In-season NBA news thread

InstaFace

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@InstaFace I didn't post that article nor did I respond to it. I responded to a poster who posted about social media success.

I'm not sure what "facts aren't in evidence" - Jesus, what a condescending way to post - but you're essentially taking NBA PR spin and presenting it as fact. I'm not going to go point by point because I have a job to do, but you pushing aside the two premier events on the NBA calendar - all-star weekend and the NBA finals - as insignificant to the overall health of the sport seems pretty silly. You seem to think these ratings rank below your two made up metrics of "Twitter communities built" and "jerseys seen abroad." Okay.

I'm sure the league is thrilled that fans would rather watch a highlight of a game on twitter rather than watching the full game live on TNT. It's a totally sustainable foundation for a sports league. No more work needs to be done by the NBA. They're good.
"Objection, assumes facts not in evidence" is a phrase we toss around on here all the time to question an assumption in someone's statement. It's nerdy banter, not meant as a personal or condescending phrase, but if that's how I came across I apologize and assure you that's not what I was going for. I appreciate and enjoy the intelligent points raised here by you and others, and save my scorn for the Ben Thompson article.

And yes, I know you didn't post that article, but my post was half to you and half in reply to it, because it seems you're trying to defend Thompson's thesis. I would summarize that thesis as "the NBA has a fan- and viewer-relationship problem and it heralds trouble to the league's revenue growth and long-term stability". That's what I took from your choice to argue that the NBA's TV viewership numbers are a matter of serious concern (or ought to be) to league management and fans such as we here, and to rebut others' points.

My references to twitter, jerseys and other things are meant to be illustrative of the types of influence, of soft power, that social media and brand value and other such things can have on long-term revenue potential. It's not an attempt to quantify specific impact or make a forecast, because for that we have the actual revenue numbers - and I hardly need to tell you what that looks like over the past 10-20 years for the NBA. One can simply glance at franchise valuations (as DBMH points out) or the salary cap and TV deals, to gauge that. Anyone arguing "these TV numbers are a canary in the coal mine for the NBA!" needs to reckon with the fact that revenues continue climbing quickly, and the next TV deal will be multiples of their current one.

And yes, the league would much prefer that someone who only has a few minutes for the NBA watch a highlight, than the obvious alternative that exists in a world without social media, which is "they don't watch anything, and are a non-fan". Someone who interacts with the NBA in a limited way is far more likely to someday decide to start watching games or even attending them, than someone who doesn't interact with them at all and has no gateway drug available. I would think that obvious, but I suppose it's possible there's evidence to the contrary out there - and if that's what's driving your remark, I'd be interested to know more.
 
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Scott Cooper's Grand Slam

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The Ja story is so bizarre. He allegedly punched a kid and threatened him with a gun. Ja did this allegedly at his own house. He told a police officer later that the boy was the aggressor because the boy checked the ball to him aggressively.

I can get wanting to be a cool neighbor and playing pickup with local kids, but how does this happen? The power imbalance that happens when an all world athlete punches a kid… I mean, if I’m playing pickup with the neighbors then I’m playing zone and I’m not going hard.
 

ManicCompression

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My references to twitter, jerseys and other things are meant to be illustrative of the types of influence, of soft power, that social media and brand value and other such things can have on long-term revenue potential. It's not an attempt to quantify specific impact or make a forecast, because for that we have the actual revenue numbers - and I hardly need to tell you what that looks like over the past 10-20 years for the NBA. One can simply glance at franchise valuations (as DBMH points out) or the salary cap and TV deals, to gauge that. Anyone arguing "these TV numbers are a canary in the coal mine for the NBA!" needs to reckon with the fact that revenues continue climbing quickly, and the next TV deal will be multiples of their current one.
I appreciate your clarification and additional context - I hadn't seen that posted before and it seemed like you were equating me with Thompson (which you kind of are) and then saying some nasty things about Thompson.

I know I could be chicken little here. The cynical part of me thinks that the NBA is currently kind of a Ponzi scheme, with combined bubbles of bloated team valuations and TV deals that can't possibly continue to rise so drastically forever, and the owners are just pressing their luck until some group of them are going to be left holding the bag. These don't seem like massively profitable businesses on a day-to-day basis, so they're really just prestigious, limited, speculative investments, and those don't always work out (as we've seen over the last couple of years). We'll see what the actual new TV deal is, but some of these talk of "multiples" just seem like NBA negotiating tactics rather than an objective reality today. Caveat - i'm often wrong!

We may not think the TV numbers are a canary in the coal mine, but I think we can look at the actions of the league and see that their leadership does - why else are they looking at adding midseason tournaments, play-in tournaments, rules changes and other ways to appease fans? If everything in their eyes is hunky dory, they'd be like the NFL and trying to keep the league on an even keel. The wild swings at improvements seem like increasingly large bets to fix the fundamental issue that people aren't paying attention as much as they used to.
 

benhogan

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I appreciate your clarification and additional context - I hadn't seen that posted before and it seemed like you were equating me with Thompson (which you kind of are) and then saying some nasty things about Thompson.

