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Basketball Fan
01-17-2011, 09:53 PM
http://adage.com/article?article_id=148243


NBA Lockout Would Put $1B in TV Ad Revenue at Stake
Also in Danger: Chunk of $2.7B Licensed Products Market
By Rich Thomaselli
Published: January 17, 2011




A correction has been made in this story. See below.

NEW YORK (AdAge.com) -- Halfway through the 2010-11 National Basketball Association season, it's already been one of the finest in league history by almost every metric -- and that's just one more reason why a potential lockout and protracted labor negotiation between the owners and the players will threaten far more than simply the bottom line of a financial statement.

Although the National Football League's potential labor dispute is more top of mind -- its collective bargaining agreement with players ends in six weeks -- the NBA is dealing with its own issues. While its current agreement with the players doesn't expire until June 30, both sides are trying to avoid a situation that some sports-marketing experts have termed "more dire" than the NFL labor conflict.


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Over $12B at Stake if NFL Lockout Prevents 2011 Season
Networks, Sponsors, Websites, Fantasy Leagues, Sports Bars and Stadium Workers Will Be Real LosersAt stake? About $1 billion in TV ad revenue for Walt Disney Co.'s ABC/ESPN and Turner Broadcasting's TNT, the main rights holders for NBA games; sponsors and advertisers that are facing the possibility of a second potential sports-programming platform disappearing; a global stage that Nike (and, to a lesser extent, Reebok) uses to hawk shoes; a huge chunk of the $2.7 billion licensed products market, most of which Adidas makes and sells; and brand equity at a pivotal time for the league, both domestically and internationally.

And don't think it isn't real. Phoenix Suns player Jared Dudley recently tweeted: "If you are in the NBA: I need all NBA players to save there [sic] money. Be prepared to live without a check for at least a year. This is serious."



AP
The NBA Finals could see Lebron James, now with the Miami Heat, facing off against Kobe Bryant and the Los Angeles Lakers. The NBA is as hot as it's been in years. The buzz began three months before the season even tipped off, when LeBron James announced on live TV last July during "The Decision" that he would be leaving his hometown Cleveland Cavaliers for the Miami Heat. The league reportedly had a record 50,000 new season-ticket requests. The buzz has continued through the first half of the season with the potential for an NBA Finals between Mr. James and the Los Angeles Lakers' Kobe Bryant -- by far the two most marketable players in the league -- as well as the resurgence of big-market teams such as the New York Knicks and Chicago Bulls and the emergence of young stars such as Blake Griffin of the Los Angeles Clippers and John Wall of the Washington Wizards.

Attendance at games is flat, up about a half-percent compared to last year, but TV ratings on ESPN and TNT are up a whopping 30%. Advertisers and sponsors have noticed the resurgent fan interest.

The two sponsors that stand to lose the most are the newest ones -- Spanish banking group BBVA and American Express. BBVA, which is looking for increased brand exposure, signed a four-year, $100 million deal with the league this year. And American Express just returned as a sponsor after a five-year absence.

"The problem is this," said one chief marketing officer for an NBA partner. "It's not so much the money that we spend with the league and on the ads, it's how do you fill the hole in the promotional schedule? I mean, you can give me a make-good, but sometimes there's no real way to make good."

TNT clearly has the programming to fill the void if there is no NBA next season, but sports-centric ESPN would have to scramble. Unlike the NBA lockout in 1999, ESPN no longer has the National Hockey League to fall back on. And, according to a report prepared by analysts from RBC Capital, Disney derives 55% of its revenue from sports, primarily from ESPN.

As with the NFL, the NBA dispute is mostly over money. The NBA, claiming it lost $370 million last year, wants to change entirely a system that currently gives the players 57% of the revenue. The league has opened its books and audited tax returns to the union, which wants to maintain the status quo.

"Nobody is anxious to have a lockout or a work stoppage," said Neil Pilson, the former CBS Sports president who now runs his own consultancy, Pilson Communications. "From a cable [network] standpoint, a lockout would be manageable. But then you have a lot of goodwill there that's threatened."

And that goes beyond just the U.S. More than 300 million people play basketball recreationally in China, which has a deep fascination with the NBA and its superstars. Mr. Bryant was treated like a rock star -- some might even say a god -- when he played for the U.S. team in the 2008 Olympics in Beijing.

And what of the sneaker business? The basketball shoe market is a $2.4 billion market. Between the traditional Nike brand and Nike-owned Jordan Brand and Converse, the Swoosh controls 94% market share in basketball shoes. Nike is a marketing partner of the NBA; Adidas is a marketing and merchandising partner.

