🏆 The Impact of the NBA Finals

A new champion will be crowned for the 6th year in a row, which means a new city will see the monetary impact of the Larry O’Brien trophy.

Even though we’ve been fiddling our thumbs just waiting for what will be about a week for basketball to show up on our TV screens again, the NBA Finals are back! In one corner we have the storied Boston Celtics franchise. The best team in the NBA all season, winning 64 games (out of 82 😉), with some of the best metrics and advanced stats “analytics nerds” have ever seen. All while trying to capture what would be their NBA-leading 18th title. In the other corner is the Western Conference’s #5 seed, Dallas Mavericks. Who built their team on the fly and out of desperation, led by inarguably a top-3 player in Luka Dončić, all while trying to pull off the impossible after missing the playoffs entirely just one year ago. But we’re not here to sell you on watching what should be an enticing series (GO MAVS! 🐴). Today, let’s review the NBA Finals as a whole. What goes into these next 2 weeks of championship basketball from a business perspective? What KPIs set the NBA apart from other sports? What is the economic impact of having the NBA Finals in two separate cities?

Let’s get after it…

What makes the NBA Finals run from a business perspective?

Media Rights. We know we keep beating this over your head, but hey, it’s always a great reminder! In 2014, the NBA signed a 9-year media rights deal with Disney (ABC/ESPN) and Warner Bros. Discovery (TNT) that generated annual league revenues of ~$2.7B, which is set to run through next season.

• For the NBA Finals in particular, ABC owns the rights (yes, Susie you can only watch these games on ABC 🙄).

• According to sources for the upcoming new media rights deal, ABC/ESPN is expected to pay ~$2.8B annually for the league's "A" package.

  • This would include the NBA Finals, a conference final, weekly primetime games, primetime WNBA games, and shared international rights.

Ad Revenue. It might not be all that surprising, but primetime advertising generates most of the revenue when it comes to the NBA Playoffs and ultimately the NBA Finals.

• During last year’s playoffs, the NBA saw record numbers as Disney raked in ~$241M in ad revenue, +12% from 2022.

  • Disney sold last-minute :30 ads for last year’s NBA Finals between the Denver Nuggets and Miami Heat for $1.2M.

  • Disney had 240 different advertisers, an increase from 184 in 2022. In addition, Disney added 91 new advertisers.

    • ➡️ Shows the importance of live premier televised sporting events + the popularity of the NBA with a young and diverse fan base.

• According to Statista from data in 2018 (see Table 1), the cost of a 30-second commercial aired at the NBA Finals averaged $700K.

  • Though we don’t have further data post-2018, we’d bet our mortgage it costs more today due to incremental growth of viewers, the rise of streaming, OTT media, and social networks.

Viewership. Fans drool for drama. This isn’t a one game, “winner-takes-all” event. Since the Finals are only one (best out of 7) series long, prices for ads tend to be higher which usually result in higher revenues as networks must sell space ahead of time. But viewership is a different story — one that possesses plenty of meaning behind the percentages, but is ultimately predicated on how long the Finals lasts (i.e. if a series goes the full length of 7 games, that will increase the number of viewers…because, hey, drama!).  

• For more evidence, we can examine last year’s Finals which saw the Nuggets defeat the Heat in 5 games.

  • The series averaged ~11.7M viewers (-6% from 2021), which had averaged ~12.4M viewers where the Golden State Warriors defeated the Boston Celtics in 6 games.

• Viewers are also driven by the specific markets that compete in the Finals (Nielsen rankings in parentheses).

  • In this case, we can say Denver (ranked #17) and Miami (#18) was not considered a flashy series.

  • 2021, on the other hand, between Golden State (#10) and Boston (#8) brought on more fireworks from their respective markets.

  • As for this upcoming Finals, get ready for Disney’s wet dream (yeah it’s a little wrong but Disney’s got to grow up at some point 😂)…Dallas (#5) vs. Boston (#8).

Tickets. Just as we get done talking about this upcoming major media market battle between two intense fan bases, it only makes sense to check in on how much tickets cost to get into a game…

• Game 1 in Boston is Thursday, with upper-level tickets starting at $900 on the secondary market, making it the cheapest price of the series 😳.

• The cheapest seats increase from there, to $931 for Game 2 in Boston, $1,209 for Game 3 in Dallas, and $1,372 for Game 4.