I know I could be chicken little here. The cynical part of me thinks that the NBA is currently kind of a Ponzi scheme, with combined bubbles of bloated team valuations and TV deals that can't possibly continue to rise so drastically forever, and the owners are just pressing their luck until some group of them are going to be left holding the bag. These don't seem like massively profitable businesses on a day-to-day basis, so they're really just prestigious, limited, speculative investments, and those don't always work out (as we've seen over the last couple of years). We'll see what the actual new TV deal is, but some of these talk of "multiples" just seem like NBA negotiating tactics rather than an objective reality today. Caveat - i'm often wrong!

We may not think the TV numbers are a canary in the coal mine, but I think we can look at the actions of the league and see that their leadership does - why else are they looking at adding midseason tournaments, play-in tournaments, rules changes and other ways to appease fans? If everything in their eyes is hunky dory, they'd be like the NFL and trying to keep the league on an even keel. The wild swings at improvements seem like increasingly large bets to fix the fundamental issue that people aren't paying attention as much as they used to.
Marc Lasry, probably one of the sharpest owners, may agree with your NBA team valuation top.
 

The Social Chair

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Using current franchise valuations, coming at the end of the TV sports rights bubble, is like saying the music industry was in great shape in 2001 because of how many CDs they sold in the 90s. The NBA has one more giant TV deal and then it's a guessing game.
 

HomeRunBaker

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The Ja story is so bizarre. He allegedly punched a kid and threatened him with a gun. Ja did this allegedly at his own house. He told a police officer later that the boy was the aggressor because the boy checked the ball to him aggressively.

I can get wanting to be a cool neighbor and playing pickup with local kids, but how does this happen? The power imbalance that happens when an all world athlete punches a kid… I mean, if I’m playing pickup with the neighbors then I’m playing zone and I’m not going hard.
To keep this in proper context let’s be aware that the “kid” was 17 and Ja is what, 23/24? This is obv wrong but this isn’t like a 34 yr old punching a 13 yr old…..or insert your own Karl Malone reference.
 

DeJesus Built My Hotrod

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Using current franchise valuations, coming at the end of the TV sports rights bubble, is like saying the music industry was in great shape in 2001 because of how many CDs they sold in the 90s. The NBA has one more giant TV deal and then it's a guessing game.
You may indeed be correct and this is all a bubble.

However I am curious what alternative you use to assess the state of the league aside from franchise valuations. What other alternatives are there to estimate the economic value of the NBA?
 

InstaFace

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I appreciate your clarification and additional context - I hadn't seen that posted before and it seemed like you were equating me with Thompson (which you kind of are) and then saying some nasty things about Thompson.

I know I could be chicken little here. The cynical part of me thinks that the NBA is currently kind of a Ponzi scheme, with combined bubbles of bloated team valuations and TV deals that can't possibly continue to rise so drastically forever, and the owners are just pressing their luck until some group of them are going to be left holding the bag. These don't seem like massively profitable businesses on a day-to-day basis, so they're really just prestigious, limited, speculative investments, and those don't always work out (as we've seen over the last couple of years). We'll see what the actual new TV deal is, but some of these talk of "multiples" just seem like NBA negotiating tactics rather than an objective reality today. Caveat - i'm often wrong!

We may not think the TV numbers are a canary in the coal mine, but I think we can look at the actions of the league and see that their leadership does - why else are they looking at adding midseason tournaments, play-in tournaments, rules changes and other ways to appease fans? If everything in their eyes is hunky dory, they'd be like the NFL and trying to keep the league on an even keel. The wild swings at improvements seem like increasingly large bets to fix the fundamental issue that people aren't paying attention as much as they used to.
Yes, the miscommunication was my fault.

For the bolded, I think the mistake is to assume that these are being considered to appease fans. It's perfectly possible that things are fine and they're just always looking at opportunities to improve things, because that's what good businesspeople should do. What they're paid to do, frankly. And in comparison to the NFL - the NFL recently added one more game, they tinker with the rules every year, they're adding more international games, there are lots of changes every year and I think the scope of what all leagues are considering is roughly the same. MLB just instituted the biggest rule changes in decades, shortly after making the DH universal. Hockey changed its overtime format (and probably more that I'm not aware of) within the last few years. MLS changed its postseason and may do more experimenting. It's in the nature of sports leagues to try new stuff occasionally. It doesn't mean that the fans are up in arms and need "appeasing", not necessarily. The NFL makes its fans eat shit on a regular basis (Personal Seat Licenses, anyone?) and they keep coming back for more. Sports allegiance is very sticky, even if fan intensity can wax and wane.

