The National Basketball Association (NBA) Analysis

Sport is a complex multi-facet industry encompassing modern spectacles such as the winter and summer Olympics and casual pick-up basketball courts games, competitions with thousands of participants including recreational joggers and runners in the Boston marathon. People watching any sports facets behind a screen participate in the event in some way. Games remain to be one of the most watched events in the world and a source of entertainment to millions of fans. In fact, basketball falls among the top most watched competitions. The National Basketball Association (NBA) is a popular term not only in America but also around the world among sports lovers. NBA is a professional basketball tournament located in the North America, with a total of thirty teams participating in the league competitions. Twenty-nine of the franchises have their roots within the United States, with only one team from Toronto Raptor in Canada. The association had existed since 1946 when it was founded under the name Basketball Association of America (BAA). The league name changed to NBA in 1949 after the merger of the two principal basketball league rivals BAA and National Basketball League (NBL). NBA has grown to be among the four top professional sports leagues in North America. The primary association task now includes developing the rules of the games, officiating, marketing the players and their teams, and offering regulation for the ownership of the franchise.

Major NBA Industry Players

Along with the association, NBA has other major industry players. Among those major contributors to this sports entertainment, there are the players, the teams, and the sponsors. In the 2014-2015 games season, the total sponsorship of the NBA summed up to 739 million dollars (Ribas 27). Anheuser-Busch remains to be the primary sponsor. The company operates at least 12 breweries within the United States and has its headquarters in St. Lois Missouri. Anheuser-Busch also operates ten theme parks within its entertainment division. According to research, insurance companies have overtaken autos to become the most active category sponsoring the entertainment. Auto and beer hold the second and the third positions in the sponsoring categories respectively. NBA partners keep changing, but they remain a crucial industry player since they invest the much-needed capital to finance the teams and pay the players. Other major sponsors include the Harman, Permanente, Kaiser, Under Armour and Pepsi-Cola (Ribas 25). The sponsors contribute to the industry through providing the needed advertisement that attracts fans increasing the revenue of NBA. The sponsor also obtains profit by having their products and services advertised through the widely watched NBA series competitions.

In addition to the sponsor, the different franchises play a significant role in the success of the sport. The thirty teams consolidate a strong team by harnessing talents and offering training to the players. The competitive aspects of the games that attract and entertain the public originate from the dedication of the teams and the team managers to perfect the skills displayed by their players on the court (Nath 3). Similar to any other sport, the solidarity of the teams, the financial strength, and the efficient management determine whether the team embodies greatness by winning the championship. Although it is hard to name the best team in the history of the NBA competition, some teams such as the Golden State Warriors, Chicago Bulls, Los Angeles Lakers and Boston Celtics have left an impression in the history of the tournament. The success of any team in the league significantly depends on the presence of unique talents, such as world famous Michael Jordan, to the upcoming star Stephen Curry.

Stephen Curry, Kelvin Durant, LeBron James, Russell Westbrook and Anthony Davis qualify as some of the best industry players in the capacity of court players. There should be no debates on whether Curry is the current best NBA player because of how spectacular he has been on the court. Curry stands as the newly crowned champion and the most valuable player in the NBA. Each NBA player possesses a label that describes the role of the player on the court (Nath 2). The court has five positions; hence, there are five different names. An individual player obtains a given label mainly based on the size of the player physically. Strong and big players commonly receive the center or power forward. If he is small and swift, the player obtains the label of the guard. The general view of the player’s skills qualifies him into one of the specific five positions. If the player is a guard and possesses unique shooting skills, he gains the label of a shooting guard. If he handles the ball well and makes good passes, he is a point guard. Although the process of labeling players is not scientific, it plays an important role when acquiring new players (Nath 2). However, physical body posture does not simply dictate the position of a player on the court. Some players can demonstrate excellent performances on positions that they are least expected to perform well. Curry has the label of a shooting guard. However, it should be noted that the effectiveness of any player on the court significantly depends on the performance of the teammates.

