50 million dollars a year. You just have to think how with the loss of all this money how will the NBA be able to pay for these contracts. This could lead to pay cuts for players and could potentially send the salary cap inflation rate backwards in order to eventually balance out the loss of money before they are able to increase the salary cap again. Just ten years ago some of the best players were making only 20 million dollars. Those 16 million dollar a year contracts for the player like Kuzma and Kenard could turn into 7 or 8 million a year, this could be the direction we are heading in if the NBA cannot figure out how to move forward to make the most profit. With all of these speculations for the economy in the NBA one thing is certain the NBA has some major decisions to make when it comes to how they continue whether that’s bringing back fans or something else.
Work Cited:
Gough, Christina. “Total NBA Revenue 2001-2018.” Statista, 27 Feb. 2020, www.statista.com/statistics/193467/total-league-revenue-of-the-nba-since-2005/.
Helin, Kurt. “Why Did NBA Swing toward Christmas Start, Shorter Season? Money.” ProBasketballTalk | NBC Sports, 26 Oct. 2020, nba.nbcsports.com/2020/10/23/why-did-nba-swing-toward-christmas-start-shorter-season-money/.
Michael Kaskey-Blomain Oct 31. “NBA Fears That Starting 2020-21 Season in January Could Cost League up to $1 Billion in Losses, per Report.” CBSSports.com, 31 Oct. 2020, www.cbssports.com/nba/news/nba-fears-that-starting-2020-21-season-in-january-could-cost-league-up-to-1-billion-in-losses-per-report/.
“Report: NBA Came in $1.5 Billion under Revenue Projections in 2020.” Yahoo! Sports, Yahoo!, sports.yahoo.com/report-nba-came-in-15-billion-under-revenue-projections-in-2020-135356538.html?guccounter=1.
Wojnarowski, Adrian, and Zach Lowe. “NBA Revenue for 2019-20 Season Dropped 10% to $8.3 Billion, Sources Say.” ESPN, ESPN Internet Ventures, 28 Oct. 2020, www.espn.com/nba/story/_/id/30211678/nba-revenue-2019-20-season-dropped-10-83-billion-sources-say.
Young, Jabari. “NBA's Return by Christmas Appears to Be on Track despite Covid.” CNBC, CNBC, 5 Nov. 2020, www.cnbc.com/2020/11/05/despite-covid-19-challenges-nba-december-return-on-track.html.
I really like all of your points in this blog post because the all sports have been affected but the NBA is moving fast, quickly, and safe with their methods of protecting players and people from COVID-19. One statistic that I saw was out of 500 players zero of them tested positive with Coronavirus. Although this doesn't directly affect the loss of money it shows that they are managing the situation properly. One thing I would like to add on in your blog post is about players sitting out. When the NBA allowed fans, people got upset with teams, players, and the league for letting teams rest their big name players. The fans come to see LeBron, Giannis, Nikola Jokic, Steph Curry, and Damian Lillard. They want to watch the best players, but this year is different because they aren't directly watching them from the stands, so it should be interesting how many players actually take rest days.
ReplyDeleteI think we all were impressed with how the NBA quickly adapted to the situation in front of them. Not only does it show you their dedication to bringing entertainment, but their dedication to make a profit. In a way do you think that these "bubble" restrictions could slowly be applied to other venues, such as military or other sporting events.
ReplyDeleteI knew that the NBA didn't make as much money due to no fans, but I did not think that they fell $1B under projected revenue. I think that the bubble solution worked well, but you are correct in saying that the short off-season is probably detrimental. Players will get injured and level of play will decrease, resulting in less viewership, and the constant presence of basketball may increase viewer boredom as well. All this means less money for the NBA.
ReplyDeleteIt doesn't surprise me they're losing money considering the coronavirus, however, only ten percent loss doesn't seem like that much to worry about when other industries have been suffering much more. I certainly hope they don't open to fans, because profit is much less important than human lives are, and it feels like it'd backfire. In all, it is good to hear they aren't losing so much money that they're under threat of bankruptcy or anything like that, so we don't have much to really worry about.
ReplyDeleteI find it very interesting that as NBA players are making more and more money, they are continuing to make their full rated salaries. I know that the MLB only allowed for players to make 60 percent of their pro salaries to compensate for the losses that the MLB is facing. This is very shocking to me that they are continuing to get every dollar on their paychecks yet nothing is being done to truly affect the economy when major businesses are paying millions to single individuals when they could change the lives of communities as a whole. The economy is much bigger than entertainment and covid is proving the point that things need to be changed from salary perspectives.
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