Anyway, I don't think you or anyone would be crazy to argue that NBA teams are over-valued. It's just that we have no real insight into the inner P&L of teams, so other than the trend of what teams are selling for, we can't really make arguments about different valuation models and what long-term trends could support this multiple or that discount rate. There's times it looks like "greater-fool theory" to me too, on that front. Maybe the Saudi Public Investment Fund will come to Owner X's rescue, or maybe Owner X will be the one holding the bag when the music stops and he takes a big haircut. Maybe a big portion of the value is an enjoyment / prestige premium that you pay in order to get to play around with an NBA team and be referred to publicly as the owner. None of us can say, really, except maybe Forbes or the Sportico guys.

But that's valuation of ownership, which is supposed to represent the NPV of all future cashflows. What I'd assume we fans are more concerned with is the fundamental profitability of the business, whether the game is growing and is financially healthy both short and long-term. Let the bankers argue about what it's worth to own it, I say. And from a revenue perspective, at least, we can break it down and look at some of the pieces starting from some amount of agreed-upon fact.






Television: $5.5 Bn / yr, 56% of total
- National: $2.7 Bn / year, with the NBA looking for the next one in 2025 to go up 2-3x, and with other packages being currently tendered incl a streaming-only one for $1 Bn. Both sides are clearly posturing, but the pool of bidders is wider than previously.
- Local TV / RSN contracts between $10-$150M / yr per team, which is another $2.4Bn / year total
- Foreign: $300M / yr from China, total $450M. Allegedly has been more static than the other revenue streams

Merchandise: $1.0Bn / yr, 10% of total.
- Based on a couple estimates I've seen

Sponsorships: $1.4 Bn / yr, 14% of total
- Strong growth trend the last decade
- Good synergies through things like the centrally-managed jersey patch sponsorships, which do really well with global brands

Tickets / In-Person (includes concessions): $1.9 Bn / yr, 19% of total
- Based on avg ticket price $109, avg attendance 14k, and not including playoffs
- Arguments over whether tickets are overpriced and the NBA is driving fans away is a classic complaint by sports media, because it gets clicks... but the trend of attendance tells a different story (As does that Athletic article above).

That presentation says the average NBA team has a 23% profit margin, with the Warriors leading the way at $200M and the average team making $63M. That's a lot of cushion to invest with.

To be pessimistic about the future sustainability of that, imo you'd have to think that the Local TV revenue stream is likely to fall off a cliff. And I certainly wouldn't bet on that one to outpace the others. But I just can't see how it declines by enough soon enough to matter to the league's overall picture.
 

HomeRunBaker

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Using current franchise valuations, coming at the end of the TV sports rights bubble, is like saying the music industry was in great shape in 2001 because of how many CDs they sold in the 90s. The NBA has one more giant TV deal and then it's a guessing game.
If this game were an American only game I may not disagree but the globalization of the NBA is imo not being accounted for by anyone who takes this position. This league is massive now in so many countries with so much growth still ahead.
 

DeJesus Built My Hotrod

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This league has 30 franchises and they rarely trade. When they do, in the case of Marc Lasry, the returns are staggering.

Lasry, who bought the Bucks in 2014 along with Wes Edens, reportedly has a 25 percent stake in the Bucks. Based on that $3.5 billion valuation, the Haslams will pay approximately $875 million. That's more than the $550 million Lasry and Edens paid to buy the team nine years ago. That's a tidy profit for less than a decade of ownership, and it's been an impressive nine years. In that time, Fiserv Forum was constructed and opened, Giannis Antetokounmpo emerged as a major star and perennial MVP candidate and the Bucks won their first NBA title in 50 years.
Whether this is the market top or a bubble I leave to those with a better crystal ball. However for every seller there is a buyer and the NBA makes even forced sellers like Sarver (~10x) and Sterling (a ~$12.5mm investment in 1981 turned into ~$2B in 2014) eye popping stacks of money.

The other thing to add is that there are pools of money out there looking for homes and the NBA is an attractive option. From The Athletic:

  • The league passed this expansion of potential institutional investors during a recent vote by NBA owners.
  • The NBA was the first U.S. league to allow private equity funds to take stakes in its teams and now it will allow even more institutional investors to assume passive investment.
  • Along with sovereign wealth funds, pension funds and university endowments will now be allowed to buy shares in NBA teams.
If the Forbes valuations from December are even remotely accurate - and they had the Suns at at ~$2.7B while they traded at ~$4B and they had the Bucks at ~$2.3B so if anything they skewed low - the total value of all the teams in NBA is somewhere in the $80-90B range.

The potential pool of investors from the group in the Athletic piece linked above collectively controls hundreds of billions of dollars. It seems like a no brainer for them to diversify into a franchise because even if one of them buys a share of the Warriors, its likely an odd-lot when compared to the rest of their holdings. Plus, they get to say they own an NBA team.
 

lovegtm

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Points:

  1. 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.
  2. 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% (!).
  3. 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.
  4. 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.
  5. 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.
  6. 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)


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 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...

