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What will happen if fans stop attending NBA games?

Recently Bill Simmons seems to be so attached to an idea (that in the near future fans will abandon arenas because of better TV experience) that he repeated it on yesterday’s three-man podcast, on podcasts with Bill Hunter and Ticketmaster’s CEO Nathan Hubbard and in multiple recent columns.

Don’t get me wrong, I think it’s a very good point but what bothers me is that he always writes about it as a huge threat not only to the bottom line but even to the league’s existence.
But what if this is a classic bless in disguise?
What if this is just a giant neon with a sign “you have an outdated model”?

Let me explain starting with something obvious… why do fans started attending NBA games in the first place?
IMHO there’s only one reason: it was the only option.
You wanted to see an event, you had to go there. Even with an invention and expansion of TV the coverage there was so limited you had no other option but to visit stadium/arena.

But in the last couple of years there was an earthquake-like shift. Instead of going to several NBA games with good seats you can literally buy a new TV set or a computer and a package for ALL games in the NBA including playoffs! Yes, I understand there are nuances and emotions you can get only at a game live but that sounds like a no-brainer deal to me. Hell, it sounds even worse that some ads of really shady offers.
1500 games for a price of 5-10-15? And in more comfortable conditions?! Where’s the catch?!?!

Maybe NBA needs those fans to survive and without their support league will have to fold?

OK, let’s think about it… here’s how current model works financially:

  • building bigger and better arenas with a room for at least 17000 people – hundreds millions of dollars
    [usually taxpayer's but still huge sums are involved and are always an obstacle to any move],
  • maintenance of those arenas including people working at the arena – I don’t know how many are there but even with minimum wages those costs have to be in hundreds of thousands of dollars per month,
  • advertisement in the press and on TV to bring as many people as possible
    [again probably in hundreds of thousands of dollars per month].

All of this money and effort for a revenue of around one million dollars per game.

On the other hand national TV contract alone is worth around 900M$ per year.
That’s 600k$ for every single game played even though only fraction of them are actually aired.
In my opinion, and it’s not only my point of view, the next one will be significantly bigger.

What’s more, thanks to creating own local networks which team at least partially owns, some other huge television revenues could be around the corner just like those signed by Lakers and Celtics. Obviously, small market teams won’t be able to earn that much from them but I think this idea will spread with lower figures.

So there’s a chance that in the next few years revenue from TV will greatly exceed one from gate.

You probably already know where am I going with this but here’s a point you might have missed:
to date most money and effort by teams and NBA were focused on bringing people to the arenas!

What if they simply totally reverse their priorities?

What if they put way less money and effort into attendance figures [small arenas wouldn't be way cheaper? Additionally wouldn't it create a sense of scarcity which would drive ticket prices up?] and way more money and effort into revenue from TV including local stations?

For example it could include helping networks to air more games by better suited airing times, more commercial time during a game, angles for cameras which would enable to show advertisements for some parts of the game [every free throw attempt?!] and finally simply improve TV ratings by a heavy blitz-like promotion of WATCHING NBA instead of ATTENDING NBA GAMES.

So am I crazy or we will enter a new phase of fandom and everyone will benefit?

Yes, even fans because it’s way harder to stomach more commercial time and exposure at a game than at home where you can easily do something productive or discuss game with your friends on a social media. What’s more, you could still experience a live event and it would actually be more intimate!

 
13 Comments

Posted by on November 16, 2011 in Unanswered Questions

 

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Should Team’s Prices Become a Factor in Next CBA?

I can’t discuss matters with the NBA or research financial health of the league better than Nate Silver but what I can do is… present some more tables and ask questions ;-) Because when you collect a lot of data about one topic like ownership history… you really should have some fun with it, right?

If you prefer picture than tables… well, that’s your lucky day because it will be the first one on this blog! ;-)

Known Team's Prices in the NBA Since 1962

This graph and table below have basically the same content as yesterday’s data but it’s focus is on a different piece of the puzzle… Here’s detailed version of League-Wide Picture of Team’s Prices. Read the rest of this entry »

 
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Posted by on July 6, 2011 in Unanswered Questions

 

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