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What will happen if fans stop attending NBA games?

16 Nov

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What if this is just a giant neon with a sign “you have an outdated model”?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!

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13 Comments

Posted by on November 16, 2011 in Unanswered Questions

 

Tags: , , , , , ,

13 responses to “What will happen if fans stop attending NBA games?

  1. Leszczur

    November 17, 2011 at 14:13

    I have few comments on this post.
    1. NBA is making money not only with gate receipts, but also concession stands (15000 faces to stuff with hot-dogs, burgers, drinks and what have you!), gift shops, parking etc. What’s more – many arenas are built in areas that require economic boost. This is part of the business that NBA does not have in their books but should be taken into account when discussing their infulence. Local economy boost is the reason tax-payers money are being spent on those humongous arenas – not out of sheer generosity.
    What’s more – arena-related revenues cannot be simply ignored because TV deals provide bigger part of the revenue. I’ll bet NBA wants to maximize both.

    2. I would say that “game experience” is much better when you watch it on your 50-inch plasma, rather than from twentieth row behind one of the baskets. Altough if arenas will be equipped to enhance fan experience by offering wi-fi access, mobile apps to give you stats and whatever you need – then arenas can beat the hell out of League Pass and TV.

    3. I don’t have actual numbers but I believe gate receipts were affected by economic crisis. That also affected not only net sales but also required increased effort in making those sales (ticket plans for 10 games, quarter of a season, 3-game plans etc). This increased effort must have cost much more than 10 years ago when it was efortless and people were lining up to see MJ or Shaq.
    The thing is – this crisis will pass. Sooner or later but it will. So whatever you change now – cannot negatively impact you abilities to earn in 2-3 or 5 years.

     
    • wiLQ

      November 17, 2011 at 23:50

      “Local economy boost is the reason tax-payers money are being spent on those humongous arenas – not out of sheer generosity.”
      Come on! You clearly haven’t read anything from Prof. Berri or any other economists recently…

      “I’ll bet NBA wants to maximize both.”
      True, but that’s why I’ve suggested a change in priorities not to completely forget about arenas and start playing at any playground.

      “That also affected not only net sales but also required increased effort in making those sales”
      Which again points to change in philosophy, isn’t it?

       
      • Leszczur

        November 18, 2011 at 11:01

        “Come on! You clearly haven’t read anything from Prof. Berri or any other economists recently…”
        No I did not. Though I remember rationale given behind funding some arenas as the “local economy boost” being the main reason. If that’s just a PR talking then I got mislead, but at least I know they have not used my tax money.

        “Which again points to change in philosophy, isn’t it?”
        Not if that’s only a temporary solution used during the times of crisis.

         
        • wiLQ

          November 18, 2011 at 15:18

          “Not if that’s only a temporary solution used during the times of crisis.”
          But why do you assume attendance problems are only temporary?
          Do you think it’s only about economy?

           
          • Anonymous

            November 18, 2011 at 22:33

            Yes – I think it’s driven by economy.

             
  2. Peter M. Arel

    November 23, 2011 at 05:45

    If there are NO NBA games being played because of the current lockout, what then?Shouldn’t the cities and towns WITH the arenas be able to PUT SOMETHING IN THOSE ARENAS to attract people so the restaurants and sports bars NEAR the arenas will also benefit from having the arenas filled with people because those same people will also patronize the restaurants abnd/or sports bars near the arenas?

     
    • wiLQ

      November 26, 2011 at 00:51

      Those cities and towns are able to put something else in the arenas… so I really don’t get your point. Especially when games were canceled months in advance…

       
  3. Peter M. Arel

    November 23, 2011 at 05:53

    The current NBA lockout is a DISGRACE! So are the two groups of PIGHEADED PEOPLE involved! THE FANS-AND THE PEOPLE MOST DIRECTLY AFFECTED BY THE LOCKOUT-the arena employees and the people who own or work at restaurants and/or sports bars NEAR those arenas SHOULD JOIN IN A BOYCOTT OF THE NBA UNTIL THE YEAR 2020!They should tell the arena owners, Sure we want events at those arenas that will keep us employed and keep our businesses running profitably but put concerts, hockey games, ice shows and other events in thew arenas INSTEAD IF THE NBA’S GOING TO ABANDON US!HOW DARE THEY?!

     
  4. Peter M. Arel

    November 23, 2011 at 06:00

    THERE SHOULD ALWAYS BE A SIZABLE NUMBNER OF FANS WHO WILL NOT SUPPORT THE NBA AGAIN AFTER A WORK STOPPAGE(BE IT A LOCKOUT OR A STRIKE)! THERE SHOULD BE A SIZABLE NUMBER OF FANS WHO WILL NOT GO BACK, IF ONLY TO TEACH BOTH SIDES-PLAYERS AND OWNERS-A HARSH LESSON ABOUT LOCKOUTS AND STRIKES.

     
    • wiLQ

      November 26, 2011 at 00:54

      That’s just pure anger talking… Relax, NBA will be back soon and we will get our fix ;-)

       
  5. Peter M. Arel

    November 23, 2011 at 06:12

    Please DEFINE “OUTDATED MODEL.” BETTER YET, ASK YOURSELVES WHY FANS ARE SAYING “THE NBA SUCKS”? IS IT BECAUSE PLAYERS WHO DON’T DESERVE TO BE OVERPAID ARE OVERPAID WHEN THEY SHOULD BE WORKING FOR PEANUTS BECAUSE THEY DOn’T CONTRIBUTE ANYTHING TO THE GAME?NO MATTER HOW SHORT THE PLAYERS’ CAREERS ARE, THEY SHOULD BE WORKING for $150K(OR LESS), NOT $5 or 6M!

     
    • wiLQ

      November 26, 2011 at 00:59

      Fans don’t say anything like that, quite the opposite – last year set a couple of records! And money involved in any business doesn’t depend on how serious it looks… otherwise clowns would have to pay to do their work ;-)

       

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