NBA: League Overview

Formation of the league

• Earlier form: Basketball Association of America• Formed in New York City on June 6th 1946. • Formed as an alternative to then existing leagues like American

Basketball League and the NBL. • First match: New York Knickerbockers  V/s  Toronto Huskies• First league to play games in large cities in major arenas. • After the 1948-49 season, BAA merged with the NBL and formed

the NBA in its initial form. • The NBA initially had 17 franchisees in small and large cities.

Consolidation and evolution

• Consolidated to 11 franchisees by 1950. Reduced to 8 teams by 1954.

• The league continued with just 8 teams till 1961. By 1968, the league had 14 teams and 18 by 1974.

• The rival league ABA formed in 1967 was merged with NBA following the 1967 season, taking the total number of teams to 22.

• The popularity of NBA surged through the years from 1979 with players like Magic Johnson and Michael Jordan playing in the league

• Currently, the league consists of 30 teams divided into 2 conferences, each with 3 divisions. Each division has 5 teams each.

Key Success Factors

1. Franchise model• NBA was created as a limited partnership in which the

partners are the teams that operate as franchises• Any team trying to enter the league must be accepted

first by the management organization and afterwards pay a fee of $300 million

• Audits and reviews to validate a team’s feasibility (it takes an avg of 5 years for a team to get entry)

Key Success Factors

2. Market players and draft• The NBA itself has an own market of players & each player has a

value priced at his annual salary• Draft is the standard procedure with which the NBA incorporates

players to the league• Both college basketball players (>19 years) & international

players are eligible for draft• NBA draft Lottery: The lottery is weighted so that the team

with the worst record has the best chance of obtaining higher draft picks.

Key Success Factors3. Wage Limit• It is the spending cap that every team in the league adheres to for

wage payment to players• Helps to maintain equality in the competition regardless of the

economic power of resp. teams• The ceiling for last season was $58 million per team

4. Global Fan base• China has emerged as NBA's largest overseas market• Large number of Twitter & FB followers (11.21m & 25.68m resp.)

Revenue Streams

The NBA, as a whole, generates more than USD 4 billion in revenue each season (avg USD 150 million per team)LA Lakers: 295 million & Milwaukee Bucks: 109 millionRevenue sources can be classified into 4 major groups:• Television broadcasting rights – all 30 teams receive the same

amount per year• Market revenues for each team – depends on the home city of

the team and fans globally• Revenues from stadium management – ticket sales,

advertising, etc.• Brand Management – marketing of individual star players like

Jordan, Kobe, LeBron

Revenue Streams

Fan Base• The NBA has the youngest audience, with 45

percent of its viewers under 35. It also has the highest share of black viewers, at 45 percent—three times higher than the NFL or NCAA basketball.

• The league's games are now shown in 215 countries and territories. The NBA says a total of 114 games have been played in 32 international cities across 17 foreign countries since 1988. Through social media, the league says it engages 320 million fans - that's more than the entire U.S. population - across the globe, and seems to put the NBA at the front when it comes to interest internationally among the four major U.S. leagues.

League Structure

ConflictsBy the 1997–98 season, 57 percent of basketball-related income was used to pay players, while the previous deal called for a 48 percent split. According to the NBA, 15 of the 29 teams posted losses that season. The NBPA disputed this figure and claimed that only four teams had losses. The league's owners voted on whether to reopen the CBA on March 23, 1998, and the vote passed by a 27–2 margin. Negotiations between the NBPA and owners started on April 1, and nine further bargaining sessions took place in the next three months.

It capped players' salaries at between $9 million and $14 million, depending on how long they had played in the NBA. The league became the first major sports organization in the U.S. to limit the salaries of its players. A rookie pay scale was introduced, with salary increases tied to how early a player was selected in the NBA Draft.

The NBPA re-formed as a union on December 1, receiving support from over 300 players, exceeding the requirement for at least 260 signatures. Signature cards were sent to the roughly 440 players on rosters at the end of the previous season, as well as to the 60 rookies drafted in 2011 and to players who signed at least two 10-day contracts.The re-formation enabled further negotiations with the league on secondary issues such as the age limit for the NBA draft and rules on players being sent to and recalled from the NBA D-League

The 2011 NBA lockout was the fourth lockout in the history of the National Basketball Association (NBA). The owners began the work stoppage upon expiration of the 2005 collective bargaining agreement (CBA). The 161-day lockout began on July 1, 2011 and ended on December 8, 2011. It delayed the start of the 2011–12 regular season from November 1 to December 25, and it reduced the regular season from 82 to 66 games

Conflicts