NBA, why are teams worth so much? TV rights, sponsors and "global"

The NBA has now set its sights on the NFL, which in 2024 reached almost 20 billion in total revenues and can count on collective income guaranteed by mega national TV revenues (111 billion dollars in 11 years until 2033) that allow each team to receive an annual check of over 400 million. While a collective contract with players linked to a rigid salary cap allows the budgets to be constantly balanced. The NBA is trying to emulate the NFL model in both respects, but can count on a global audience of fans much larger than that of football.

In terms of revenue, the NBA has accumulated just over $11 billion in total in 2024 (with the Golden State Warriors leading the way, reaching $800 million). However, in July 2024, a new television deal was signed with ABC/ESPN, NBC/Peacock and Amazon Prime Video for $76 billion over 11 years, $6.9 billion per year, compared to the $2.6 billion of the previous domestic agreements with ESPN and Turner Sports that expire at the end of this tournament (plus about $500 million from the international market).

Figures that will triple the annual check for each franchise and that are allowing to absorb without shocks the drop in "local" TV rights, after the default in 2023 of the regional sports network operator Diamond Sports Group, which account for about 10% of the turnover of the 30 NBA teams.

In 2024, sponsorships increased by about 15% - the agreement with Nike was renewed in October 2024, with an annual investment of about 90 million dollars until 2037 - as did the revenues from non-NBA events, which benefited above all the teams that own/have access to the arenas. The concert business, for example, brought in an average of 25 million dollars to these franchises. The NBA owners managed 10 of the 20 highest-grossing concert venues in the world in 2024, according to Billboard. In June 2024, the Koch family purchased 15% of BSE Global, the parent company of the Brooklyn Nets, the New York Liberty and the Barclays Center, the sixth highest-grossing arena in the world, for a valuation of 6 billion.

To keep the books in order and follow the model of the NFL which has a very rigid salary cap, the NBA has signed an agreement with the players' association less permissive in terms of salary increases. Given the increase in revenues, the salary cap for the 2025-26 season will increase by 10%, to 154.6 million dollars. The luxury tax will be set at 187.9 million dollars, while two other spending thresholds have been established at 195.9 and 207.8 million dollars.

In essence, starting from the 2023-24 season, in addition to the luxury tax that provides for the payment of a penalty proportionate to the excess to be paid to the most virtuous teams, but being able to continue to move freely, further "upper spending limits" are in force, beyond which penalties and blocks on the market are triggered: for example, not being able to sign free agents from the buyout market or use sums of money (the so-called cash considerations) in exchanges.

The NBA has had 30 teams since 2004, when Charlotte began playing by paying the other 29 owners a $300 million entry bonus. There has long been talk of a possible expansion with Las Vegas and Seattle favorites to find space in the basketball Olympus, but the entry fee would be $4/5 billion to take into account the latest television deal.

However, the area that the NBA is looking at with renewed attention to grow is that of non-US markets from which it obtains 10% of its revenues. International TV rights are burdened by match times, which generally take place after midnight in Europe and early in the morning in Asia. Although they aim to overcome this limit with highlights and social consumption.

Meanwhile, following a 2019 crisis when then-Houston Rockets general manager Daryl Morey tweeted an image in support of the Hong Kong protests and state broadcaster CCTV responded by blacking out the games, the NBA will return to China for two preseason games, between the Brooklyn Nets and the Phoenix Suns, to be held in Macau on October 10 and 12, 2025.

But above all, the NBA is aiming for the European market. After many rumors, last March 27, Commissioner Adam Silver announced that the possibility of founding a league in Europe in association with the International Basketball Federation (FIBA) will be explored. An alternative competition to the Euroleague, a private association of clubs founded over twenty years ago in opposition to FIBA. The NBA and FIBA ​​have admitted that for over a year they have been carrying on discussions with potential investors, teams, sports facility builders and commercial partners.

What is emerging is on the one hand a restoration with Fiba intending to return to govern the top continental competition, on the other hand a revolution with the NBA aiming to create a satellite tournament under its wing. The Achilles heel of the Euroleague, which has grown in terms of sport and following, is financial sustainability, given that revenues have never managed to compensate for the costs of the teams. On average, the budget of a Euroleague team is around 20 million.

Overall, it is 360 million with an expenditure for the roster allowed by financial fair play (65% of the budget) of over 230 million (about 13 on average). However, the 18 franchises as a whole can count, between the box office and the money turned over by the Euroleague for TV rights and sponsors, on just over 100 million in revenue. The support of commercial partners and owners becomes essential for all of them. The NBA with its support evidently aims to increase the revenues of the new competition - not with a closed number - in which 16 teams should initially be included. Some would leave the Euroleague (Real Madrid, Barcelona, ​​Villeurbanne and Fenerbahce), while especially in the European capitals, the NBA franchises could contribute to the foundation of new realities.