Size and Scope of NBA League

The initial step to the estimation of the size and scope of any sports requires an assessment of the total viewership that the sport attracts. The size of NBA can be estimated through examination of all sports participants who engage in the game in the capacity of players, people who attend and watch the game on the court and those who watch or listen to the event through the television or radio respectively. Attendant promotes the size and economic scope of the professional sport by purchasing tickets (Humphreys and Jane, 22). Television viewers and radio listeners increase the revenue of NBA through increased viewership that raises the cost of broadcasting rights. NBA possesses a tremendous viewership within the United States compared to other professional games. NBA comes second in regard to the most day to day watched sports after NFL. A record viewership of 72 million in one season illustrates the huge crowd that participates in the entertainment. As the NBA expands, cities continue to pursue the big franchises for their metropolitan areas. Some of the teams that have moved to increase their capacity to gather finance from fans include the relocation of the Golden State Warriors from San Francisco to Oakland. The fundamental impetus of any of the teams’ relocation revolves around increasing the arena-related revenues (Rascher, 280). The better revenue enhances the capacity of a franchise to compete for better players, which, in turn, results in a better team that attracts more fans hence extra income and the cycle continues.

A tremendous financial impact witnessed through the NBA games comes partly from the sponsor but hugely from the sports fans. Cities that host the NBA major events project and in most cases exceed the expectations regarding states economic boost. For instance, New Orleans got awarded the NBA 2014 All-Star Game. The local economy is expected to receive a boost of around 89.6 million dollars for hosting the midseason showcase event (Eichenhofer). The assessment of the economic impact after the event revealed that the projection had been exceeded, with a total spending of 106.1 million dollars. The economic impact is felt in the community for a period, and some of the visitors become regular visitors of the city creating long-term financial implications (Humphreys and Ruseski 19). Along with the cities, the players rank among the best-paid athletes in the world. The billions of dollars that circulate as a result of the NBA events do not only create immediate economic impacts but also lead to eventual impacts on cities, individuals and families (Schoettle).

How It Works

Operating a multiple billion dollars industries requires NBA to have multiple streams of revenue. Broadcast rights, advertisements, and merchandise act as the major source of income in the industry. Recently, Nike and NBA entered into a one billion dollar deal. The deal will have Nike become the official NBA brand. The NBA parted with Adidas for Nike, the leading manufacturer of basketball apparel and shoes in America (Schoettle). Nike collaborated with Michael Jordan to create the famous Jordan brand making the deal both logical and helpful in developing the international and domestic NBA brand. The 2017 season will be the first time when the NBA Jersey will have the iconic swoosh logo. The deal will see Nike produce most of the NBA merchandise including the WBNA merchandise. Arena tickets also contribute to the revenue generated by the various franchises. The majority of the collected revenues are shared among the different teams. The finances are paid to the players and the rest of the team officials. Some sizable amount goes to the sustenance of the annual operation of the franchises (Yam 20).

Current NBA League Trends

Among the major trends in NBA industry, there is the expansion of the various franchises and relocation. Throughout the game history, there have been a total of 25-30 relocations based on the definition of relocation (Rascher, 275). This means that a team relocates in every two to three years. The most recent team to relocate was the Seattle Supersonic that moved to the Oklahoma City Thunder. Relocation cannot be expected to stop because the desire to increase revenue and afford bigger and better arena continually grows with the expansion of the NBA competitions. Relocation commensurately increases or endeavors to increase the value of the major clubs. Three major factors influence teams when selecting the city to relocate to, which include the owner preference, political climate and the economics of the new location. Most teams’ owners are driven by maximizing profit while few have a personal motivation. Political support for the major clubs proves important because the stadiums and arena fees are partially paid or fully paid for by the local government. Bigger and less expensive arenas host more fans increasing the revenue earned via games tickets (Rascher, 295). Every local government bids and offers amenities to NBA teams to motivate them to move to their city. The team owners mostly move the teams to the locations with an opportunity to maximize profits. Before relocating, the clubs evaluate the city in terms of population and financial might. Cities with big and richer population attract the major teams easily compared to smaller cities. Cities with numerous corporate headquarters are assumed to have a better capacity to support a team when contrasted to a city lacking such demographics features. The success of teams in the modern era hugely depends on the corporate support obtained through sponsorship and purchase of merchandise. Cities with more and growing corporate headquarters can better influence sports teams (Rascher, 277). Furthermore, change in team revenue generating capacity improves the performance and the eventual profitability of the franchise.

