Commissioner Silver expects NBA to hit $10bn revenue this season
Adam Silver, commissioner of North American basketball’s NBA, projects the league will generate $10 billion in revenue this season as full capacity crowds will return to all arenas for the first time since the outbreak of the coronavirus pandemic.
Over the past two seasons, NBA teams have played with limited crowds or empty arenas due to Covid-19, which resulted in huge losses in gameday revenue across the entire league.
The $10 billion projection will be a significant increase on recent years as the NBA’s revenue dropped from $8.8 billion in 2018-19 to $8.3 billion for the 2019-20 season.
The league is yet to release financial numbers for the shortened 72-game 2020-21 season, but Silver told the media on Monday that the NBA’s revenue was down about 35 per cent last year instead of the estimated 40 per cent.
He said: “We lost significant amounts of money. The good news is we’re able to take a long-term view of this business and continue to grow in it.
“We try to look at it as an ongoing investment in the business over a long period of time as opposed to a loss of individual seasons.”
Television rights deals make up around $2 billion of the league’s turnover with lucrative agreements with ESPN and Turner Sports running through the 2024-25 season.
The NBA also has sponsorship deals with major corporate brands such as Microsoft, Verizon and State Farm and yesterday announced an expanded agreement with Google.
These deals could see the league pass its record $1.46 billion figure in sponsorship income set last season.
The NBA returns to its traditional 82-game format this season and Silver is hoping viewership figures will pick up again after two shortened seasons in which he revealed that numbers were down.
After American football’s NFL and ice hockey’s NHL landed lucrative new rights deals this year, the NBA is seeking to triple its TV revenue for the next contract but knows a surge in viewership figures will play a huge role in this.
The league’s nine-year deal with ESPN and TNT is worth $2.6 billion annually.
Audiences for the regular season and particularly the NBA finals have been down in recent years.
The finals last season, in which the Milwaukee Bucks beat the Phoenix Suns, averaged 9.9 million viewers, which was up 32 per cent from the 7.5 million which watched the Los Angeles Lakers defeat the Miami Heat in 2020.
Both finals represented significant decreases from the 2019 finals between the Golden State Warriors and Toronto Raptors which attracted an average of 15.1 million.
Silver also warned that the cable TV business model could deteriorate as cord-cutting increases and believes this may also have a huge impact on audiences for regional sports networks.
Meanwhile, the NBA has agreed a content deal in China with Kuaishou Technology, the short video platform.
Under a multi-year strategic partnership, the Chinese tech company will collaborate with the league to recreate content based on its games.
Kuaishou will serve as the official short video platform and video content creation community of the NBA.
The move is seen as the latest attempt by the league to improve its relations in China following a two-year period where it has had to rebuild its image in the country.
A tweet by Philadelphia 76ers president Daryl Morey (then general manager of the Houston Rockets) in support of anti-government protests in Hong Kong, a special administrative region of China, resulted in tensions between the league and the country which escalated in the months to follow and had major financial implications throughout the 2019-20 season.
Despite a blackout for many months, NBA games were eventually back on Chinese screens last season as the league began to rebuild relationships in its biggest market outside of the US.
CCTV, the state broadcaster, and Tencent, the internet giant and the league’s streaming partner in the country, had suspended their broadcasts of NBA games for up to a year.
The NBA also lost several sponsorship deals in the Asian country.
Kuaishou claims to have had 513 million monthly active users as of June 2021.
Tencent remains the NBA’s main digital partner in China, having recently extended its long-standing relationship with the platform through the 2024-25 season.
In other NBA developments, the New York Knicks have once again been named as the league’s most valuable franchise by Forbes.
The Knicks are valued at $5.8 billion, an increase of 16 per cent from the team’s valuation last year.
The franchise is one of three in the NBA valued at over $5 billion, along with the Golden State Warriors ($5.6 billion) and Los Angeles Lakers ($5.5 billion).
Despite the pandemic, the average value of NBA teams has risen 13 per cent since February, to $2.48 billion.
Forbes attributes this to record sponsorship revenue and high expectations for the league’s next media rights deal.
All 30 NBA teams are once again worth at least $1.5 billion.
The 2021-22 season tips off tonight with defending champions the Bucks taking on the Brooklyn Nets and the Lakers facing the Warriors.