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Report: NBA’s Bubble Prevented $1.5 Billion In Losses

Topline

The National Basketball Association spent approximately $180 million over a four-month span to set up and operate its “bubble campus” at the Walt Disney World Resort in Orlando, Florida, but that investment allowed the NBA to play a total of 172 games, which prevented the league from losing $1.5 billion in expected revenue, according to the Sports Business Journal.

Key Facts

The majority of the money the league was able to conserve was tied to national and local television revenue via preexisting contracts.

Sponsor contracts were fulfilled via virtual signage during TV broadcasts of games and signage on the courts themselves (during the Finals, the logo for presenting partner YouTube TV was placed at the center of the court). 

Nonetheless, roughly 40% of the NBA’s annual income typically comes from gate receipts, so the league undoubtedly experienced a significant revenue decline in 2020. 

According to a report last week in The Athletic, the NBA, as a whole, lost approximately $695 million from the 258 regular-season games that were canceled due to the pandemic-induced shut down in mid-March.

Key Background:

A crucial component of the NBA’s success was its ability to prevent the spread of Covid-19. The league mandated players test negative before traveling to Orlando, then quarantine for two days in their hotel rooms upon their arrival in the bubble, and then test negative twice more. Inside the bubble, players had to wear masks and practice social distancing when possible. Players, coaches and team personnel were tested regularly throughout. Not a single player or coach ever tested positive during the duration of the bubble campus experience (nearly 100 days). In contrast, Major League Baseball had to postpone more than 40 games due to multiple Covid-19 outbreaks. Six weeks into the NFL season, 47 players and 71 other personnel have already tested positive for Covid-19.

Tangent:

The TV ratings for NBA’s playoff games declined dramatically, down 37% compared to 2019. However, the average digital audience for NBA’s nationally televised games increased by 34% compared to last year. The TV ratings for other professional sports in the U.S. have dipped significantly during the Covid-19 pandemic as well. Viewership of the 2020 NHL’s Stanley Cup Finals was 61% lower than last year, while the final round of golf’s U.S. Open was down 56%

Crucial Quote: 

“Our No. 1 priority was health and safety and from a business standpoint, it was important that we would finish the 2019-2020 season, crown a champion and be able to include our business and media partners and develop a plan to bring our fans courtside,” said Kelly Flatow, NBA executive vice president.

Big Number:

8.8 Billion: That’s the record-setting amount of revenue NBA teams generated during the 2018-19 season, which was a 10% increase over the prior season, according to Forbes data. Since 2010, the average value of an NBA team is up nearly 600%. Forbes estimated in February that NBA teams are worth an average of $2.1 billion.

Further Reading:

NBA’s Ratings Drop Not Due To Blowback Over Players’ Activism, Poll Suggests (Forbes) 

NBA preserved $1.5B in revenue at Disney, but losses are steep (SBJ)

Full coverage and live updates on the Coronavirus

Source: Forbes – Business

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