Are Companies Winning Big with NBA - Basketball Partnerships?

According to Forbes, the NBA generated $8.76 billion in revenue in the 2018-19 season. Each of the 30 teams is valued at a minimum of $1 billion, with an average team value of $2.12 billion. This average value represents a 14% increase compared to the previous season.

How big of a business is the NBA?

Let's look at the numbers, shall we?

According to Forbes, the average NBA team's value surged to $3.85 billion, a 35% YoY increase from 2022. With Apple, YouTube TV, and Amazon Prime entering the market, sales prices soared due to the anticipated expansion of media rights.

The NBA's Revenue Stream and how you can benefit from it

The NBA's financial success can be attributed to a diverse range of revenue streams:

1. BROADCASTING RIGHTS

The NBA earns significant revenue through broadcasting agreements with major networks like ESPN, TNT, and various international partners. These lucrative contracts, valued at billions of dollars, enable the global broadcast of NBA games, contributing to the league's financial success.

Television is the primary revenue source for the NBA. During the 2016-2017 season, TNT and ESPN renewed their contracts with the NBA, amounting to an estimated $24 billion overall. This nine-year agreement provides the NBA with roughly $2.6 billion annually. Even though around 400 active players earn an average annual salary of nearly $6.7 million (as of the 2019-2020 season), the income from national TV deals is sufficient to cover player salaries and still leave a surplus.

TNT is an American primary television channel owned by Warner Bros.

Additionally, the league has embraced digital platforms and streaming services to reach audiences who prefer online content consumption. NBA League Pass allows fans to watch games on their devices, expanding the league's reach beyond traditional television.

2. SPONSORSHIPS AND PARTNERSHIPS

The NBA maintains lucrative partnerships with major corporations such as Nike, Coca-Cola , and Samsung. These collaborations create diverse marketing opportunities for individual teams and players, fostering a mutually beneficial relationship within the league's commercial ecosystem.

In addition to this, fans also purchase merchandise, such as Jerseys and T-shirts. Emirates and the National Basketball Association (NBA) announced a multiyear global marketing partnership on 8 February 2024, naming Emirates the Official Global Airline Partner of the NBA. The sponsorship will also allow Emirates to enjoy a presence at other marquee league events, including as a partner of NBA Crossover—an immersive fan event at NBA All-Star—and as the presenting partner of the NBA Finals Legacy Project.

Coca-Cola has been the NBA's official beverage sponsor since 1986, and Sprite has been the league's official soda in the United States since 1994. The new deal will involve PepsiCo 's sodas and Aquafina, Lipton Brisk, Doritos, and Ruffles brands. Mountain Dew will become the NBA's lead soft drink brand.

Furthermore, the NBA has entered esports partnerships, collaborating with organisations like Tencent to expand its digital footprint and attract a younger, tech-savvy demographic.

The National Basketball Association (NBA) and Tencent Holdings Limited, the Exclusive Official Digital Partner of the NBA in China, in 2019 announced a five-year expansion of their existing partnership that will see Tencent – the NBA’s largest partner outside the U.S. – provide extensive NBA coverage on its platforms through the 2024-25 NBA season

Tencent, the digital media partner of the NBA in China since 2009, has streamed full seasons of live NBA games and content to its hundreds of millions of daily users under the current partnership that began in 2015. Tencent and the NBA also jointly manage and operate several other NBA services and activities in China, including NBA-themed mobile games, NBA social media accounts, and interactive fan events.

3. MERCHANDISING

The NBA generates substantial revenue from the sale of its branded merchandise, including jerseys and sneakers. This is further amplified by the individual merchandise lines of star players, which contribute significantly to the league's overall sales figures.

Nike Inc.'s shares increased by 1.37% in June 2015 after the athletic footwear and apparel retailer announced an eight-year global merchandising and marketing partnership with the National Basketball Association (NBA).

In 2015, The NBA announced signing an apparel deal with Nike beginning with the 2017-18 season. The deal is an eight-year partnership worth roughly $1 billion, approximately a 245 per cent annual increase from the previous agreement. Unlike during the deals with Reebok and Adidas, Nike's logo will appear on NBA game jerseys—a first for the league, which will help in Nike's branding.

Due to these factors during the NBA, Nike could be one of the shares on your watchlist.

4. TICKET SALES

While the NBA has a global reach, its live games remain a big attraction. Ticket sales, concessions, and arena partnerships strengthen the league's financial strength.

5. SOCIAL MEDIA

The NBA has a robust digital presence, with millions of followers on social media platforms. They monetize this engagement through content partnerships, online merchandise sales, and streaming services like NBA League Pass.

Additionally, the NBA has explored virtual reality experiences, which allow fans to enjoy games from the comfort of their homes while experiencing the atmosphere of a live arena, creating new revenue streams.

Moreover, the league actively collaborates with content creators, influencers, and YouTube channels, harnessing the power of user-generated content to extend its reach and connect with a younger and digitally native audience.

The Bottom Line

Any international phenomenon, be it a sports activity, could be an excellent opportunity to learn about and understand the workings of the companies that will benefit from it. It is all about the power of observation and action.

What opportunity are you preparing for next? Let's do it together. Contact us for research-backed strategies.