Points:
- The demand to attend an NBA game vastly exceeds the supply. NBA arenas are all capacities between 16k-21k, and even the ones built most recently (Warriors 2019, Bucks 2018) are not pushing the capacity envelope. Teams care more about that there be an atmosphere at games than they do maximizing gate revenue. They would rather the present state of ~19k sellouts than double the capacity (= people farther from the floor) with only 70-80% attendance.
- This is partly because gate revenue is so minor to NBA teams. Over the last decade, MLB has gone from tickets being 38% of their revenue to ~28% today; with the NBA, it's at 22% and has been (pandemic aside) since about 2016. NHL 37%, NFL ~16% (!).
- Instead they have, of course, focused on other ways to consume their content, and frankly push the envelope with how much reach they can achieve on social media. NBA Twitter is orders-of-magnitude bigger, more dynamic and more entertaining than the twitter communities for any other sport, soccer included. Views of clips and highlights are monetized, but also they meet the customer where they are in terms of time commitment. It's choose-your-own-adventure. To borrow Thompson's model: through their choices, the NBA is able to serve both SuperFan and CasualFan very ably through social media, in a manner that will survive CasualFan cutting the cable cord. As such, the total engagement generates / preserves a lot more customer lifetime value than it might appear if just trying to measure by directly-attributed purchases or whatever - and measuring that full effect is devilishly hard.
- Any attempt to ignore the brand-association value of the NBA, with its cultural cachet and relative immunity from negative associations, will inevitably undervalue the fanbases. And there are a lot more people abroad going around wearing NBA jerseys than there are MLB, NFL or NHL jerseys (and domestically, surely they're second only to the NFL). NBA fandom is a greater part of people's self-identity than other sports - I can compare it only to European football. The mention of the shoe market above reinforces this point too.
- The NBA Finals ratings is such a red herring, that the extent to which the article builds its case off of that makes one suspect the author has an axe to grind. It's not the super bowl, where unaffiliated fans and plenty of non-fans are going to take it in anyway. It's mostly for the fans of the two teams, and the ratings say more about the relative distribution of consumption channels than they do about popularity or trajectory. Where in that assessment are the numbers of people who streamed the game? Caught highlights later? Watched on NBA League Pass? Nowhere that I see. At least start from the set of playoff games, which amount to ~20% of the total nationally-televised games in a year. Focusing on the Finals feels like cherry-picking.
- And the All-Star game even moreso. The ASG is not recruiting incremental fans or generating incremental revenue except via the in-person stuff. It is a blip on the radar, one data point among thousands, and less valuable a data point than the rest, at that.
(in fairness, things like "NBA Christmas games are up 5%" are cherry-picking too, I discount all of that and instead buy the argument that "TV ratings are a little down over the last decade", and am arguing that it doesn't matter as to the health of the league)
The problem is that this:
- Doesn't translate into significant money for the league
- Doesn't result in higher television viewership for the league (it probably contributes to the record low viewership we're seeing recently)
Objection, facts not in evidence. They've poured a steadily-increasing amount of media-staff time and attention into promoting the social experience. And they have access to the data from partners that demonstrate the value of this. So while the direct monetization (of social media views) is probably not a huge fraction, the
indirect monetization is, I think the default assumption has to be, quite substantial and growing rapidly.
TV viewership is a partial means to an end. It is not the end goal here in and of itself. It is merely one of many tools the league has to pursue customer lifetime value.
You're conflating two things - the size of a fanbase and the value of that fanbase to advertisers. Yes, live events are still important to TV networks and they'll pay out the nose for them because most of their other content is being digested after the fact. There's also the idea of - well, what the hell else is ESPN or Turner going to air? More Hockey? More Law and Order? The money has to go to some kind of programming or they'll be out of business.
So you can say that it doesn't matter that they're losing viewership because the NBA is still making lots of money via this avenue. That's a fair point. But they're still seeing their viewership and fanbase dwindle even though the US population has grown. This TV deal may be great, but how sustainable is that? How many more viewers can the NBA lose until that becomes not a good deal for the networks?
