NBA cushions its economy after financial downturn

The NBA is once again looking up in its revenue picture. Before the impact of the pandemic, the league had accumulated seven consecutive years with rising figures, going from 3,680 million dollars in 2012 to its historical peak of 8,760 million in 2019. The business had strong support, but two years attacked by the covid caused the financial line to plummet.

In the 2019-20 season, with the birth of the pandemic and the obligation to play in a bubble, the league closed its income at 7.92 billion dollars and in 2020-21, with more games behind closed doors, the figure fell to 6,410 million, the lowest since 2016. That is why in 2022, with the return to the normal influx of the arenas, the NBA’s goal is aggressive in terms of recovering its economy: reaching 10,000 million dollars for the first time .

“The projections are that we will return to pre-pandemic income levels. Our expectation is that we are going to reach $10 billion in revenue this year (2022). Of course, that requires a lot of things to go right. We’re building a little bit of a reserve, so we’ll be able to handle a little bit of Covid rescheduling,” NBA Commissioner Adam Silver told the Sports Business Journal earlier this season.

Despite the setback due to the pandemic, the NBA maintained its level of income compared to other major sports leagues in the United States. At the end of 2020, the MLB generated 3,660 million dollars and the NFL a total of 12,200 million. The NBA was in the middle with $7.92 billion.

As it celebrates its 75th anniversary this season, the NBA has upgraded its business portfolio. In June 2021, it raised 1,460 million dollars through sponsorships, which, according to the IEG firm, is a record figure and increased 6% compared to 2020, exceeding the 1,200 million that had been obtained with commercial associations after the 2018-19 season, the last without a pandemic.

Said income record was a buffer against the losses generated by the two years in the pandemic and with the shortfall in box office funds, since it should be noted that between 2020 and 2021 the NBA suffered losses estimated at 3,222 million dollars. However, commissioner Adam Silver highlighted to the media that, for the 2020-21 season, revenues were down 35% compared to the estimated 40%, seeing this at least as progress.

“We lost significant amounts of money. The good news is that we can take a long-term view of this business and continue to grow it. We try to see it as an ongoing investment over a long period of time rather than a loss of individual seasons.”

According to figures from Front Office Sports, the NBA receives 2,600 million dollars from the sale of its broadcasting rights and another 1,460 million from its sponsors, which in the current season reached 48 brands with the addition of representatives of technological markets. and blockchain: Coinbase, Google Pixel and LegalZoom. In this way, broadcasting rights and sponsors will represent 40% of the 10,000 million that the league tries to reach by the end of 2022.

As for sponsors, brands like Clorox and Mondelez are experiencing their first full seasons as league sponsors. Also surprising was the arrival of Wilson, which replaced Spalding as the official game ball, since Spalding had been around since 1983. The NBA also recently renewed with Ticketmaster (which started in 2012), resumed with FanDuel and DraftKings, and also renewed with American Express. It also extended a pact with Sportradar.

Of its total list of 48 sponsors, those that have been agreed in the last five years in technological and digital matters stand out, such as YouTube TV, SAP, Rakuten, Oculus, Hyperice, Microsoft, FanDuel or Coinbase, but there are also other more long-standing ones such as EA Sports, 2K Sports and Sony.

Another source of income that has increased in the last five years is that which comes from the clubs’ agreements with the sale of advertising space on the patches of their jerseys. This was allowed starting in 2017 and, five years later, the combined value of the jersey patch program for the 2021-22 season is projected to be $225 million, more than double initial estimates, as during the first year (2017-18) Adam Silver mentioned the estimated potential financial impact was around $100 million in combined revenue for all 30 teams.

“The greatest opportunities continue to be outside of the United States. There are probably only a handful of brands in the world that have the expansive global reach and commitment that the NBA has. There is no question that we have to work through a transition in terms of a change in viewing habits in the United States, largely from traditional cable and satellite to streaming services and to digital devices, smartphones, tablets, all these changes work for us outside the US, where there are no established audience patterns around the NBA”, reflected Adam Silver, thinking that this year the game tours will also be resumed in countries such as Mexico, Japan and United Arab Emirates.