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The Business Aspects of the NBA
Tom Foy
Ms. Oren
Period 1
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Overview
• PowerPoint–Look at all the aspects of a Sports Business–Break down the income of teams and players
• Application
• Class Activity
• Conclusion
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Personal Relevance
• I hope to one day be a General Manager or a sports agent of a major sports organization whether it be in the NFL, MLB, or NBA.
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Audience Relevance
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Thesis
• Beginning as a made up game at a YMCA, basketball and the NBA have evolved into a complex organization involving players, owners, sponsors, and the media in a huge money-making enterprise.
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History of the NBA (Past)
• Origins of the Game–Based off 13 rules
• Creator–Dr. James Naismith
(http://www.nba.com/history/thegame_index.html)
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History of the NBA (Now)
• All 13 rules have been modified• 24 second shot clock is still in effect
– To keep the game:• Exciting• Offensive showcase every game
(http://www.nba.com/history/thegame_index.html)
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Commissioner
• Holds the highest power– David Stern
• Fourth Commissioner• Very strict and demanding job• Lawyer
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Ownership
• Controls:– Pricing– Player salary’s – On court presentations
• Has to meet salary cap• Luxury tax payment• Highest ranking woman
– Susan O’Malley
http://www.insidehoops.com/nba-owners.shtml
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Stadiums
• Sometimes owned by the NBA team
• Rent is paid to the Owner of the Stadium
• Companies inside the Stadium
(Coyle)
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Halfway Attendance
• Bulls 2009-2010• Avg. 20,705
– Wins/Lost» 31/29
• Nets 2009-2010• Avg. 12,905
– Wins/Lost» 6/53
www.espn.com/attendance
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Final Attendance Numbers
• Bulls 2009-2010–Average 20,725
• Win/Lost– 41/41
• Nets 2009-2010–Average 13,103
• Win/Lost– 12/70
http://www.nba.com/standings/team_record_comparison/conferenceNew_Std_Div.html
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Attendance continued
• One player can make the attendance go up
–Allen Iverson
www.nba.com
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Salary Cap
• Luxury tax on all NBA teams
• All teams have the same cap no matter how much more the owners have
• Trades
(Devlin)
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Average Salary
• 2005-06–5 million dollars
• 2006-07–5.215 million dollars
• 2007-08–5.356 million dollars
• 2008-09–5.585 million dollars
http://members.cox.net/lmcoon/salarycap.htm#Q24
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Average Salary cont.
• 2009-2010–5.854 million dollars
• Highest paid player–Tracy McGrady
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2004-2005 Salary Breakdown
http://www.swivel.com/charts/2642-NBA-Team-Salaries-2004-2005-
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2009-2010 NBA Salary Cap
• Any team that goes over the cap
– Has to pay $1 for every $1 that the team goes over
• Luxury Tax– Last Season
• $71.2 Million
– This Year• NA
http://withleather.uproxx.com/2009/07/nba-salary-cap-lowered-for-2009-2010
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Foreign Players
• The NBA has expanded Internationally
• Total of 86 International players on only 30 teams
(http://www.nba.com/players/int_players_0607.html)
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Most Popular Foreign Players
• Tony Parker–2007 NBA Finals MVP–NBA All-Star three times–All-NBA Third Team
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Foreign Players Cont.