Nike, through a spokesman, declined to comment. Matt Powell, an analyst with Charlotte, N.C.-based SportsOne Source, said, "Kids are the primary buyers and if kids are still playing ball, it won't have a dramatic impact. But it will have some impact. With no NBA, there's no way for Nike or Reebok to showcase a new guy [in endorsements]."

~ ~ ~
CORRECTION: An earlier version of this story said that NBA attendance was down 1% this year; it is up 0.48%. The original story also said the NBA, like the NFL, does not open its books to the union. The league has opened its accounting and its audited tax returns to the players. Nike is an official marketing partner of the league; the original story said otherwise.

Kegboy
01-17-2011, 10:51 PM
Uh, hold on. We're supposed to believe the Walt Freakin' Disney Company gets over half it's revenue from ESPN, which they don't even own outright? I call shenanigans.

Peck
01-18-2011, 02:54 AM
Uh, hold on. We're supposed to believe the Walt Freakin' Disney Company gets over half it's revenue from ESPN, which they don't even own outright? I call shenanigans.

Yea, I thought that was more than a little odd myself.

Roaming Gnome
01-18-2011, 07:07 AM
It would be a real coup if the NBA players and owners can get their ducks in a row before October while the NFL has a lengthy lock-out. It's just too bad that I think both the players and owners of both leagues are going to put more bullets into that "golden egg laying goose".

It's almost insanity that either side feels that a work stoppage is the best way to get what they want when there are so many ways for a family/individual to spend their time and entertainment dollars these days. Hell, 12 years ago I would have never thought that my own interest in all things sports would wane as much as it has, but with plenty of other things to do... Sports isn't the end all, be all it use to be!

Maybe that's why they can never seem to get the ratings back to where they were 15 years ago for pro sports in general.

DocHolliday
01-18-2011, 09:00 AM
I think the NFL could lose all of next season and still be more popular than the NBA when it came back. Baseball lost a lot of fans because they realized it's slow and boring, in addition to the greed of players and owners. Football would still be football.

Unclebuck
01-18-2011, 09:19 AM
It's almost insanity that either side feels that a work stoppage is the best way to get what they want when there are so many ways for a family/individual to spend their time and entertainment dollars these days.



The owners believe the only way they can get concessions from the players is through a work stoppage. And I tend to agree with the owners. The question becomes whether it is worth it though.

owl
01-18-2011, 09:20 AM
It would be a real coup if the NBA players and owners can get their ducks in a row before October while the NFL has a lengthy lock-out. It's just too bad that I think both the players and owners of both leagues are going to put more bullets into that "golden egg laying goose".

It's almost insanity that either side feels that a work stoppage is the best way to get what they want when there are so many ways for a family/individual to spend their time and entertainment dollars these days. Hell, 12 years ago I would have never thought that my own interest in all things sports would wane as much as it has, but with plenty of other things to do... Sports isn't the end all, be all it use to be!

Maybe that's why they can never seem to get the ratings back to where they were 15 years ago for pro sports in general.

Well said. I feel the same way about finding other things to do if their is a work stoppage.
I do feel for all the people who depend on these entities for their livelihood. They are the ones who truly suffer.

Unclebuck
01-18-2011, 10:08 AM
Well said. I feel the same way about finding other things to do if their is a work stoppage.
I do feel for all the people who depend on these entities for their livelihood. They are the ones who truly suffer.

I agree, and felt the same way back in 1999 - honestly, it didn't really bother me, I did other things enjoyed the break and saved money because only 50 games vs 82 fewer tickets to buy. Plus don't most of us believe 82 games is too many. So if November is lost and they only play 60 games, it doesn't bother me.

Roaming Gnome
01-18-2011, 10:19 AM
I think the NFL could lose all of next season and still be more popular than the NBA when it came back. Baseball lost a lot of fans because they realized it's slow and boring, in addition to the greed of players and owners. Football would still be football.

I wish I would've been more clear when I started talking about this other than just rambling my thoughts. When I mentioned a real coup, I was thinking in terms of the Pacers being able to get more warm bodies into the Fieldhouse for a season while the Colts were on hiatus for THAT specific season.

Eventhough I did type in terms of "leagues", my thinking was more in terms of local and for only that season because as you mentioned.... Football would still be football... (King!)

Justin Tyme
01-18-2011, 11:27 AM
50 games vs 82 fewer tickets to buy.


There is only 41 home games in a 82 game season. Do you travel to the away games too?

naptownmenace
01-18-2011, 11:34 AM
There is only 41 home games in a 82 game season. Do you travel to the away games too?

:laugh:

Good catch!

Unclebuck
01-18-2011, 11:42 AM
There is only 41 home games in a 82 game season. Do you travel to the away games too?

amzing how differently my post reads when I put a comma in. Sorry for my bad communication.

here is what I meant to say. 50 games vs 82, fewer tickets to buy