Introduction
“A sport is defined as an organized, competitive, and skillful physical activity that requires commitment and fair play. A sport is always governed by a set of rules or customs.” (Garnet, 23) Over the years many sports have been developed as recreational and professional activities where the athletes make a living. The use of sports and the development of mass media have facilitated the growth of professionalism in sports. “This has created some friction where by the money is seen as more important than the recreational aspect.” (Sport business International ) The entertainment side of sport has seen exemplary sports men and women elevation to celebrity status. Currently, sporting events have been turned into business opportunities, some claim that the changing “of sports to make them to make them more profitable leads to the loss of certain valued traditions.” (Garnet, 30) This paper seeks to establish the business side of sports with particular reference to the National Basketball Association (NBA).
Background
The NBA was “launched in 1949 as a small basketball league that people had little interest in.” (NBA Business/Basketball business) The league has now grown through leaps and bounds to be one of the best sporting events in the world. The league has solely marketed basket ball as a favorite sport for many sports lovers across the globe. The league started off with 8 teams but now boasts of a 30 team strong event. “The sport has had several superstars including George Mikan, Michael Jordan and Yao Ming just to name a few.” (St Petersburg International Economic Forum)The NBA has featured several successful teams which have become household names. “Teams like, Minneapolis Lakers, Boston Celtics, Houston rockets and Chicago bulls” among others have produced great players who have been instrumental in the commercialization and development of basket ball as an entertainment magnet. (NBA Business/Basketball business) Other sporting activities have not been left behind, soccer; the world’s most popular sport has had a more or less history. The sport is adored by many fans across the globe that keenly follows the progress of various leagues that are played around the world. The most popular soccer events include the FIFA world cup, the English premier league, the Champions league, confederations cup and the African cup of nations among others. Other important sporting activities that have had a tremendous development include: track events including short distance races, long distance races, marathon among others; rugby, especially the growth of the IRB series circuit; American football; hockey; swimming and racing sports among others.
NBA as a Business
The near fanatical following of the sporting events across the globe has facilitated the development of the business side of sports. The rapid growth of the mass media has facilitated the live broadcasting of sporting events making them available to most fans across the globe. The development of international, regional, and national championships for various games together with the development of the pay TV series have been instrumental in the growth of sporting business. The NBA in particular has really marketed the basketball sport making it the dream league for young aspiring players. What are the factors that may have contributed to the development of business model of sports? Well, the world has embraced technology and the society has moved away from the traditional ways of life which had depicted sports as a pass time which required little attention. Technological advancement has increased interest in sporting recreational activities due to the convenience created. Physical presence is not necessary and one is able to catch a live action of his/her favorite sport that is taking place thousands of miles a way. The Television has long been the single most important driver of sporting business. Other forms of media such as the print media and the internet have also played a major roe in sports marketing. The NBA has successfully signed TV contracts worth millions of dollars since 1979. “The games displayed on TV include regular season, all star game NBA play offs and finals” (Klayman)
The Table below shows the NBA cable TV contracts since 1979 to 2008
(NBA Business/Basketball business)
The table below shows NBA network TV contracts
(NBA Business/Basketball business)
The NBA also generates revenue from the match attendance fees which often depends on the teams that are playing, the city or location and round of the games. “The able recorded an all time high attendance in 2006 where by a total of 21,595,804 people turned out to watch the home games in various cities.” (NBA Business/Basketball business)Figures for other years have ranged between 19,000,000 to 20,000,000 people. “The revenue generated by a play off varies widely and depends on the venue, the play off round and the city in which the game is played.” (NBA Business/Basketball business)A single payoff can earn less than 500,000 dollars or as much as 2.5 million dollars. Additional revenue is generated through contracts with other companies which use the games or players to market or advertise their businesses. The aggregate revenue generated the NBA runs into billions making it to be one of the best paying leagues in the world. The top players earn between $24,000,000 and $15,000,000.
Conclusion
The road has not been so smooth for the NBA and other major leagues, the global financial crisis badly affected the industry. The NBA experienced a lockout in 1998which cost the players $500,000 and $1 billion to the owners. “According to Billy Hunter the executive director of the National Basketball Players Association another lockout may be witnessed this year.” (Klayman) He adds that the NBA’s biggest headache is not revenue generation but the expenses. Other sports have also been affected by the global financial crisis; in fact the European footballs clubs are warned to cut on their spending to forestall an imminent bankruptcy.
Works cited
- Garnet, Peter. Recreational Activies. Glasgow: Haper collins publishers, 1994. Print
- Klayman, Ben. “Union Heads calls NBA proposal ‘draconian’.” Reuters.com 2010.
- “NBA Business/Basketball business.” insidehoops.com 2010. “Sport business International.” sportsbusiness.com. Sports business,2010.
- “St Petersburg International Economic Forum.” Reuters.com. Reuters,2010.