...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.
I posted the article, but I like this critique better.
 

ManicCompression

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It's in the nature of sports leagues to try new stuff occasionally.
Appreciate your post, but this quote is an oversimplification. MLB and hockey are in a much worse position than the NBA in terms of fandom shrinking, hence their current flailing. MLS... I don't pay much attention, but I imagine they're growing at a snails pace. And the NFL - the things you mentioned are like small changes at the margin for incremental gains. They're not adding a game because people are losing interest in the sport. They're adding a game because people have so much interest in the sport that demand is outpacing the supply. That's the opposite of the NBA, which is considering wholesale changes to the structure of their season to stop the bleeding. The motivations are clearly different.
 

kenneycb

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I posted the article, but I like this critique better.
I don't. The fact TV contracts keep going up is a sign of scarcity as much as value they derive. There certainly is value from a scarcity perspective but TNT / TBS have no intrinsic value without have pro sports. The NBA knows this and can play them against each other for large national TV contracts. It also presumes social media / short-form consumption will lead to long-term sticky relationships with fans which is a major assumption. It may, it may not, but to say it will definitively translate to the same fan engagement today is a guess.

And it ends with a weird ad hominem attack where he exposes that he knows nothing about Thompson or his reach / influence.
 

lexrageorge

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Appreciate your post, but this quote is an oversimplification. MLB and hockey are in a much worse position than the NBA in terms of fandom shrinking, hence their current flailing. MLS... I don't pay much attention, but I imagine they're growing at a snails pace. And the NFL - the things you mentioned are like small changes at the margin for incremental gains. They're not adding a game because people are losing interest in the sport. They're adding a game because people have so much interest in the sport that demand is outpacing the supply. That's the opposite of the NBA, which is considering wholesale changes to the structure of their season to stop the bleeding. The motivations are clearly different.
Silver has been talking about the mid-season tournament for several years now. So I don't see what Silver's proposal had anything to do with trying to stop the bleeding.

EDIT: Also, the mid-season tournament idea was proposed to help with the problem of teams tanking, which was indeed starting to get to absurd levels ("The Process"). Instead, the NBA went with the playin, mostly in response to CoVid, and those games have been an unqualified success by all measures.

I do feel some of the "sky is falling" memes are an overreaction to the ratings of the NBA All Star game, which is truly a red herring. TV viewers barely care about All Star games these days; even MLB's, probably the most famous and by far the most entertaining, has struggled to draw ratings. NFL cancelled theirs; NHL turned theirs into a 3-on-3 tournament geared for live fans. Those games are not huge pieces of the league's TV revenues to begin with.
 
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benhogan

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ManicCompression

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I do feel some of the "sky is falling" memes are an overreaction to the ratings of the NBA All Star game, which is truly a red herring. TV viewers barely care about All Star games these days; even MLB's, probably the most famous and by far the most entertaining, has struggled to draw ratings. NFL cancelled theirs; NHL turned theirs into a 3-on-3 tournament geared for live fans. Those games are not huge pieces of the league's TV revenues to begin with.
All-Star weekend is one of the biggest weekends on the NBA calendar. They make a big deal out of which cities are hosting the all-star game. It's one of the reasons I fell in love with the NBA as a kid, as well as the Saturday NBC broadcasts. It may not be a "revenue driver" but it's certainly a big spot on the league's calendar that fans now don't give a shit about. Citing two other leagues that are doing worse than the NBA does not prove this point; it serves as a sign that they're closer to the MLB and NHL than the NFL.

And don't point out that the pro-bowl sucks, too. It's always sucked, and has never been a marquee event for the league. The NBA all star game was the second highest rated game on the calendar behind finals games for decades. It's not nothing that ratings collapsed.
 

BigSoxFan

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https://www.bloomberg.com/news/articles/2023-02-27/lasry-said-to-sell-stake-in-bucks-valuing-team-at-3-5-billion

counterpoint, Lasry starting a fund to invest in sports franchises could also be a bullish sign

Avenue Capital Groups' buying power is multiples larger than Marc Lasry's PA account.
Private equity is gobbling up as many minority stakes as they can get their hands on. I side with DeJesus on this one. I always follow the money and the money is still flowing quite a bit.
 

DeJesus Built My Hotrod

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Just to put a fine point on it, this is institutional money and while those people aren't immune to bad decisions or herd following, they are typically pretty shrewd. If they are allocating into a space there are usually healthy margins involved.
 

benhogan

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Private equity is gobbling up as many minority stakes as they can get their hands on. I side with DeJesus on this one. I always follow the money and the money is still flowing quite a bit.
His ownership stake in the Bucks probably conflicted with ACGs ability to bid for stakes in numerous sports franchises. The ~150MM he threw into the initial purchase of the Bucks, with the subsequent monetization will be part of a new Sports Fund's "track record".

