Empty buildings, short schedule guarantee NBA teams lose money
Lucrative TV deal provides cushion as COVID-19 hammers the bottom line
Lucrative TV deals and overwhelming popularity will be critical to the National Basketball Association as it navigates a new season with few fans able to attend games — and spend their money inside arenas.
Most clubs aren't ruling out the possibility of welcoming fans at some point this season — and a handful, including the Orlando Magic and Utah Jazz, are allowing a limited number from the start — but the loss of ticket sales and in-arena revenue will hurt, as COVID-19 ravages North America.
“You could be looking at losses of over $3 billion across the league based on ticket revenue, concessions, corporate boxes and so on, should the pandemic impact the whole of the 2020-21 season as a worst-case scenario,” Conrad Wiacek, head of sport analysis at Globaldata, told Reuters.
“NBA teams are guaranteed a loss” with only 72 games compared to a standard 82-game season, said Wiacek, and Globaldata research suggested the league and teams lost more than US$694 million from the 258 cancelled games last season, after the pandemic forced a hiatus in March.
With TV rights deals in place, however, including a reported Us$1.4-billion yearly contract with Disney, the NBA has plenty of cushion, and this month agreed to distribute $30 million to teams to boost liquidity, Sports Business Daily reported.
Andrew Zimbalist, a professor at Smith College who has consulted for players, teams and leagues, said the NBA'S tremendous profitability gave it a strong financial standing, even though it's too soon to say how much COVID-19 will restrict arena and gate revenue.
“There might be an owner or two in the NBA that's feeling pinched, not so much because of the NBA but because of other assets,” Zimbalist said.
“Are all the teams hurting relative to what they're used to? Yeah, of course, as is just about everybody in the United States.”
Even the Dallas Mavericks' gregarious billionaire owner Mark Cuban, who has taken on nationwide fame as a shrewd investor navigating would-be entrepreneurs on Shark Tank, conceded he can't get the best of this deal.
“Am I going to lose a lot of money this year? Yes. No question about it. More than US$100 million when this is all said and done? Yes,” Cuban said this month.
“We need to get back into our normal season.”
SEASON STORIES
Five storylines to track during the 2020-21 National Basketball Association season, which tips off on Tuesday:
COVID-19 Impact: After successfully completing last season in a bio-secure bubble in Orlando, teams will once again be travelling and players, coaches and staff testing positive for the novel coronavirus is probably inevitable.
The NBA season has already been reduced to 72 games because of the COVID-19 pandemic and the league will try to complete its 16-team playoffs between May 22 and July 22. Asked what would be the determining factor in a team's success this season, the Mavericks' Luka Doncic simply said: “Which team is not going to have (COVID-19) positive people.”
Lakers look to build dynasty: The Los Angeles Lakers emerged victorious last season and are favoured to repeat after signing Lebron James and Anthony Davis to contracts during the off-season and adding Dennis Schroeder and Montrezl Harrell.
The storied franchise snapped a 10-year title drought with the success and now has the kind of depth that could see them dominate the league for years to come.
But they lost rim protectors Dwight Howard and Javale McGee during the break, and will be reliant on newly acquired 35-yearold Marc Gasol, a former Toronto Raptor, to play key minutes at the centre position.
Durant in Brooklyn: The last time Kevin Durant was seen on a basketball court he was leaving the 2019 NBA Finals with an Achilles tendon injury.
The Golden State Warriors would go on the lose the series to the Raptors, and Durant joined the Brooklyn Nets soon after, but did not suit up for the team last season as he continued to rehab.
Fans will finally get to see Durant play alongside Kyrie Irving, and if he's fully recovered and stays healthy, the Nets should prove to be a serious threat in the Eastern Conference.
Harden on the move: Former MVP James Harden reportedly wants to leave the Houston Rockets, possibly for the Philadelphia 76ers or Nets — a move that would realign the balance of power in the league.
It's unclear whether a deal can get done, and if not Harden will stay in Houston to play alongside John Wall, who came over from the Washington Wizards in the off-season in exchange for Russell Westbrook.
Warriors without Thompson: The Warriors were primed to have a bounceback season with sharpshooting guards Klay Thompson and Stephen Curry finally healthy. But then disaster struck.
Thompson tore his Achilles during a practice game in November and will have to sit out for his second consecutive season.
While few expect the Warriors — NBA champs in 2015, 2017 and 2018 — to contend, they still have two-time MVP Curry, the scrappy Draymond Green, Kelly Oubre Jr., Andrew Wiggins and second overall draft pick James Wiseman.
It will be up to coach Steve Kerr to figure out how to put the pieces together.