Like England’s Premier League, the NBA is one of the world’s wealthiest sports associations affected by the coronavirus, and the disease’s economic impact on it could be fierce.
How the league will be affected by the stoppage — and whether it can avoid financial calamity — depends on a number of variables, according to those with knowledge of the sports entertainment industry.
Can the NBA playoffs be saved?
The NBA will do everything it can to preserve one of the most anticipated postseasons in recent memory.
A potential ratings bonanza is on the cards for an inter-Los Angeles playoff series between the Lakers and Clippers. Meanwhile, the Milwaukee Bucks have been winning at a historic pace, and young stars like Luka Doncic and Ja Morant are still hoping to make their playoff debuts.
Salvaging the playoffs would mean making good on its lucrative TV deal, a matter of urgency for the NBA, according to David Berri, professor of economics at Southern Utah University, who cites the reported $2.7 billion annual television package deal that accounts for about 30% of league revenues. (The rights fees are split between Disney, the parent company of broadcasters HBO and ESPN, and AT&T, the parent of WarnerMedia, which also owns CNN.)
“The anticipation is that they will finish the season,” says Berri. “At this point, ESPN and ABC have made virtually no money on their investment for this year, because they make (most of) their advertising money on the playoffs. The question is who eats that loss?”
No one yet knows when it will be safe for players, staff, officials, media and fans to congregate in an arena, but the NBA has targeted a best-case return date of mid-to-late June, according to ESPN.
Last week, research analyst Michael Nathanson of MoffettNathanson slashed earnings estimates for Disney, citing $475 million in lost ad sales if the NBA season is canceled entirely.
“I’m assuming the ad money will probably disappear,” Nathanson says, noting that the league would then be expected to make concessions to the networks for the following season. “Why would you pay for something and never get credit back?” he asks.
Can games be held without fans?
NBA commissioner Adam Silver confirmed he was exploring the idea of holding games with medically cleared NBA personnel and players — but no fans.
The NBA has already told teams to begin booking smaller arenas and practice facilities for dates leading into August, according to ESPN, to avoid television views of swaths of empty seats.
However, made-for-TV games would not only preserve the league’s relationship with its partnering networks, it would also secure game day advertising revenue for teams, including those on uniforms and billboards, says Eric Handler, media and entertainment analyst at MKM Partners.
“Sponsorship deals are dependent upon games being played and those logos being seen,” he says. “If you can’t deliver the goods, you can’t get paid.”
What is the cost of losing the regular season?
Extrapolating those figures would mean losses of over $1.7 billion for the potential cancellation of just the final regular season games — a scenario that would not be surprising given the uncertainty surrounding the health scare.
Will players be paid for the rest of the season?
This could potentially be a sensitive topic for NBA owners.
Complicating matters for owners, not all of whom own their own arenas, is the potential for paying the likes of ticket handlers and popcorn venders again once the games are rescheduled. “Do we pay them twice?’ I personally don’t care. That’s fine,” Cuban told the New York Times.
The National Basketball Players Association did not respond to CNN’s request for comment on the potential of teams withholding players’ salaries.
Further damaging to players is the likelihood that next season’s salary cap — a factor of this season’s dwindling league revenue — will be lowered.
Before the coronavirus disruption, the NBA had already lost “hundreds of millions” in revenue over a much-publicized preseason rift with China, Silver said last month.
Will there be a lasting impact on fans?
When paying customers are eventually cleared to return to arenas, how quickly will they feel safe enough to assimilate in groups of thousands after a global pandemic? And would a potential glut of delayed live sporting events running at the same time hurt the NBA?
“People want live entertainment,” says Nathanson. “I’m still in the mind that, like after 9/11, people will return to their behaviors. People are still social creatures and sports is a bonding experience.”
Berri compares this situation to the suspension of professional baseball during World War II. Fan attendance spiked following the war in 1946, before it normalized over the ensuing decade, he says.
Is there a silver lining around home quarantines?
Meanwhile both NBA players and fans are taking their skills to the world of online video games to compete against one another during the league’s hiatus.
The Phoenix Suns and other teams have been simulating their suspended schedule, pitting one of their players against an opponent’s on the NBA’s officially licensed videogame NBA 2K20.
Though the financial reward for the NBA to license its game is marginal, Handler says, following the fortunes of teams and players through esports will allow fans to stay engaged with the league while many are forced into home quarantine.