The NBA still packs a powerful punch - The Biz - National Basketball Association TV broadcasting deals - Brief Article

Basketball Digest, March, 2002 by David Stone

BEGINNING NEXT SEASON, THE NBA's television coverage will have a new look. Disney-owned ESPN and ABC has outbid longtime incumbent NBC for the rights to broadcast the league's games. With the addition of cable network ESPN, fewer NBA games will appear on broadcast TV, as ABC will only air 15 games in the 2002-03 season (compared to NBC's 33 this year), not including the NBA Finals, which will also appear on ABC. ESPN will carry 55 games, most likely on Fridays and Sundays.

In addition to the ABC/ESPN deal, AOL Time Warner will continue to broadcast NBA games on its TNT network, and also will partner with the league in the development of an all-sports cable network that could carry approximately 100 games a season. TNT will air approximately the same number of games as ESPN--primarily doubleheaders on Thursday nights--and will broadcast the All-Star Game for the first time.

The planned network to be developed by AOL Time Warner and the NBA is not yet a done deal, as it will depend on cable systems agreeing to provide a minimum of 13 million viewers at a monthly fee of $0.50 each (a cost that would likely be passed on to subscribers). Otherwise, the games will be shown on the league's NBA.com network.

The new deals will generate as much as $815 million per year for the league, compared to the $616 million it currently receives from its broadcast partners. But this best-case scenario assumes that the new AOL Time Warner-NBA network gains national carriage.

NBC had the opportunity to match the ESPN/ABC offer but declined, as it reportedly had lost $100 million per year on its four-year, $1.75 billion contract.

The new television contracts are significant in a number of ways. First, it represents a dramatic move from so-called "free" TV to cable, which no other league has been willing to do. While all major professional sports leagues do have contracts with cable stations, none has the emphasis on cable as the NBA will soon have. But with cable viewership at an all-time high and network audiences decreasing, the NBA may once again start a trend.

The deals also demonstrate that the league is still seen as healthy and in demand; most observers predicted that it would not be able to approach the annual revenues generated by its expiring broadcast contracts, due to the economic recession, a soft ad market, and NBC's recent losses from its NBA broadcasts.

YankeeNets, the organization that owns the New Jersey Nets, has long been working with public officials in New Jersey in an attempt to make a new arena in Newark a reality. Late last year, YankeeNets threatened to move both the Nets and the NHL's New Jersey Devils out of Continental Airlines arena--and possibly to New York City's Madison Square Garden, which, of course, is the home of the Knicks and Rangers--if the state is unable to plan for the arena's funding. YankeeNets has said that the Nets and Devils need to be in a new arena by 2004, which seems unlikely, although New Jersey's new governor, James McGreevey, has promised to address the issue.

In late 2001, The Sports Business Daily reported the NBA's 10 top teams and players in terms of merchandise sales. In alphabetical order, the top 10 teams, based on sales from August to October 2001, are the Chicago Bulls, Los Angeles Clippers, Los Angeles Lakers, Miami Heat, Minnesota Timberwolves, Knicks, Orlando Magic, Philadelphia 76ers, Sacramento Kings, and Toronto Raptors. The top 10 players, in alphabetical order, are Kobe Bryant, Vince Carter, Kevin Garnett, Allen Iverson, Tracy McGrady, Darius Miles, Lamar Odom, Shaquille O'Neal, Latrell Sprewell, and Chris Webber.

Earlier this season, we discussed the financial impact that Michael Jordan's return might have throughout the league. Now, as the regular season has passed the halfway point, it's clear that Jordan's reach has not been limited to the NBA. While Washington Wizards owner Abe Pollin says that the team, which leads the league in attendance, will break even or earn a profit "for the first time in many years," businesses surrounding the MCI Center have also benefited from Jordan. With the Wizards' attendance up by more than 5,000 fans per game this season to nearly 21,000, restaurants in the district surrounding the arena have reported that revenues have increased by as much as 100% on game nights.