You have jumped from "TV ratings are down a bit" to "they're seeing their fanbase dwindle", without any attempt to connect the two. And social media is a big counterargument to the idea that there is a connection there. Among other indicators we have, like the sponsorship volume / revenue. The fact that the TV contracts keep going up should itself be evidence enough that the broadcast partners, and the advertisers behind them, see a huge and growing amount of value in reaching NBA eyeballs, which overwhelms any effect from ratings or cord-cutting.
"oh they have to buy
some content, they have to have something to show people" yeah well let me assure you, the staff at the pro ultimate frisbee league would accept a far lower price from ESPN and Turner than the NBA is asking for. Why do ESPN and Turner choose to pay such a high price to specifically get the NBA, and why are others lining up to outbid them next chance they get? Because the NBA is such
a better product, reaches such a better audience and does so in a much more valuable way. Not all broadcasted content is equal, and we have to infer its value from the price people are willing to pay for it - or at least reckon with that as a value signal.
So when the article posted goes on about all of this drivel...
The NBA, not so much. The league allows entertainment-killing nonsense like flopping and intentional fouling and endless timeouts and interminable reviews to continue, and refuses to shorten the season — increasing the importance of every game and making it more likely that star players play — for fear of losing gate revenue (and, until very recently, regional sports network revenue). Far too many players, meanwhile, seem to treat fans with derision, asking for trades or simply not trying, with seemingly zero appreciation that they are harvesting money that is downstream of structures put in place decades ago, which are rotting out as more and more CasualFans can’t be bothered to find an antenna, much less pay for cable.
...I'm forced to conclude that Ben Thompson was lying at the top when he said "the love of my sports life is basketball, particularly the NBA", and whether he's lying to himself or just to us is almost immaterial. The game had intentional fouling and flopping in decades past (frankly more of it than today), it had "endless timeouts", if you're focused on shit like that than you're just not arguing in good faith. Shit, the league recently reduced the number of timeouts per game. And if you're looking at the stability of the finances and the growth curve thereof - DON'T YOU WANT TO SEE THEM EARNING THEIR TV PARTNERS SOME AD REVENUE?! Like, it's totally an argument out of both sides of his mouth. The goalposts are shifting all over the place throughout that article.
Oh, load management of stars is killing the league, is it? And your reasoning is that it is affecting the watchability of games, which are continuing to sell out while they hike the prices and yet build other revenue streams
faster than in-person is growing? So the NBA should reduce the number of games in the season, taking a proportional pro-rata hit to nearly
all their revenue streams (just about everything except merch, since even things like placement sponsorships are going to be priced proportional to impressions), just for the sake of reducing load management so that the people who already can't get tickets to all the sellouts will have an incrementally better experience?
With apologies to
@Old Fart Tree , it makes me wonder what the hell they're teaching over there at Kellogg, because this was just about the most poorly-reasoned piece of business analysis I've seen. Maybe a career at Microsoft and Apple working on apps and growth marketing doesn't make one an expert on forecasting the economics of sports leagues.
Yeah, Ben, a lot of people got into Formula 1 from watching Drive To Survive. The NBA... is also a sport. The useful comparisons just about stop there. I have my criticisms of the NBA and would tinker around the edges (Elam ending!), but I have seen absolutely no evidence that Silver / the owners lack any understanding about what they're doing, or how they're going to continue growing. Most particularly, they seem better-positioned to weather the storm of cable collapsing than just about any other media property. Thompson spends a lot of words arguing that ESPN is going to end up being a bad business model in 20 years, and the RSNs along with it. Yeah, and? What is his estimated impact on the NBA itself? If those numbers looked dire, he'd share them. We can infer a lot that he didn't - both that they can't be that bad, and also that he's something of an idiot for not even making an attempt to connect his big essay sections to his main thesis.