The NBA's Business Model
Charlie McGill
Dr. Roddy
IHSS
2.1.19
The NBA’s Business Model
The article that I read was about the NBA, specifically how the NBA makes money. First, the article talked about something they called BRI, or basketball related income. Basketball related income is any income that falls under the category of basketball: ticket purchases, concessions, TV deals, and merchandising. Not included in BRI is income collected through proceeds for expansion teams, fines collected throughout the season, and revenue sharing between teams.
Although TV viewership has steadily declined over the past few years, live sports have generally remained safe, which is causing TV networks to spend huge amounts of money to air NBA games through TV deals. These deals are one of the main ways in which the NBA makes its money. Recently in early 2016, ESPN and Turner Sports signed a 9 year, $24 billion dollar deal. That translates to $2.6 billion dollars annually. Other important ways the NBA makes money is through ticket sales and concessions, and licensing agreements and sponsorships, such as the NBA’s deal with NIKE to have them make game jerseys.
This article is important to economics because of the importance of the NBA in culture. Economics and culture are very intertwined in many ways; movies are released every year about wall street and the stock market, people have investing clubs and friendships built through a love of investing and money. Clothing and style are huge parts of culture, and huge parts of economics as well. People spend hundreds or thousands of dollars every year on clothes to look good, they watch tv shows and look at Instagram accounts on fashion models, who make money off views. Nobody can deny our culture loves material goods, especially clothes. In the same sense, people spend hours and hours watching and following the NBA every year, investing money by watching games, buying tickets, buying jerseys and merchandise, and also listening to NBA podcasts, or reading articles on the NBA, which supports those individual projects. But since society is so invested in the NBA, financially and emotionally, it’s important that the league operates in a financially stable way and makes money so it can stay afloat. The article also engages how other leagues can make money, mainly by saying other leagues should follow what the NBA does with its TV deals and licencing agreements and sponsorships. However, I feel like it could talk about what the NBA does with its money. If we were to know that, we could make a better analysis on how important the NBA really is economically.
Nath, Trevir I. “The NBA's Business Model.” Investopedia, Dotdash, 27 Oct. 2018, www.investopedia.com/articles/investing/070715/nbas-business-model.asp.
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