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The NBA's $10 Billion Business
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Hey Friends,
The 2022-2023 NBA season begins tonight with two games, including the host Golden State Warriors receiving their championship rings ahead of their opener against the Los Angeles Lakers in San Francisco. So I figure there is no better time to provide an update on the business behind the NBA. Let’s dig right in.
Annual NBA Revenue Will Surpass $10 Billion
After dropping for two consecutive years and posting $6.4 billion in revenue for the COVID-impacted 2020/21 season, the NBA set a league revenue record of $10 billion last year.
NBA revenue over the past five seasons (2018-2022):
2017/18: $8 billion
2018/19: $8.8 billion
2019/20: $7.9 billion
2020/21: $6.4 billion
2021/22: $10 billion
That means NBA annual revenue has nearly tripled over the last decade—going from $3.7 billion in 2012 to $10 billion in 2022.
The NBA makes money through three main avenues:
Television rights
Sponsorship deals
Merchandise
But most of their annual revenue comes through “basketball-related income,” which represents $8.9 billion of the $10 billion total and includes line items like TV rights, sponsorships, merchandise, tickets & concessions, and other things.
And while media rights continue to grow across all major US sports properties, the NBA has done an exceptional job on the sponsorship front. For example, since Adam Silver became NBA commissioner in Feb. 2014, the NBA’s sponsorship revenue has increased 135% from $679 million to $1.6 billion.
The main driver of this increase has been the NBA’s jersey deal with Nike and their jersey patch program with individual teams. The Nike deal, for instance, was signed in 2015 and brings in $1 billion over eight years, and the jersey patch deal program, which was launched in 2017, reportedly fetched the league more than $200 million in revenue last year alone.
This level of revenue ($10 Billion) firmly supplants the NBA as America’s second-most popular sports league —trailing the NFL ($18 billion) but ahead of the MLB ($9.6 billion), NHL $5.3 billion) and MLS ($1.2 billion).
NBA Franchise Valuations Continue To Climb
The average NBA franchise is now worth $2.48 billion, according to Forbes. That’s a 13% increase from 2020 to 2021, and the average value of an NBA team has increased 12x since 2001 — a 1,100% increase from $207 million in 2001 to $2.48 billion in 2021 (+13.22% compounded annual growth rate).
The NBA’s most valuable teams list includes the New York Knicks, Los Angeles Lakers, Boston Celtics, and others. But even teams like the Memphis Grizzlies, New Orleans Pelicans, and Minnesota Timberwolves are now worth more than $1.5 billion.
New York Knicks: $5.8 billion
Golden State Warriors: $5.6 billion
Los Angeles Lakers: $5.5 billion
Chicago Bulls: $3.65 billion
Boston Celtics: $3.55 billion
Los Angeles Clippers: $3.3 billion
Brooklyn Nets: $3.2 billion
Houston Rockets: $2.75 billion
Dallas Mavericks: $2.7 billion
Toronto Raptors: $2.47 billion
Of course, most of this growth is due to the NBA’s impending media rights deal.
The NBA Has A Bright (& Bigger) Future
Every NBA team’s value will likely skyrocket in 2025 when the league signs a new TV deal. For example, the NBA is reportedly seeking a deal worth $75 billion at an annual rate of $8 billion. This would mean that teams could receive anywhere from $275 million to $300 million per team, and the total size of the deal would be second only to the NFL’s $10 billion annual TV deal package.
Secondly, just as we saw the “Ballmer bump” increase NBA franchise values in 2014 when Steve Ballmer bought the LA Clippers for $2 billion, a “Sarver bump” could be coming when Robert Sarver sells the Phoenix Suns, which could get anywhere from $3 billion to $4 billion or even $4.5 billion to $5 billion.
And lastly, commissioner Adam Silver and the NBA haven’t been shy about their plan to expand. Many people expect the league to eventually expand from 30 to 32 teams, with Las Vegas and Seattle as likely city candidates for a rumored expansion fee of $2.5 billion each — that potential expansion fee at a combined $5 billion would net each NBA team $167 million.
However, NBA commissioner Adam Silver said the rumored $2.5 billion expansion fee was “very low” — so that expansion fee could be even higher.
I hope everyone has a great day. We’ll talk tomorrow.
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