As everything seems to be coming up gold for the NBA, is it possible that the average fan could find him or herself priced out of the fun?
The often unacknowledged truth about success in team sports -- on the field and/or in the pocketbook -- is that the cost to the fan to attend a game goes up the better a team does. With enough successful teams, an entire league will rise, such is the nature of their association. This is all frequently overlooked because that particular result of success doesn't occur until the following season.
Today's NBA Team Previews
Today's NBA Team Previews
With recent team sales skyrocketing and, by all projections, one of the most expensive television broadcast and digital media rights contracts in the history of sports on the horizon, the NBA appears to be in or verging on superb financial health.
In the latest Forbes annual ranking of the world's 50 most valuable sports teams, four NBA franchises claim spots, with the New York Knicks leading the pack at no. 13 (valued at $1.4 billion), the Los Angeles Lakers at no. 15 ($1.35B), the Chicago Bulls at no. 37 ($1.0B), and the Boston Celtics at no. 45 ($875 million).
Steve Ballmer's record-setting purchase of the Los Angeles Clippers for $2 billion was still awaiting approval at the time the list was published in July, and it remains to be seen how that sale will affect all team values.
Despite negligible fluctuation in overall seating capacity over the last five years, average attendance for games has continued to trend upwards. That's especially interesting given the lockout-shortened season in 2011-12, which came in at about 72.5% of full-season capacity, yet still managed to grab just over 90% of full capacity for the 66 games played.
In general, this puts the league in the owner-enviable position to charge what they want. From data compiled by Team Marketing Report, the average cost of a single NBA game ticket for the 2013-14 season was $52.50*. This was up 3.1% over ticket prices the previous season and continues a trend of advancing ticket prices each year since the 2010-11 season, the last that the league had a downturn on the season average. The Knicks had the highest average ticket price at $129.38, while the New Orleans Pelicans came in with the least at $26.87.
*It should be noted, per TMR, that the NBA made around 1 million tickets available in 2013-14 that cost $10 or less to the customer. The same was done in the 2011-12 and 2012-13 seasons, but is down from 2 million such tickets available in the 2010-11 season.
How does this compare to other leagues? The richest sports league in the world, the NFL, had a league average of $81.54 per each of its 8 regular season home games per team in the comparable 2013 season. This was also a 3.1% increase over the average from the previous year. (In 2014, the average NFL ticket costs $84.43, a 3.5% increase over last year. As the 2014-15 NBA report isn't available yet, the 2014 prices can't be compared. We'll happily update when they are.)
The NHL, the most direct competitor with the NBA, charged an average $61.62 per each of its 41 home games in the 2013-14 season, a relatively modest 2.3% increase over the year before. While TMR has yet to compile data on Major League Soccer, as one of the more rapidly growing sports, it felt worthy of inclusion. Using some rudimentary data, MLS appears to average $58.07 per each of its 17 home matches in 2014. The so-called "best deal in sports" still remains Major League Baseball at $27.73 per each of 81 home games in 2013. ($27.93 per in 2014, a 2.0% increase.)
As if that weren't a good enough number dump for you, TMR's data also covers what it calls the "Fan Cost Index." This is a single number that shows what the average cost of an outing to the ballpark/arena/stadium for a family of four would be, including parking, beer & soft drinks, hot dogs, game programs, and the least expensive adult-sized team ball cap. The NBA sits at $326.60 in 2013-14, compared to the NFL ($459.65 in 2013, $479.11 in 2014), the NHL ($359.17), and MLB ($210.46 in 2013, $212.46 in 2014).
For those wondering why amenities are so important to the bottom line in modern stadiums and arenas, there you go.
The financial health of the NBA and team values will play significant roles amidst conversations about the television contract, the possibilities of expansion, and the pending negotiations for the next collective bargaining agreement between team owners and the players. Among other things, the CBA sets the potential values of player contracts, as well as the division of all league revenues, including lucrative merchandising, between the teams and the players.
Negotiating the current CBA during the lockout in 2011, the owners were able to leverage a downturn in revenues and plateaued team values into a reduction of the revenue split from a player-favoring 57% to 43% back to a roughly even 50-50 share. Players are anticipated to opt out of the ten-year agreement in 2017. Without that leverage for owners, the next negotiations are expected to lean back towards the players, which means the fans can expect their cost to go up.
There are some who refute the concept that players salaries directly affect cost to the fan. Authors Rodney Fort and Jason Winfree counter in their 2013 book, Two Sports Myths and Why They're Wrong, that it is fan willingness to pay more that provides the bump in revenues, from merchandising to TV rights costs to what the players are paid.
Rather than salaries causing ticket price increases, it is ticket price increases that cause salaries to rise. The same is true for television and the growing presence of sports through streaming media, by the way. Increases in fan willingness to pay for games under the standard fee structure and under premium fee structures actually raise the price of those TV offerings. Players will also earn a part of this increase in revenues, but it is the increase in willingness to pay that starts the whole chain of events in motion.
Average NBA salaries (recent is 2009-10 and 2010-11) fell 14.2 percent, ticket prices fell 2.6 percent, and the correlation between payroll changes and ticket price changes was a negligible 0.24. Sixty percent of NBA teams behaved counter to the myth.
Whether or not salaries directly influence ticket, merchandising, and amenity prices, it's certainly a piece of the puzzle. Just as in any business venture, the rise in operating costs are often passed on to the customer to retain the profit margins expected by owners. It remains to be seen by just how much that will be.
For 2014-15, the NBA holds in the middle of the pack. But as the entire pack gets more expensive, will there come a point when the average fan is priced out?