Over the last eleven years, television viewership has declined as a result of technological advancement. DVRs and streaming services have also felt the effect. In contrast, live games have remained significantly immune to this trend. Consequently, different networks are competing to have the rights to televise the games by paying exorbitant rates. Recently, a 24 billion dollar media rights deal between NBA, ESPN, and Turner Sports was signed. The media right deal represents 180% increase from the previous deal that was signed in 2007 (Wharton). The deal will take effect during the 2016-2017 Season. NBA will receive 2.6 billion dollars annually from the Turner Sports and ESPN. The increase in sponsorship has and continues to increase as evidenced in the replacement of Adidas by Nike as the main NBA apparel sponsor. Nike deal represents a 245% increase from the previous deal. With the expiry of the collective bargaining agreement (CBA), the deal will increase the players’ contracts and the wealth of the owners (Yam 19). The salary cap projection indicates an increase from the current sixty-three million to one hundred and eight million in the 2016-2017 series.

Due to a continually growing increase in popularity of the basketball competition, 30 NBA teams have experienced a trend of the increase in tickets sales and concessions. Chicago Bulls records the highest attendance in the league and has witnessed a rise in attendance from 0.85 million in 2010 to 0.875 million in 2015 (Wharton). The enhancing attendance resulted in an increase in the ticket price by 3.4%. Cheapest Charlotte Hornets tickets also experience an increase by 4.5% from the previous year. The increasing ticket prices are not likely to discourage attendance. The management of day to day events and activities will be simpler for the managers, and the players will get better compensation offers, with more funds at the team’s disposal.

Future NBA League Outlook

The increasing number of international NBA players and overall countries representation on the NBA roster project a shining worldwide growth. On the 2014-2015 opening ceremony, NBA recorded 101 international players from thirty-seven different nations. As the number of international players continues to grow, basketball fans around the world will develop more interest in the sport. As the global viewership increases, NBA will target the international markets to promote merchandise sales and media broadcasts. Possibly, European based NBA team will participate in the competition shortly, which will improve the league overseas operations.

The NBA’s D-league has experienced a terrific ten years and holds a great potential for the future of the NBA league. D-league has evolved from an unnoticed fringe league with teams on the edge of folding to the current stable talent pool for the future NBA players. The NBA teams without a D-league representation are most likely to add their franchises (Moore 7). Some teams such as the Golden States Warriors continue to take full advantage of the Development league to develop talents and train offensive sets for their main team counterparts. The new television deal will increase the exposure of the D-league, which will draw more teams to utilize it to its fullest potential. One of the biggest challenges that the opportunity created by the D-league is likely to face involves the movement of players to abroad teams with more money (Moore 7). Another challenge is the ability of any team to select any player from the D-league. As a result, most teams are hesitating to develop their players through the league because of the lack of assurance in keeping the players. In future, the rules are likely to change and NBA league teams will only draw talents from their affiliate NBADL team (Key 7). If the players become draft-eligible the moment they leave high school, the team will have more confidence when investing in young talents. Extra cash needs to be pumped into the minor league so as to maintain the talents instead of losing them to international players competitors.

Although certain steps have been made in trying to promote fair competition from all the teams, much still need to be done. Currently, the best teams rely on their location and financial strength to gain a competitive edge over other economically disadvantaged teams. The rates of growth of the financial abilities of the various franchises also defer reflecting possible future competitiveness inequalities (Key 8). Nevertheless, when well addressed, the identified challenges and opportunities contain a more prominent future of the NBA league.

Conclusion

The research identified principal fundamental components that contribute to the success of the NBA sports entertainment. Players, fans, and media have been identified among the major industry players. The major industry players promote the sport by availing the necessary finances to pay players and run the teams. Cities and corporate headquarters also play a significant role in establishing teams in their respective cities. With numerous and capable industry players, NBA has experienced tremendous growth, especially regarding finance and viewership. Fans interested in the games gradually increase resulting in more competitive teams. One of the trends identified in the basketball industry revolves around the cut-throat competition of media networks and sponsors when buying the right to broadcast or brand the NBA franchises. The entertainment has great potential that includes drawing more international players and increasing the broadcast and merchandise market to areas beyond the American boundaries. The Development League also has the ability to act in the quality of the NBA talents nurturing center.