How Do NBA Teams Make Money?

How do NBA teams make money? This is a question that we get a lot. There are a few different ways that NBA teams generate revenue.

NBA Teams Make Money From Three Main Sources

NBA teams make money from three main sources: ticket sales, broadcasting rights, and sponsorship deals. Ticket sales are the most important source of revenue for NBA teams. Broadcasting rights are the second most important source of revenue, and sponsorship deals are the third most important source of revenue. NBA teams generate a lot of revenue, but they also have a lot of expenses.

Ticket Sales

Ticket sales are, by far, the biggest source of revenue for any NBA team. In the 2017-2018 season, the average NBA team earned almost $43 million in ticket sales alone. That’s over 60% of the average team’s total revenue!

Most of that money comes from people buying tickets to games at the team’s home arena. But teams also make money from people who buy tickets to games that their team is playing in another city (away games). And sometimes, when there’s a really big demand to see a particular game, teams will even play what are called “neutral site” games, where they essentially sell tickets to a game that could be played anywhere. The most notable example of this in recent years was when the Golden State Warriors played a “home” game against the Cleveland Cavaliers at Oracle Arena in Oakland—even though it was technically a Cavs “home” game!

All told, ticket sales account for about two-thirds of all NBA teams’ revenue. So if you want to know how NBA teams make their money, selling tickets is a good place to start.

Merchandise Sales

NBA teams generate revenue from several sources, including merchandise sales, ticket sales, and broadcasting rights. Of these sources, merchandise sales make up the largest portion of team revenue. In the 2018-2019 season, for example, the Golden State Warriors generated $300 million in merchandise sales, accounting for 36% of their total revenue.

While most of this revenue comes from the sale of jerseys and other apparel, a significant portion also comes from the sale of team-branded merchandise such as toys, mugs, and other collectibles. Some teams also generate revenue from the sale of game-used items such as balls and jerseys.

Broadcast Rights

Broadcast rights are the biggest source of revenue for NBA teams. National TV partners ESPN and Turner Sports (which includes TNT) paid a combined $24 billion to the league in 2016, an average of nearly $900 million per year through 2025. That’s an increase of more than 300% from the previous TV deal.

Each team receives an annual national TV payout, which was nearly $56 million per team in 2017-18. The amount each team receives is based on its share of total league TV revenues and its place in the standings. For example, the league’s most valuable franchise, the Golden State Warriors, received $101 million from national TV revenues in 2017-18 while the least valuable franchise, the Charlotte Hornets, received $51 million.

NBA Teams Also Make Money From Secondary Sources

NBA teams make a lot of their money from things other than ticket sales and television contracts. In fact, most NBA teams generate around 50% of their total revenue from other sources. So, where does this money come from? Let’s take a look.

Sponsorships

Many NBA teams also make significant amounts of money from sponsorships. The amount of money that a team can make from sponsorships depends on the size of its market, its success, and the number of high-profile players on the team. The Los Angeles Lakers, for example, are one of the most valuable franchises in the NBA, and they make a significant amount of money from sponsorships. In addition to jersey sponsorships, the Lakers have deals with companies like McDonald’s, Pepsi, and Verizon. These companies pay the Lakers for various marketing rights, including advertising at Lakers games and on the team’s website.

Luxury Boxes and Premium Seating

In addition to ticket sales, NBA teams make a significant amount of money from the sale of luxury boxes and premium seating. These are seats that offer fans a more exclusive and intimate experience, such as access to private clubs and restaurants, and are often located near the court.

Luxury boxes and premium seats typically cost much more than regular tickets, and the revenue generated from their sale is a major source of income for NBA teams. In fact, according to Forbes, the average NBA team generates about $25 million per year from the sale of luxury boxes and premium seats. This is an important source of revenue for NBA teams, as it allows them to generate additional income beyond ticket sales.

Parking and Concessions

In addition to ticket sales, NBA teams also generate revenue from parking and concessions. Parking fees can vary depending on the city and the arena, but they typically range from $10 to $30 per car. Concessions are also a major source of revenue for NBA teams, with the average concession stand selling items such as hot dogs, beer, and sodas.