Now he can use his GP status to use LP money to splash on numerous sports franchises. Going for fees/carried interest is in his wheelhouse and a better ROI.

Also his Bucks sale/starting a Fund greatly reduces his risk while retaining upside optionality. The asymmetric return profile every fund mgr craves
 

InstaFace

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I don't. The fact TV contracts keep going up is a sign of scarcity as much as value they derive. There certainly is value from a scarcity perspective but TNT / TBS have no intrinsic value without have pro sports. The NBA knows this and can play them against each other for large national TV contracts. It also presumes social media / short-form consumption will lead to long-term sticky relationships with fans which is a major assumption. It may, it may not, but to say it will definitively translate to the same fan engagement today is a guess.

And it ends with a weird ad hominem attack where he exposes that he knows nothing about Thompson or his reach / influence.
Thompson has a high reach and audience, and was one of the main reasons that Substack exists. I respect his hustle. I have read a number of things he's written, most of it probably linked from SoSH. Sometimes I have found them thought-provoking, but mostly I think he suffers from a lack of ever having run a business more complicated than his own blogging side gig - and this article suffered more than most. I'm sure I hardly need to provide examples of people who have a lot of reach or influence and yet obviously lack wisdom - hell, just look at the Elon/Twitter thread. If I made an ad hominem, this rebuttal feels like an appeal to authority :)

> The fact TV contracts keep going up is a sign of scarcity as much as value they derive. There certainly is value from a scarcity perspective but TNT / TBS have no intrinsic value without have pro sports. The NBA knows this and can play them against each other for large national TV contracts.

I would say,
- This probably overstates the extent to which TNT / TBS lack other enticing content. I'm sure they lead their presentations to advertisers with the NBA, but it's not all they got, they're not a regional sports network. When CBS lost the NFL, they didn't die. Other networks are doing fine without any live sports. Thus far, however, nobody has regretted the terms of a deal they made with a major sports network, only the deals they didn't make. Let me know the first such time you see one, and then we can talk about calling a peak.
- This statement, while it might be mostly true, does not rebut the idea that the league's finances are healthy, sustainable and trending well.

> It also presumes social media / short-form consumption will lead to long-term sticky relationships with fans which is a major assumption. It may, it may not, but to say it will definitively translate to the same fan engagement today is a guess.

It's a guess, based on every bit of accumulated understanding of the impact social media advertising has on consumer behavior. There's a reason social media advertising has been growing at a huge rate year-over-year for the last decade while many other channels are flat (and portions of offline spend are declining), and that is first and foremost the extent to which you can attribute future user action to previous influence and connection with them.

- Deloitte: consumers who are influenced by social media are 4 times more likely to spend more on purchases. Moreover, the influence can be so high that 29% of consumers are more likely to make a purchase on the same day of using social media.
- Academic thesis, 2021: Many forms of social media engagement, particularly when categorized as entertainment, have positive correlations with brand loyalty and retention
- This study says that in 2017-18, the NBA's brand partnerships generated >$800M of value for those brands, up 40%, and that the overall value of its social media footprint is $5 Bn. And that was 5 years ago.
(many more in that vein are a google away)

Consider this quote from Kevin Esteves, the NBA's VP of digital strategy:

“I think a lot of brands can be hesitant around new platforms as they’re emerging because they aren’t sure if the ROI is there, or they’re not sure exactly how it ladders up to their overall company objective,” Esteves said. “When you think about social media when it first started, a lot of brands were in the business of driving people back to their website or other offerings, whereas I think we’ve always had the directive from our executives to optimize for the platform we’re on and nurture engagement there.

“At first, it was a very big marketing platform for us, but now, social drives just about every business objective that we have. But I don’t think we could have achieved that if we were thinking that our first post on each platform had to drive 10 of our business objectives. We had to nurture engagement on those platforms to then be able to capitalize in the long-term. I think we benefited from that approach. Globally, I think you’re starting to see more and more sports leagues embrace a similar approach, being on multiple platforms and [creating specific] content that they make available on those platforms to engage fans and ultimately increase the reach of the sport.”
...
“We believe that social [media] is a driver of awareness and reach, and that it can complement and increase linear viewership,” Esteves said. “We know that there are such avid communities, whether it’s the #NBATwitter community or the communities that we have on YouTube, Reddit, you name it. They are among the most vibrant social communities on each platform, and we believe that it’s a complementary offering. It’s long been our strategy to drive awareness through social.
...
"Something that [Commissioner] Adam Silver always says is, ‘Ninety-nine percent of our fans never get to attend a game live.’ So how do we use social to bring the game courtside and make them feel like they’re actually there? We feel like that’s a critical bridge between social and TV tune-in, creating those authentic relationships and providing the context for why this is such a big game or matchup. We use social to do that storytelling.”
I think that qualitatively illustrates why they're focusing on it and what sort of impact it can have. And you might reasonably respond, "ok, if it's 'complementing and increasing linear viewership', Kevin, where is that showing up in the numbers?" And all I can say is, we only have some of the numbers. And social media views / virality, streaming / league pass and international attention all contribute to that. Esteves does offer numbers with one anecdote:

