How NBA Owners Make Money?

Several NBA teams are worth more than a billion dollars. How do the team owners make their money?

Introduction

Owning an NBA team is a lucrative business, and many of the league’s owners are billionaires. But how exactly do they make their money?

The answer, it turns out, is a combination of television contracts, ticket sales, and merchandising. In addition, some owners also make money from owning stakes in other businesses, such as real estate or sports teams in other leagues.

Let’s take a closer look at each of these revenue streams.

TV Contracts
NBA teams earn the vast majority of their revenue from television contracts. The league has deals with two major networks—ESPN and TNT—that are worth a combined $24 billion.

Each team receives an equal share of this TV money, which amounts to about $49 million per team per year. Additionally, the league receives a separate TV contract from ABC/ESPN for its Saturday night games, which are broadcast on ABC. This contract is worth an additional $1.1 billion per year and is split evenly among the teams.

So in total, each NBA team receives about $50 million per year from TV contracts.

NBA Teams and Their Worth

With the average NBA team now valued at $1.9 billion, up 13% from last year and nearly triple the value of five years ago, according to Forbes’ annual NBA valuations, it’s safe to say that owning an NBA team is a very lucrative investment.

However, simply owning an NBA team does not guarantee that you will become a billionaire overnight. In fact, most NBA owners are not even close to becoming billionaires solely off of their NBA investments. So, how do NBA owners make their money?

First and foremost, the vast majority of NBA owners are already billionaires or come from billionaire families. For example, the owner of the Charlotte Hornets, Michael Jordan, is a former professional basketball player and is considered by many to be the greatest basketball player of all time. He is also a billionaire, with his net worth being estimated at $2.1 billion.

Secondly, many NBA owners also own other businesses and investment portfolios outside of the basketball world. For instance, the owner of the Dallas Mavericks, Mark Cuban, is also a successful entrepreneur and investor in various tech startups. He has an estimated net worth of $4.3 billion.

Finally, some NBA owners also make money through other businesses that are indirectly related to the world of basketball. For example, Jerry Reinsdorf, the owner of the Chicago Bulls and the White Sox, also has ownership stakes in multiple sports cable networks such as ESPN and Comcast SportsNet Chicago.

In conclusion, while owning an NBA team can be a very lucrative investment on its own, for most NBA owners it is just one part of a much larger business and investment portfolio.

How NBA Owners Make Their Money

NBA owners make the majority of their money from the sale of their team’s equity. When an NBA team is sold, the owner will sell a majority stake in the team to the new buyer. The owner will also receive a percentage of the team’s revenue, which includes things like ticket sales, television rights, and merchandise sales. NBA owners also make money from investments and other business ventures.

Television Deals

The biggest source of revenue for NBA owners comes from television deals. In 2014, the league agreed to sell the rights to its games to ESPN, TNT, and ABC for a combined $24 billion over nine years. That’s an average of about $2.7 billion per year, which is about 60% more than the previous television deal was worth.

Most of that money goes to the owners of the teams, though a small portion is set aside for things like arena improvements and player benefits. The split isn’t even, though; the lion’s share goes to the teams that are considered the most valuable by broadcasters. For example, the Los Angeles Lakers receive about $30 million per year from television deals while the Milwaukee Bucks receive less than $20 million.

Ticket Sales

NBA teams generate revenue from several sources, the largest of which is television contracts. These agreements, which are negotiated every few years, grant the league’s broadcast partners the right to show NBA games on their various channels. In addition, the league has its own cable network, NBA TV, which also generates revenue. Other sources of income include ticket sales, sponsorship deals and merchandising.

While most of the league’s revenue is distributed equally among the teams, a portion of it is used to fund special initiatives and shared costs, such as marketing and player pensions.

Merchandise Sales

NBA team owners make a significant portion of their money through merchandise sales. Every year, the NBA releases new team jerseys and other clothing items bearing the logos of each team. These items are then sold in stores and online, and the proceeds are divided among the league’s teams. In addition tojerseys, teams also sell other merchandise such as hats, T-shirts, and basketballs.

Advertising

Leagues like the NBA make most of their money from advertising. This includes the ads you see on TV, as well as commercials that play during breaks in the action. The NBA also sells ad space onits website and mobile app. In addition, the league has a partnership with Google, which shows ads on the NBA homepage and certain other pages on the site.

According to Kantar Media, the NBA averaged $749 million in ad revenue per year from 2010 to 2016. That number is expected to rise in the coming years, as the league has secured several new sponsorships, including a $1 billion deal with Intel to provide virtual reality highlights of games.

Other sources of revenue for the NBA include ticket sales, merchandise sales, and television rights fees. The league also generates income from its investment portfolio, which is worth an estimated $2 billion.

Conclusion

Interestingly, the vast majority of NBA owners are actually losing money. In fact, only a handful of team owners are turning a profit. Most team owners rely on other sources of income to make up for the losses they incur from owning an NBA franchise.

So, how do NBA owners make money? They do so through a variety of methods, including TV contracts, ticket sales, merchandising, and sponsorship deals. While some team owners are able to turn a profit from owning an NBA franchise, most are not.