• Yao Ming–Member of the China National team–Tallest player in the NBA
• 7ft 6in
–NBA All-Star 7 times–All-NBA team 5 times
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Influence on the World
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Merchandising
• One of the key factors for any sports team• Jerseys • Sneakers• Allen Iverson (AI)
– Reebok
http://www.footballfanatics.com/NBA
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Sponsors
• Source of some income for the league
• Have to pay a price to post their name with the NBA logo
• Sponsors change from stadium to stadium
http://nbahoopsonline.com/Articles/2007-08/NBArevinuesharing.html
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Sponsors inside and outside
Outside the Wachovia Center Inside the Wachovia Center
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Adidas
• Signed an 11 year contract
• Replaced Reebok’s contract
• Contract started at the beginning of this past season
http://sports.espn.go.com/nba/news/story?id=2404020
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Media
• Has a huge effect on the league
• Shows the fans the games of their favorite players
• Shows interviews
• Coverage from around the world
(Coyle)
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Media for the Fans
Video Games• NBA 2K• NBA Jam• NBA Live• NBA Street• NBA 10• NBA Hang time• NBA Ballers
• Online web feeds• NBA.TV
Television
• ABC• CBS• ESPN• NBA TV• NBC • TNT• Local TV Networks
http://hoopedia.nba.com/index.php?title=NBA_Technology_History
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Promotions
• This is based on the team and what they feel is right for their fans
• Better teams many have more or less promotions• Charlotte Bobcats
• Low fan base• Fighting the economy to stay afloat
(Devlin)
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Ticket Sales
• Depends on the team/organization–Ex. Bobcats low pricing
• $130.00– Center Court
–Cavaliers• $160.00
– Center Court
• Better teams support the lower teams
(http://www.nba.com/cavaliers/tickets/)
(http://www.nba.com/bobcats/bobcats_tickets_landing_page.html)
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Fines/ Suspensions
• Happens when:– Players fight– Get Technical fouls– Get thrown out of
games– Enter the crowd
• For any reason
• Come from NBA Commissioner or team
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“Legends in Business”
• This was created to share its knowledge and expertise in career development and emphasize the importance of diversity in the work place
• “The Team”–Julius Erving–Dominique Wilkins–Clyde Drexler–Jamal Mashburn–Dave Bing
http://www.nba.com/careers/legends_in_business.html
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Marketing
• New Jersey Nets– Free Jersey’s
• Seek interest to the fans
• Dallas Mavericks– Free ticket to All-Star
game• With purchase of full-
season ticket package
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Basics of a “Team”
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Awards
• After each season these awards are given out– The Sixth Man Award– The Most Improved Player Award– The Rookie of the Year Award– Defensive Player of the Year– Coach of the Year– MVP (Most Valuable Player)– Executive of the Year– All-NBA Team– All-Defensive Team– All-Rookie Team
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Transactions
• The biggest part of the NBA
• Beginning process for putting a winning team
• Takes place throughout the entire season• Trade dead line
– This year was Feb. 18 at 3 pm
http://www.nba.com/news/transactions/2010.trade.deadline.tracker/index.html
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The Lottery
http://blogs.suntimes.com/sportsprose/nba-draft-lottery.jpg
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The Draft
• Players move up and down draft boards
– Draft is only 2 rounds
• Players from US colleges and all around the world are drafted
• Highest draft pick is paid the most
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The Draft
• Injures during the season effect a teams draft board
– College Example from this year’s Final Four
• Da’Sean Butler from West Virginia
www.espn.com
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Community Service
• NBA Cares–Is the service the NBA supplies to community
• Different lines of service –Players have their own community service–Foreign players go back to help their
countries in every way
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Community Service•League wide•Worldwide
•All over•Africa•Asia•Europe•North America
•All US Cities•New Orleans was the biggest project for the league
http://www.nba.com/allstar2008/nba_cares/
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Community Outreach
• NBA players also support–Volunteerism–Child Abuse Prevention Programs–Hunger Relief–HIV/AIDS Awareness–Special Olympics
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Read to Achieve
• Shows kids the importance of education
• Education is everything
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Recycling Program
• Every NBA Stadium• Work with the city
http://www.nba.com/dleague/dleague/read_to_achieve_index.html
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Application
• NBA games
• Compared the business before and after
• Took pictures
• Met Public Relations directors, Broadcasters, players, writers, and interns
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Class Activity
• Make your own Jersey
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Conclusion
• The NBA is a huge business with many opportunities. Whether you want to work behind the scenes, volunteer, or become the Commissioner you must work long hours, like traveling, and get along with a diverse group of people.
