How Much Do NBA Owners Make?
To find out exactly how much do NBA owners make, you need to understand the scope of the NBA. The National Basketball Association is the professional league of basketball players in North America. The commonly accepted figures are that the team owners can make an average of $100 million per year, out of which they get to keep about $ 12 – 30 million after duties and taxes. However some of the critical financial information is private and so we have to estimate based off what reported figures we have.
How The NBA Makes Money
The National Basketball Association is the top-tier league of professional basketball players in North America. It has a total of 30 teams, one from Canada and 29 in the USA. Everyone earns millions.
The teams play 82 matches in a season. Basketball season starts in October and lasts until April. The NBA is a private sector association, and its revenues are not issued publicly.
However, the revenues are assumed to be high as multiple endorsements, sponsorships, and product placements exist for the teams and athletes playing in them. This means that NBA team owners can earn back in multiples of what they invest into their teams.
How do NBA owners make money?
Athletes contracted with the NBA teams are paid very well. In fact, they are known as some of the top paid athletes globally. In the US, the NBA generated $8.3billion for the 2019/20 season, this was a slight fall from $8.8billion in 2018/19, due to the end of the 2019/20 season being affected by the start of Covid restrictions. These are the latest figures available at the time of writing this article on July 27th 2022.
Income for the 2021/22 season that finished recently was expected to be $10billion, now that most Covid restrictions have finished.
The NFL is still the wealthiest sports league in the US, and also the world. The latest figures are that it generated $11billion in 2021.
NBA owners spend a lot of money to build up their teams. They recover their investment through various revenue streams:
- Ticket sales from matches
- Concession stands in stadiums, seating arrangements, and arena sources
- Team and player merchandise
- Advertisements and media placements
- Endorsements and branding
Breakdown of NBA Owners Earnings
Since the teams and NBA are not government or public entities, their earnings and income sources are not publicized. However, doing some reverse calculations and adding up revenues from published figures about different deals, the NBA is known to have earned a total revenue of approximately $8.8 Billion in the 2018-19 season.
Therefore, dividing the revenue between the 30 teams comes to approx $293million for each team.
1. Arena Income
The stadium or arena that the team plays in earns revenue from ticket sales, concession stands, and merchandise sales. However, the stadium is also rented out for other events during the off-season or when the home team is traveling. This is also a revenue stream.
The arena also earns from sponsorships and advertisements. Teams with high profile, popular and talented players get more endorsement and sponsorship deals.
2. Media income
Media income includes what will be the viewership income from television viewers. This was estimated to be around $2billion in 2019/20 from the report above. The team owners earn from the popularity of their teams and the number of viewers they can attract.
3. Brand income
Merchandising income from the sale of the branded team and player caps, jerseys, and other team wearables is known as the brand income. These are again linked to the popularity of the teams and the star players it has.
The league itself signed a deal with Fanatics for trading cards. CNBC reported a $30million per year deal for shirt sponsorship starting with the 2021/22 season for the Brooklyn Nets by the WeBull brokerage platform which readers might be familiar with.
4. Sport income
Since revenue is linked to player and team popularity, not every team will earn equally or as high as projected. To neutralize this inequality in incomes amongst teams, top earning teams have to submit some portion of their income for distribution amongst teams that make less revenue.
So how much do NBA owners make? From the four income heads above, NBA team owners take home an estimated $12 to 30 million per season. This is the net saving after the deduction of taxes and duties.
The approximate earnings are $100 million, after which the owner needs to pay the team players, managers, coaches, trainers, and support staff. In addition, the arena maintenance and running costs are also borne by the team owner.
Many of these team owners are billionaires, so this income is not important to them. For example the LA Clippers owner Steve Ballmer, the former CEO of Microsoft, is the 10th richest person in the world and is worth $89.4billion according to Bloomberg
Since teams' incomes vary, their expenses are also different, and less popular or running arenas will have lower costs. For instance, a famous team like the Los Angeles Lakers will have higher income and expenses than a team with a lesser rating and market value.
Other Income Sources for NBA Owners
NBA owners also get to invest in other sectors to generate income, like sports and basketball related real estate. As sports fans and trivia seekers know, many players earn more than what NBA owners earn. This makes sense since players have a much shorter professional life than NBA owners.
With the growth of live streaming and other viewing options, live audiences have been overtaken by remote viewers as the primary revenue producing segment. As a result, the role of advertising revenue, airing contracts, and broadcasting rights have increased.
NBA Sources of Revenue
Team sponsorships are also a significant source of funding for the team owners. Sponsors usually approach teams with popular players and good performance rankings. Apart from individual team sponsorships, the NBA has its overall sponsors who contribute towards revenues.
For instance, in 2015, the NBA ended its contract with Adidas and signed one with Nike worth $1 billion for the next eight years. This significantly boosted its revenue. Similarly, the growth of foreign viewership has led to a July 2019 deal with Chinese giant Tencent for the digital rights to air NBA matches in China, continuing their partnership that started in 2009. The deal was valued at $1.5 billion by many media outlets including USA Today.
Such large deals earn NBA a lot of money which is distributed to the teams and eventually to the NBA players. By adding up all the funding sources, the players make more money than the NBA owners, but the owners usually have a higher net worth due to longer professional lives and broader asset holdings compared to the players.
The Bottom Line
Many people think that spending millions or even billions of dollars to acquire an NBA team and then manage it makes no sense.
However, the NBA is a popular league, and basketball fans are increasing yearly.
NBA owners can earn a significant amount of money from different sources of revenue like tickets, stadiums, merchandising, and sponsorships. The league also supports its teams and players so everyone benefits from the season.