"For a game like Klay Thompson’s return, we had a live social producer on hand to capture Klay’s arrival, his warm-up routine, him coming out of the locker room and just all of that context. For all of our biggest nationally televised games, we’re making it appointment-style viewing. We know that fans on social are inundated with content. You see the trends on a platform like TikTok, where seemingly anyone can go viral now with content that they just captured on their phone.
...
Having a live social producer on hand for Thompson’s return paid off, as the NBA’s Instagram generated 103 million views — the most-viewed regular-season day in the account’s history. Klay-specific content generated more than 110 million views across the NBA’s socials, making Thompson’s return the most-viewed regular-season moment ever. Video of Thompson’s pregame introduction received 22.3 million views, which is the NBA’s second-most-viewed Instagram video of all-time.

It translated to linear viewership too. On NBA TV, the game averaged 844,000 viewers, making it the league's most-viewed regular-season game since 2016. Locally, NBC Sports Bay Area had a 12.7 household rating, the network's highest-rated regular-season game since 2016.
On its own it doesn't prove his strategic thesis, but it does show that the effort has some real-world effects that make a difference. The full article adds a lot more on their Youtube performance, how they optimize, etc.

Then there's the various other reinforcing actions. One of the major points of social media is how interactive it can be, how it can be a two-way channel for fans to engage with players and other public figures. Consider this discussion about the NBA doing just that with some of its all-stars. The engagement cost them almost nothing but definitely reinforced a lot of fans' relationships with the league. And that's before you get into the extent to which the NBA and its stars can influence political causes and issues - the financial impact of which is nebulous, but may have some social good attached, too, if you consider multiple bottom lines.

So I think the default assumption has to be that social media has positively impacted customer lifetime value / brand loyalty and the revenues that flow from that, and anyone thinking otherwise ought to be prepared to show their work.
 

InstaFace

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Sep 27, 2016
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Appreciate your post, but this quote is an oversimplification. MLB and hockey are in a much worse position than the NBA in terms of fandom shrinking, hence their current flailing. MLS... I don't pay much attention, but I imagine they're growing at a snails pace. And the NFL - the things you mentioned are like small changes at the margin for incremental gains. They're not adding a game because people are losing interest in the sport. They're adding a game because people have so much interest in the sport that demand is outpacing the supply. That's the opposite of the NBA, which is considering wholesale changes to the structure of their season to stop the bleeding. The motivations are clearly different.
Others have addressed some of your points, but just to say: MLS, since 2002 when ownership recommitted to its growth and especially since 2007 when David Beckham came over, has been growing leaps and bounds year-over-year. Paid attendance at games (Avg 21k per game, with 17 home games per team per season) now exceeds that of NHL or NBA on a per-game basis, and due to the league having 30 teams to EU leagues' 18-20, total attendance leaguewide now exceeds that of 2 of Europe's Big 5 leagues. It has been growing very impressively and recently got a 4x bump on their TV deal by going with Apple TV. Average team valuation is now around $600M. So, a bit better than "a snail's pace".

For the rest, you're looking at very similar fact patterns - NFL and NBA both tinkering with formats, calendars, marketing mix, etc - and ascribing entirely opposite narratives to them. If I wanted to be uncharitable, I could argue the NFL's TV ratings are down and so they're the ones flailing. In reality, of course, neither league regards themselves as "bleeding", both of them have "demand exceeding the supply", and they're just investing in trying to improve the product in reasonably incremental ways.
 
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wade boggs chicken dinner

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- This study says that in 2017-18, the NBA's brand partnerships generated >$800M of value for those brands, up 40%, and that the overall value of its social media footprint is $5 Bn. And that was 5 years ago.
(many more in that vein are a google away)
Thanks as always for the links in your posts. Great stuff to digest.

With regards to brand value, while looking for something else I stumbled across this article - https://www.mvpindex.com/insights/nba-partners-prosper-on-social-during-2022-playoffs - that discusses the brand value generated during the 2022 NBA playoffs.
 