  • Oh, and if it gets to a Game 7 in Boston, that price skyrockets to $1,987, all this according to TicketiQ.

• Tickets in Boston are averaging $4,003 and games in Dallas averaging $4,346, according to TicketiQ (one of these days we’ll do a “backhand slap Ticketmaster article” 🤬).

  • Right now, the most expensive ticket on the secondary market for the whole series costs ~$50K for a Game 1 ticket.

• And if you’re lucky enough to go to a game, you more than likely won’t just pay for the ticket. You’d happily step in those massive lines and pay for food, drinks, merchandise, etc.

  • To give you an idea, the Mavs have already seen a 164% increase in online merchandise sales during their run through the playoffs to the NBA Finals.

Economic Impact. We’ve hit on this many times before when it comes to important sporting events occurring in cities, but the majority of these events are only put on during the course of 3-5 days. The NBA Finals, on the other hand, is very different…

• Hosting the Finals brings quite the economic boost to the cities involved.

  • Local businesses, such as restaurants, bars, hotels, and transportation services, experience a surge in customers as fans and media members flock to each city.

  • The increased demand for goods and services stimulates job creation and generates additional tax revenue for local governments.

  • It also acts as a platform to showcase the host cities to a global audience. It can foster tourism by promoting the cities as desirable destinations.

    • This exposure can have long-term economic benefits, as tourists may be enticed to visit the cities even after the NBA Finals have concluded.

• Last year, chief economist from the Denver Metro Chamber of Commerce, anticipated a direct economic impact to the region of up to $25M and a total impact of $100M.

  • Those numbers don’t even include ticket and merchandise sales, as those estimates are usually too hard to project.

• For Colorado in particular, sports/recreation and tourism are big for business. They accounted for ~$60B in spending (~13.7% of the state’s economic activity in 2022).

Overall, this series has it all on paper: massive media markets, star players, a historic franchise, and redemption narratives to drive what should be a fun battle. Oh, did we mention if you subscribe to this newsletter you are legally obligated to cheer for the Mavs?! Great!

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Quick Hitters

• 😼 Dave Tepper is doing his best to win back Carolina fans. Months after Charlotte announced a new practice facility and arena upgrades for the Hornets (NBA), the city is now considering an $800M investment to upgrade Bank of America Stadium, the current home of the Carolina Panthers and Charlotte FC. The city’s investment is said to be ~$650M, it wouldn’t come with any new taxes, and would be funded by existing taxes that are required to be spent on “tourism for Charlotte”. Tepper’s ownership group, Tepper Sports and Entertainment (how original), would pay $150M for the construction phase and be on the hook for cost overruns and maintenance over the next 20 years, which are estimated to be ~$420M.

• 🧦 Chicago regional media is back! At least that’s what Jerry Reinsdorf (owner of the Bulls and White Sox) told me to write. As we wrote a few weeks ago, the deal is now complete. This time, Reinsdorf agreed to partner with Standard Media (instead of previously reported, Stadium) to create the Chicago Sports Network (CHSN). CHSN will act as the new RSN and show the Bulls, White Sox, and Blackhawks. The Bulls and Blackhawks will begin airing on CHSN this fall, while the White Sox will follow beginning with the 2025 season. All three teams have been aired since 2004 on NBC Sports Chicago, which is now expected to shut down. It’s looking more likely that there will be an uphill battle as CHSN will need to negotiate with Comcast, which owns NBC Sports Chicago, all this after screwing them over 😬.

• ⚾️ Ooo yay another betting scandal! The MLB laid down the law and permanently banned San Diego Padres infielder Tucupita Marcano for gambling on baseball. According to MLB, betting data revealed Marcano made 387 bets on baseball between October 2022 and November 2023, including 231 MLB-related bets, as a member of the Pittsburgh Pirates. He spent over $150K on baseball bets including ~$87K on MLB-bets (the remaining bets were on international baseball games). He made 25 bets on Pirates games while he was with the club. Overall, Marcano won 4.3% of his MLB-related bets and lost all of his Pirates bets 😂.

  • Four other players — Athletics pitcher Michael Kelly, and three minor league players, Jay Groome, José Rodríguez, and Andrew Saalfrank — have been declared ineligible for 1 year for violations of MLB’s gambling policy.