The National Basketball Association (NBA) returned last weekend with the first round of pre-season games ahead of the upcoming 2017/18 campaign.
As each team finalises their respective plans to dethrone the Golden State Warriors, who claimed last year’s championship title by defeating the Cleveland Cavaliers in June’s Finals, here’s what to expect from the season to come.
All change on the court
This off-season has seen a series of high-profile player trades as several standout stars have upped sticks for new teams in new markets. Chris Paul, Carmelo Anthony, Isaiah Thomas and Kyrie Irving are just some of the household names to switch franchises this summer, but in truth every team in the league will have a refreshed look and feel when they take to the court this season.
In July, the NBA unveiled a tweak to its logo, introducing an updated typography and a modified colour scheme, yet the most noticeable change will be found on the league’s on-court uniforms.
This year marks the arrival of Nike as the league’s new uniform provider, the two parties having signed an eight-year, US$1 billion merchandising and marketing deal back in June 2015. Under the deal, which spelled the end of Adidas’s tenure, Nike’s Swoosh will feature on every team jersey with the exception of the Charlotte Hornets, who will sport the Jordan Brand logo in recognition of their owner, Michael Jordan.
Another significant change to the NBA’s jerseys this year is the inclusion of corporate sponsors for the first time, after teams were permitted to sell a 2½-by-2½-inch patch on the left shoulder as part of a three-year pilot scheme introduced by the league last year.
Jersey sponsorships have been selling for upwards of US$5 million per year, with the number of deals done currently at 16. The Golden State Warriors' agreement with Rakuten is understood to be worth US$20 million annually, by far the most lucrative of any deal signed so far.
Revenue from the jersey sponsorships is being split in three ways: the selling team retains 25 per cent of the fee, while 25 per cent goes to the NBA’s revenue sharing pool and 50 per cent is distributed among players under the terms of the league’s collective bargaining agreement.
NBA jersey sponsors - deals done so far
Philadelphia 76ers (StubHub)
Boston Celtics (General Electric)
Sacramento Kings (Blue Diamond Growers)
Orlando Magic (Disney)
Cleveland Cavaliers (Goodyear)
Minnesota Timberwolves (Fitbit)
Utah Jazz (Qualtrics)
Brooklyn Nets (Infor)
Toronto Raptors (Sun Life Assurance Company)
Detroit Pistons (Flagstar Bank)
Denver Nuggets (Western Union)
Milwaukee Bucks (Harley-Davidson)
Atlanta Hawks (Sharecare)
Golden State Warriors (Rakuten)
LA Lakers (Wish)
Miami Heat (Ultimate Software)
An issue put to rest?
The coming 82-game regular season will start on 17th October, eight days earlier than last year. That scheduling shift is intended to reduce the number of back-to-back games - from 16.3 to 14.4 per team - and gruelling mini-series, where teams play as many as four games in the space of five nights, often on the road. It has also been made to discourage coaches from resting their star players even when they’re healthy, something that has frustrated fans, team owners and broadcasters alike in recent seasons.
In April, NBA commissioner Adam Silver (right) described the practice of resting players as “the biggest issue” facing the league, noting how “future revenues and growth are directly tied” to having the best players on the court, not least for nationally televised games.
September saw league owners vote to implement new rules designed to eliminate the practice, including the introduction of fines and other punishments. Silver will now have discretionary power to fine teams for resting healthy players, possibly as much as US$100,000.
While it remains to be seen whether coaches will comply, the league’s leadership will be hoping that having more rest days around marquee national TV games curbs the issue once and for all. With the NBA’s current prosperity underpinned by a colossal national TV rights deal worth some US$24 billion, they will want to avoid upsetting the league’s broadcast partners any further.
Revenue-sharing row rumbles on
Despite the league’s current financial prosperity and an enhanced revenue-sharing system brought about by its current national TV deal, signed in 2014, a confidential report obtained earlier this month by ESPN highlighted the gap between the haves and the have-nots.
According to ESPN, the report revealed that 14 of the NBA's 30 teams lost money last season before receiving revenue-sharing payouts, and that nine were in the red even after collecting those payments. Most alarmingly, the profitability gap between the league's richest franchises and the small-market strugglers appears to be widening, even as TV revenues continue to grow across the board.