Cellar-Door

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My one takeaway from the F1/NBA article was that it's a dumb conceit to build your "what should the NBA do" column around. F1 has grown a ton in the US because it was a super-niche sport that had a ton of money put behind moving it to a niche sport, it was essentially an exercise in entering a market. That's a completely different profile than a major sport in a market trying to keep or grow. If you want to compare the NBA's domestic viewership (he ignores international) to car racing, you would compare it to NASCAR (in a ratings slump).
 

kenneycb

Hates Goose Island Beer; Loves Backdoor Play
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Dec 2, 2006
16,090
Tuukka's refugee camp
In response to @InstaFace

Thompson has a high reach and audience, and was one of the main reasons that Substack exists. I respect his hustle. I have read a number of things he's written, most of it probably linked from SoSH. Sometimes I have found them thought-provoking, but mostly I think he suffers from a lack of ever having run a business more complicated than his own blogging side gig - and this article suffered more than most. I'm sure I hardly need to provide examples of people who have a lot of reach or influence and yet obviously lack wisdom - hell, just look at the Elon/Twitter thread. If I made an ad hominem, this rebuttal feels like an appeal to authority :)
The above (and earlier posts) is (1) comically arrogant and (2) demonstrates your lack of knowledge about Thompson, Stratechery, its business model, or its growth strategy. That's fine, he serves a niche audience, but your characterization of Stratechery and its business model is laughable. There's a great episode on the Acquired podcast where they interview Ben and he talks about his vision and intentionality in scaling it with the tradeoffs it entails in much greater detail. As a separate aside, he's a great read if you want to make money by trading off his analysis. More than pays for the annual subscription fees.

> The fact TV contracts keep going up is a sign of scarcity as much as value they derive. There certainly is value from a scarcity perspective but TNT / TBS have no intrinsic value without have pro sports. The NBA knows this and can play them against each other for large national TV contracts.

I would say,
- This probably overstates the extent to which TNT / TBS lack other enticing content. I'm sure they lead their presentations to advertisers with the NBA, but it's not all they got, they're not a regional sports network. When CBS lost the NFL, they didn't die. Other networks are doing fine without any live sports. Thus far, however, nobody has regretted the terms of a deal they made with a major sports network, only the deals they didn't make. Let me know the first such time you see one, and then we can talk about calling a peak.
What enticing content does TNT / TBS have besides pro sports and reruns? You're talking around my point with a bunch of vagaries instead of addressing it. There's a reason "TNT knows drama" is no longer a thing. I'm all ears to understand how TNT can survive solely on AEW, reruns, and a bunch of nondescript original content.
- This statement, while it might be mostly true, does not rebut the idea that the league's finances are healthy, sustainable and trending well.
Over the next handful of years largely because they have a new TV deal coming through. But there is significant upheaval in the area where the NBA generates a significant amount of revenue. My expectation is the TV deal after this will be markedly different. In addition, something will have to replace the RSN model as that is not sustainable without a signficant model

> It also presumes social media / short-form consumption will lead to long-term sticky relationships with fans which is a major assumption. It may, it may not, but to say it will definitively translate to the same fan engagement today is a guess.

-snip-

I am not saying social media is bad, it's the equation of how the NBA gets fans that is changing. To date the NBA has gotten the majority of new fans from a combo of local and national television. They have done a good job using social media to likely convert more given the traditional constructs in place. In the future, the national television will stay in place but will have a smaller reach and who the hell knows what will happen to the local television. That means they'll have to convert fans from social media consumption either using less television inventory or through other methods, such as streaming. It could work great, it could work okay, and it could be a disaster. I don't know, it's a major assumption. Television has historically been an extremely powerful tool that won't be as powerful moving forward.
 

ManicCompression

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For the rest, you're looking at very similar fact patterns - NFL and NBA both tinkering with formats, calendars, marketing mix, etc - and ascribing entirely opposite narratives to them. If I wanted to be uncharitable, I could argue the NFL's TV ratings are down and so they're the ones flailing. In reality, of course, neither league regards themselves as "bleeding", both of them have "demand exceeding the supply", and they're just investing in trying to improve the product in reasonably incremental ways.
I'm not sure if you're just disagreeing for the sake of disagreeing, but saying the NFL and NBA are at similar points health-wise is like saying my body looks like Channing Tatum's because we're the same weight. When the NFL starts considering gimmicky tournaments to resuscitate a regular season that even die-hard fans start tuning out, I'll agree with you. They're just totally different things. The end of the NFL season is exciting with teams vying for playoff spots. March/April in the NBA is a dead zone because the teams don't care about what seeds they are anymore. How are these things even comparable?

Over the next handful of years largely because they have a new TV deal coming through. But there is significant upheaval in the area where the NBA generates a significant amount of revenue. My expectation is the TV deal after this will be markedly different. In addition, something will have to replace the RSN model as that is not sustainable without a signficant model
This feels spot on. The NBA might see some of it's broadcast partners get consolidated (in TNT's case) or spun off ( in ESPN's case) in the 2020s.
 

Kliq

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LeBron will not need surgery, but will be revaluated in three weeks for his right foot injury. The West is such a mix of mediocrity that its possible this Lakers team could remain competitive for the play-in with LeBron on the shelf, but it will be tough, especially if Davis is also missing time.
 

ElUno20

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LeBron will not need surgery, but will be revaluated in three weeks for his right foot injury. The West is such a mix of mediocrity that its possible this Lakers team could remain competitive for the play-in with LeBron on the shelf, but it will be tough, especially if Davis is also missing time.
Yeah they'll still be in it. But at his age, wouldn't that be a massive risk if he came back? He needs to be thinking more of playing going forward then forcing a play in run. I think his season is done.
 

