Nba, why are teams worth so much? TV rights, sponsors and 'global'

The Nba has now set its sights on the Nfl, which in 2024 has approached 20 billion in total revenues and can count on collective revenues guaranteed by mega national TV revenues (111 billion dollars in 11 years until 2033) that allow each team to turn over an annual cheque of over 400 million. While a collective contract with players pegged to a strict salary cap keeps budgets in constant balance. The Nba is trying to emulate the Nfl model in both respects, but can count on a much larger global audience of fans than football.

From a revenue perspective in 2024 the Nba amassed just over $11 billion total (with the Golden State Warriors topping out at $800 million). In July 2024, however, a new television contract was signed with Abc/Espn, Nbc/Peacock and Amazon Prime Video for $76 billion over 11 years, $6.9 billion per year, compared to $2.6 billion from the previous domestic agreements with Espn and Turner Sports that expire at the end of this tournament (plus about $500 million from the international market).

Figures that will triple the annual paycheck for each franchise and that are enabling the smooth absorption of the decline in 'local' TV rights, following the default in 2023 of the regional sports network operator Diamond Sports Group, which weigh about 10% of the turnover of the 30 NBA teams.

In 2024, then, sponsorships increased by about 15% - the agreement with Nike was renewed in October 2024, with an annual investment of about USD 90 million until 2037 - as did the income from non-NBA events, which mainly benefited the teams with arena ownership/availability. The concert business, for example, brought an average of $25 million into the coffers of these franchises. The owners of the Nba managed 10 of the 20 highest-grossing concert venues in the world in 2024, according to Billboard. In June 2024, the Koch family bought 15 per cent of Bse Global, parent company of the Brooklin Nets, the New York Liberty and the Barclays Center, the world's sixth highest-grossing arena, for a valuation of $6 billion.

In order to keep the books in order and follow the Nfl model, which has a very strict salary cap, the Nba has signed an agreement with the players' association that is less lax in terms of salary increases. Given the increase in revenues, the salary cap for the 2025-26 season will rise by 10%, to $154.6 million. The luxury tax will be set at $187.9 million, while two other thresholds have been set at $195.9 and $207.8 million.

In essence, from the 2023-24 season, in addition to the luxury tax, which provides for the payment of a penalty proportionate to the overrun to be paid to the most virtuous teams, but being able to continue to move freely, there are further 'upper spending limits' in force, beyond which penalties and market blocks are triggered: for example, not being able to sign free agents from the buyout market or use sums of money (the so-called cash considerations) in trades.

The NBA has had 30 teams since 2004, when Charlotte started playing by paying the other 29 owners a $300 million entry bonus. There has long been talk of a possible expansion with Las Vegas and Seattle favourites to find space in basketball's Olympus, but the entry fee would be $4-5 billion to take into account the latest TV deal.

However, the ground the Nba is looking at with renewed focus to grow is the non-US markets from which they get 10% of their revenues. International TV rights are burdened by match times, which generally take place after midnight in Europe and early in the morning in Asia. Although they aim to overcome this limitation with highlights and social consumption.

Meanwhile, after the crisis in 2019 when then Houston Rockets general manager Daryl Morey tweeted an image in support of the protests in Hong Kong and state broadcaster CCTV in response blacked out the games, the NBA will return to China for two preseason games, between the Brooklyn Nets and Phoenix Suns, to be held in Macau, on 10 and 12 October 2025.

But above all, the NBA is aiming at the European market. After many rumours, commissioner Adam Silver announced on 27 March that the possibility of establishing a league in Europe in association with the International Basketball Federation (Fiba) would be explored. This would be an alternative competition to the Euroleague, a private association of clubs founded over twenty years ago in opposition to Fiba. Nba and Fiba have admitted that they have been conducting discussions with potential investors, teams, sports facility builders and commercial partners for over a year.

What is looming is on the one hand a restoration with Fiba intending to return to governing the top continental competition, and on the other hand a revolution with the NBA aiming to create a satellite tournament under its wing. The Achilles' heel of the Euroleague, which has grown in sporting terms and in terms of following, is financial sustainability, since revenues have so far never managed to compensate for the teams' costs. On average, the budget of a Euroleague team is around 20 million.

In total, this amounts to 360 million with a roster expenditure allowed by financial fair play (65% of the budget) of over 230 million (about 13 million on average). However, the 18 franchises as a whole can rely, between the box office and the money turned over by the Euroleague for TV rights and sponsors, on just over 100 million in revenue. The support of commercial partners and ownership becomes crucial for all of them. The Nba with its support evidently aims at raising the revenues of the new competition - not with a closed number - in which 16 teams should initially be included. Some would leave the Euroleague (Real Madrid, Barcelona, Villeurbanne and Fenerbahce), while especially in the European capitals, the Nba franchises could contribute to the foundation of new realities.