Minutes after the NBA officially announced the July 1 lockout, Sacramento Kings forward/center DeMarcus Cousins offered what was perhaps the most cogent, and funny, take on the players’ financial prospects. In a tweet posted Thursday at around 7:30 p.m. EDT, the big man asked, “Is Walmart hiring?”
Cousins has $3.37 million in salary at stake, so it’s understandable that he’s a bit antsy about his personal finances. Should the NBA season be scuttled altogether, however, billions of dollars would be washed away, and no one will take a bigger hit than the league’s network of TV partners.
ESPN/ABC Sports and TNT stand to lose as much as $1.25 billion in ad sales revenue if the labor dispute negates the entire 2011-12 NBA campaign. Indeed, the NBA audience has become so valuable that the postseason inventory alone accounts for nearly a fifth of the full-season take.
According to Kantar Media, ESPN/ABC and TNT took in $417.7 million in total ad sales revenue over the course of the 2010 NBA playoffs and finals. The going rate for a 30-second spot in the Celtics-Lakers series: $402,000 a pop.
If the networks stand to lose a fortune in ad dollars, the league itself risks billions in media rights, ticket sales, and merchandising. ESPN/ABC pays $485 million per year for the rights to air NBA games while TNT forks over $445 million.
Adding up to a cool $930 million per season, both TV contracts expire in 2016.
With ad sales brokered by Turner Sports, the league-owned NBA TV platform takes in approximately $50 million in sponsor dollars. Also at risk are the regional sports networks that carry NBA action, including the Fox Sports Nets and New York powerhouses YES Network (home to the New Jersey Nets) and MSG (Knicks).
League sponsors will need to scramble to make up for the diminished brand exposure. Last year, the Spanish financial giant BBVA Group signed a four-year, $100 million deal with the league, making it the official bank of the NBA. Bacardi, State Farm, and American Express are also marquee NBA sponsors.
As is the case with the NFL, the pro hoops dustup is largely about money. In April, NBA commissioner David Stern claims the league was on track to lose $300 million this season; as such, the owners want to reapportion the split of revenue between the franchises and players.
“The expiring collective bargaining agreement created a broken system that produced huge financial losses for our teams,” said NBA deputy commissioner Adam Silver. “We need a sustainable business model that allows all 30 teams to be able to compete for a championship, fairly compensates our players, and provides teams, if well-managed, with an opportunity to be profitable.”
The NBA has locked out players before, most recently during the 1998-99 season. That dispute cleaved the schedule to 50 games and soured millions of fans. It took three years before TV ratings returned to prelockout levels.