Kliq

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Yeah they'll still be in it. But at his age, wouldn't that be a massive risk if he came back? He needs to be thinking more of playing going forward then forcing a play in run. I think his season is done.
It's remarkable that LeBron at times can be such an incredible player at his age, but it also needs to be acknowledged that he has only been able to do that over the last few years by taking a lot of games off and being extremely careful in pacing himself. It's why I am so doubtful the Lakers can just get it together and go on a run in the playoffs; his body doesn't seem physically capable of that kind of grind anymore. He hasn't played anywhere close to a full NBA season in LA, except the bubble year which had it's own wonkiness to it. The last three years it feels like anytime he's had to play seriously for an extended period of time, he's gotten injured.
 

Euclis20

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It's remarkable that LeBron at times can be such an incredible player at his age, but it also needs to be acknowledged that he has only been able to do that over the last few years by taking a lot of games off and being extremely careful in pacing himself. It's why I am so doubtful the Lakers can just get it together and go on a run in the playoffs; his body doesn't seem physically capable of that kind of grind anymore. He hasn't played anywhere close to a full NBA season in LA, except the bubble year which had it's own wonkiness to it. The last three years it feels like anytime he's had to play seriously for an extended period of time, he's gotten injured.
And even if he misses the rest of the season, he'll have more games played over the last 3 years than Anthony Davis.
 

benhogan

Granite Truther
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Nov 2, 2007
20,124
Santa Monica
And this morning he was apparently flashing a piece on IG Live:

View: https://twitter.com/raphousetv7/status/1632018247997624322?s=20


Either he's spiraling badly or he's been an utter dunce this whole time and just been lucky that it hasn't really hurt his public image until this point.
Yikes o_O

Playing with fire here, Memphis should move him this summer, before his value completely craters.

They are 4-5 in games without Ja this season
20-5 without Ja last season

His small size and attacking-the-rim style of play make him a major injury risk anyways.
 

BigSoxFan

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HomeRunBaker

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ElUno20

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Ja has always been this moron. I would be more suprised if Silver did anything than a fine event though this warrants a suspension.
 

The Social Chair

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The rapper Yung Dolph was shot and killed in Memphis while trying to buy cookies at a bakery. Memphis is not the city to play pretend. Ja pisses the wrong person off and he'll have bigger problems than Adam Silver.
 

DeJesus Built My Hotrod

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Don't like the smoke coming out of House Morant these days but if his value is cratering across the league I hope the Cs check in on him.

I think the takes about his future ending in no championships and tears are certainly possible. But I also am noting that he is immensely talented and, as far as we know (I read the entire WaPo piece earlier in the week), he is just being a crappy, entitled 23 year old. I don't condone the behavior and the pattern is definitely concerning. But it hasn't yet crossed the threshold where he is irredeemable in my eyes. I understand that others may not agree.

Based on what is public, I doubt Memphis trades Morant because of this. He needs better people around him. He should be emulating Mogul Life rather than whatever this is but its his career.
 

Cellar-Door

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Ja has always been this moron. I would be more suprised if Silver did anything than a fine event though this warrants a suspension.
It's tough for him to justify, union is stronger and CBA less commish rule by fiat friendly than the Stern Era.

Morant is clearly a problem, and I'm not sure it changes unless he gets shot or Nike drops him. His Dad is an attention whore fake tough guy too, and his Mom got him into one of these problems by calling her millionaire son to try and beat up a mall employee she was fighting with.

Even if nothing really happens I bet he ends up a 30 for 30, his game screams out "guy who loses his freak athleticism to an injury and career nosedives"
 

DeJesus Built My Hotrod

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I will be surprised if his Nike handlers aren't all over him given the week's headlines. Their necklace is prominently featured on that clip and it feels like they are in the position of punting on star athletes who don't fit their brand. But that's just conjecture.

Again, with most young NBA stars emulating the LeBron/Steph/KD etc brand building model, its fascinating that Morant is trending in this direction. LeBron's sort of path typically ends up being fairly lucrative whereas late career mafia/gangster types tend to end up in worse spots.
 

HomeRunBaker

bet squelcher
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Jan 15, 2004
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The rapper Yung Dolph was shot and killed in Memphis while trying to buy cookies at a bakery. Memphis is not the city to play pretend. Ja pisses the wrong person off and he'll have bigger problems than Adam Silver.
Silver clearly running from Ja and his piece. We knew for years who Stern’s replacement was going to be…..but who is next in line this time around?

37088F75-4DCA-4D6F-84A1-971CECD5ACC9.jpeg
 

TheRooster

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Aug 3, 2001
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And in sad but unsurprising news, Jonathan Issac is out for the year again. ESPN link

Can't help but wonder about RWIII and MJP. Some guys just struggle to stay healthy.