What have you always wondered about the economy? Tell Us
COVID-19

NBA “bubble” has been a success, but how are the league’s finances?

Andy Uhler Aug 14, 2020
Heard on:
HTML EMBED:
COPY
Had the league not finished the season and canceled the playoffs, the NBA would not have satisfied a billion-dollar TV contract. Mike Ehrmann/Getty Images
COVID-19

NBA “bubble” has been a success, but how are the league’s finances?

Andy Uhler Aug 14, 2020
Heard on:
Had the league not finished the season and canceled the playoffs, the NBA would not have satisfied a billion-dollar TV contract. Mike Ehrmann/Getty Images
HTML EMBED:
COPY

Pro basketball wraps up its interrupted regular season on Friday, and unlike college football or Major League Baseball, the NBA coronavirus “bubble,” with no positive tests for the last four weeks, seems like an undeniable success.

The league shut down in March after two players on the Utah Jazz tested positive for COVID-19. The league’s commissioner, Adam Silver, told players to ready themselves for tough salary negotiations in the years to come because the league’s revenue was going to be hurt by the pandemic. But Nola Agha, associate professor of sports management at the University of San Francisco, said that’s par for the course.

“For, I’d say, probably a century, professional leagues and teams have been telling us that they don’t have enough money and that they’re going to go out of business,” she said.

And because the NBA and its teams are private businesses, they don’t have to make their finances public, so nobody really knows how stretched their checkbooks are.

The NBA said the cost to operate the bubble at Walt Disney World in Orlando, where players and coaches eat, sleep, practice and play games, is more than $150 million. There also aren’t any fans there, and 40% of the league’s annual revenue comes from ticket purchases and in-game spending.

“It was important to them that they finished this,” said David Berri, a sports economist at Southern Utah University. “They obviously don’t have any gate revenue but they need to finish and get the television revenue.”

Had the league not finished the season and canceled the playoffs, the NBA would not have satisfied a billion-dollar TV contract. Broadcasters like ESPN and TNT would have sought something in return. 

And at a time when people are stuck at home and watching a lot of TV, conventional wisdom says the NBA and its sponsors would be seeing massive ratings bumps, but Berri said that’s not the case. Ratings are down. 

“The Knicks are gone. The Bulls are gone. The Warriors are gone,” he said. “So some of what’s driving your ratings is not participating.”

And Oklahoma City, Milwaukee and Portland don’t make up for New York, Chicago and San Francisco. 

“At the team level, I think about it as revenue recovery,” Agha said. “They had tickets sold, they had suites sold, they had sponsors signed, they had their local television deals, and it’s scrambling, like every small business in America is trying to do, to figure out, how can I still get some of that revenue?”

The NBA playoffs start on Monday, Aug. 17 from the bubble in Orlando.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

Read More

Collapse

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.