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Works Cited
• http://i.cdn.turner.com/si/2010/writers/frank_hughes/03/08/john.wall/john-wall-hughes.jpg
• http://www.theepochtimes.com/n2/images/stories/large/2010/04/03/DSeanButler98234022.jpg
• http://v3.kevincarrollkatalyst.com/images/uploads/nba_green_2_thumb.jpg
• http://netsarescorching.com/wp-content/uploads/2009/05/ping-pong.jpg
• http://aaunews.org/news/wp-content/uploads/2009/06/2009-nba-mock-draft.bmp
• http://bgchhalepono.files.wordpress.com/2009/09/adidas_logo.jpg
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Works Cited
• http://www.tsu.edu/Images/media/center/MEDIA_6_2-11-06.jpg
• http://img.photobucket.com/albums/v503/nhoj_schmeitz/benwallacebrawl.jpg
• http://sports.espn.go.com/photo/2006/0513/nba_a_nash_395.jpg
• http://cdn.bleacherreport.net/images_root/slides/photos/000/173/932/96329227.jpg.16054_display_image.jpg
• http://beta.images.theglobeandmail.com/archive/00484/Stern13_484922gm-a.jpg
• http://retrosport.files.wordpress.com/2009/11/james-naismith.jpg
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Works Cited
• http://farm5.static.flickr.com/4038/4169802901_e088234e61.jpg
• http://howtowatchsports.com/wp-content/uploads/2009/08/salarycap1big-300x269.jpg
• http://www.enbajerseys.com/site/images/jersey1.jpg
• http://media.mcclatchydc.com/smedia/2007/10/30/17/295-20071030-NBA-players-origin.large.prod_affiliate.91.jpg
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Works Cited
• Badenhausen, Kurt, and Michael K. Ozanian. “The Business of Basketball.” Editorial. Forbes.com. N.p., 3 Dec. 2008. Web. 15 Nov. 2009. <http://www.forbes.com/ 2008/ 12/ 03/ business-basketball-nba-biz-sports-nba08-cz_kb_mo_cs_1203intro.html>.
• Berri, David J. “A Simple Model of Worker Productivity in the National Basketball Association.” The Business of Sports. By David J. Berri, et al. Ed. Brad R. Humphreys and Dennis R. Howard. Westport: Greenwood Publishing Group, 2008. 1-40. Print.
• Brock, Katherine Cromer. “New Stadium Gears Up For NBA All-Star Game.” Dallas Business Journal (May 2009): n. pag. Web. 15 Nov. 2009. <http://washington.bizjournals.com/ dallas/ stories/ 2009/ 06/ 01>.
• Jeanrenaud, Claude, and Stefan Kesenne. “Sports and the Media: An Overview.” The Economics of Sports and the Media. By Bill Gerrard, et al. Ed. Claude Jeanrenaud and Stefan Kesenne. Northampton, Massachusetts: Edward Elgar Publishing Limited, 2006. 1-26. Print.
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Works Cited
• Kaplan, Daniel, and John Lombardo. “NBA Securing $175M for Clubs.” Editorial. Street & Smith’s Sports Business Journal. N.p., 16 Feb. 2009. Web. 15 Nov. 2009. <http://www.sportsbusinessjournal.com/ article/ 61537>. In this article, the authors use information based off the league and based off their numbers.
• Martzke, Rudy. “Mavs Boss: NBA Gains From Bryant.” USA Today 5 Aug. 2003: n. pag. Web. 15 Nov. 2009. <http://wf2dnvr17.webfeat.org/ mil7N1437/ url=http://web.ebschost>.
• Vollrath, Amanda. “New NBA Dress Code Too Strict at Best, Racist at Worst.” The Dog Street Journal (Nov. 2005): n. pag. Web. 15 Nov. 2009. <http://www.dogstreetjournal.com/ story/ 2842>.
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Works Cited
• Coyle, Maureen. Personal interview. 8 Jan. 2010.
• Devlin, Matthew. Personal interview. 8 Jan. 2010.
• http://product.images.prosportsmemorabilia.com/61-07/61-07780-F.jpg
• http://image.made-in-china.com/2f0j00JMrERPCKZGcs/NBA-Jerseys-01-.jpg