Television Rights, Merchandising, and Ticket Sales Are Primary Revenue Sources
- The National Basketball Association (NBA) has a reputation for being the most innovative of the major professional North American sports leagues, earning money from a combination of television rights, merchandising, ticket sales, and more.
- Because it is not a public company, the NBA does not release detailed financial reports to the public. However, according to Forbes, which regularly compiles valuations of the 30 teams of the NBA, total revenue across the organization reached $8 billion last season. Each one of the teams is worth at least $1 billion, and a team is worth on average $1.9 billion for last year—about three times the valuation from just five years ago.
The NBA's Business Model
Alongside other major sports leagues, the NBA generates revenue from multiple streams, the most significant of which are television, merchandising, sponsorships, and tickets.
The NBA's Television Business
As the NBA’s popularity increases, team values grow far out of proportion. NBA teams are not sold that frequently, but when they are, records break every time. Over the last decade, the average sale price of a team has tripled. Granted, that’s largely due to a single outlier: the 2014 sale of the Los Angeles Clippers, who went for an unprecedented $2 billion.
There are a number of key challenges facing the NBA, even as professional basketball continues to grow in popularity in the U.S. and elsewhere around the world—and as individual teams balloon in value. For one thing, not every team is valuable all the time. Last year, the Cleveland Cavaliers lost money on an operating basis and declined by about 4% in value to $1.28 billion, per Forbes.