"Teams in small markets are told we need to run our businesses better so we can make money," one ownership source told ESPN.com. "But teams in the largest markets can run their businesses poorly and still make money.”
ESPN notes how the Los Angeles Lakers made a US$115 million profit last season, despite paying almost US$49 million into the NBA’s revenue-sharing pot and enduring a miserable record on the court. That figure was bolstered by the Lakers’ NBA-high local media rights deal, which earned them a whopping US$149 million, far more than any other team, regardless of on-court performance or how well the team was run.
The Lakers’ fortunes - and those of other big-market teams such as the New York Knicks and Chicago Bulls - stand in stark contrast to those of smaller teams such as the Memphis Grizzlies, who lost nearly US$40 million despite being widely viewed as one the league’s best-run franchises. Though the Grizzlies’ losses were offset by US$32 million in revenue sharing, their market size dictates that their local media rights income remains at a league-low US$9.4 million a year.
The big-market LA Lakers made a US$115 million profit last season thanks to their NBA-high local media rights deal.
This disparity in local revenues is compounded by the league’s national TV deal, which is worth about US$2.7 billion per season. While income from that deal is split equally among every team and has helped to cover spiralling costs, it has also precipitated a sharp rise in the league’s salary cap - which stands at US$99 million for the coming season - putting extra pressure on teams to fork out ever greater sums on player salaries in order to compete on the court.
The issue of revenue-sharing is, of course, a complicated and contentious one, with both large and small-market teams voicing their discontent over the current system. To make matters worse, there are widespread suggestions that some teams are using certain financial reporting tactics to make them appear less profitable than they really are.
Nevertheless, as the debate intensifies the onus is on the league and its franchise owners to find a solution. Last week, the league's board of governors discussed the issue at their meeting in New York but with no resolution in sight, the debate - and associated chatter about potential expansion and/or relocation into new markets - is sure to rumble on for some time yet.
New faces, new places
The NBA’s present bounty has seen franchise valuations soar, as evidenced earlier this month when the Houston Rockets were sold for an NBA-record US$2.2 billion, with former owner Leslie Alexander securing a more than 15-fold return on the US$85 million investment he made to acquire the team in 1993.
By all accounts, the sale of the Rockets was a smooth process, underlining the profitability of the team and the attractiveness of the NBA business in general. Alexander was not struggling for suitors given the Rockets are a big-market, star-studded, moneymaking franchise, and in local restaurateur Tilman Fertitta he was able to secure a wealthy and willing, Houston sports-loving buyer who has owned courtside tickets at the team’s Toyota Center for several seasons.
Elsewhere, this coming season sees the Detroit Pistons debut at Little Caesars Arena in their city’s downtown district, having played at The Palace of Auburn Hills in suburban Detroit since 1988. It is hoped the move will dramatically improve the Pistons’ fortunes, with the team having lost US$63.2 million before collecting revenue sharing last season, far more than any other franchise.
Another team seeking increased revenues by relocating within the same market are the Milwaukee Bucks, who will play their final season at the Bradley Center this year ahead of their move to the under-construction, US$524 million Wisconsin Entertainment and Sports Center in 2018. More on plans for that move here.
In Brooklyn, meanwhile, it remains to be seen whether Nets owner Mikhail Prokhorov will be able to offload the 49 per cent stake in the struggling team he has reportedly been trying to sell for nearly a year but to no avail. And in LA, can Clippers owner Steve Ballmer secure an improved lease at Staples Center, or will he opt to join the city’s new National Football League (NFL) teams across town in Inglewood?
Video games and a data play
The NBA’s interest in the burgeoning world of competitive video gaming has been a talking point for some time, and this season will see the league launch its NBA 2K eLeague, a new esports competition it is forming in partnership with Take-Two Interactive Software, the developer of the popular NBA 2K series.
Featuring representatives from 17 franchises, the league is expected to debut next May. NBA 2K eLeague managing director Brendan Donohue has said teams will start drafting players in March, with each competing franchise signing five players to employment contracts. It is not yet clear how, and to whom, media rights will be sold, but more details are likely to emerge soon.
A further new development for this season is an overhaul of the NBA’s data output. Under a deal signed in September 2016, Swiss firm Sportradar will supply real-time statistics for all games from this season onwards, while LA-based Second Spectrum will operate a player-tracking system at all NBA venues in order to generate a wealth of novel on-court data.