The Business Side of the NBA’s Return

Due to the impact of the COVID-19 Pandemic, worldwide sports events also got affected. Since March 12, the National Basketball Association postponed the season for three and half months. However, the NBA decided to resume the season which began on July 31. This is the fifth time that season has been stopped and it’s the first time that the season was postponed due to a pandemic. So, why does the NBA insist on resuming the season? Regarding the answer, I think it’s because of business consideration and looking toward the future. 

  1. Economic Consideration 

Although the NBA has the third-place ranking in revenue of the professional sports league in the United States, the annual revenue of the association is still impressive. According to Statista.com, the NBA total league revenue from the 2018-2019 season is $8.76 billion.

However, due to the season postponed from March to end of July, the NBA has lost more than $100 million. While another piece of mind-boggling data shows that just in March, the NBA has lost $450 million in gate revenue, in other words, the NBA has deficit over $1.8 billion during the season suspension.

In 2014, the NBA signed a 9-year total $24 billion broadcast contract with two major media companies, ESPN and Turner, which averaged nearly $2.67 billion per year. This money is left as operating expenses by the NBA’s board of directors. The following will be equally distributed to all 30 teams in the league. This is also a relatively large amount of revenue for NBA teams in each season. In addition, regarding the broadcast contracts signed with ESPN and TNT, the NBA also has broadcast contracts with other media companies, which also includes local and foreign broadcast media.

In the total revenue of the NBA including TV broadcast, tickets, sponsorship, jersey ad, merchandise, etc. if the NBA cancels the season, it will be affected in many aspects. For example, players might lose half of their salary or the team will deficit at least a few millions dollars. 

That’s the reason why over 70 percent of players supported the resumption of the season while players can decide if they want to play inside the bubble for this season. Hence, for overall economics considerations, regarding revenue, sponsorship, players and teams, we now know why the season needed to be resumed, because of the massive commercial value behind it.

2. Looking toward the future 

In mid June, when NBA Commissioner Adam Silver announced that the season would resume at the end of July, many experts questioned and criticized it because it might make the pandemic even worse. However, since the NBA resumed the season on July 31, it seems that playing inside the bubble is feasible. The league not only implements comprehensive virus detection on players, but also manages all staff who enter the bubble. This is the first time since 1946 that games are not open to fans to watch. For the NBA, this is the new challenge, if this season is completed successfully, the new season will be able to begin in December. At least, with the current situation, the pandemic hasn’t been ebbing, fans can still watch the game through the television, streaming, and multimedia systems. To a certain extent, this provides people a physical and mental relaxation, it helps people to reduce the pressure of life. Moreover, the resuming season certainly brings positive energy to the NBA. 

Sports is a special industry in the world, facing the unprecedented situation, we wish everything can return to normal soon, especially with fans in attendance.