NBA: League

Overview

Formation of the league

Earlier form: Basketball Association of America
Formed in New York City on June 6th 1946.
Formed as an alternative to then existing leagues like American
Basketball League and the NBL.
First match: New York Knickerbockers V/s Toronto Huskies
First league to play games in large cities in major arenas.
After the 1948-49 season, BAA merged with the NBL and formed
the NBA in its initial form.
The NBA initially had 17 franchisees in small and large cities.

Consolidation and evolution

Consolidated to 11 franchisees by 1950. Reduced to 8 teams by
1954.
The league continued with just 8 teams till 1961. By 1968, the
league had 14 teams and 18 by 1974.
The rival league ABA formed in 1967 was merged with NBA following
the 1967 season, taking the total number of teams to 22.
The popularity of NBA surged through the years from 1979 with
players like Magic Johnson and Michael Jordan playing in the league
Currently, the league consists of 30 teams divided into 2
conferences, each with 3 divisions. Each division has 5 teams each.

Key Success Factors

1. Franchise model
. NBA was created as a limited partnership in which the
partners are the teams that operate as franchises
. Any team trying to enter the league must be accepted
first by the management organization and afterwards
pay a fee of $300 million
. Audits and reviews to validate a teams feasibility (it
takes an avg of 5 years for a team to get entry)

Key Success Factors

2. Market players and draft
The NBA itself has an own market of players & each player has a
value priced at his annual salary
Draft is the standard procedure with which the NBA incorporates
players to the league
Both college basketball players (>19 years) & international
players are eligible for draft
NBA draft Lottery: The lottery is weighted so that the team
with the worst record has the best chance of obtaining higher
draft picks.

Key Success Factors

3. Wage Limit
It is the spending cap that every team in the league adheres to for
wage payment to players
Helps to maintain equality in the competition regardless of the
economic power of resp. teams
The ceiling for last season was $58 million per team
4. Global Fan base
China has emerged as NBA's largest overseas market
Large number of Twitter & FB followers (11.21m & 25.68m resp.)

Revenue Streams
The NBA, as a whole, generates more than USD 4 billion in revenue
each season (avg USD 150 million per team)
LA Lakers: 295 million & Milwaukee Bucks: 109 million
Revenue sources can be classified into 4 major groups:
Television broadcasting rights all 30 teams receive the same
amount per year
Market revenues for each team depends on the home city of
the team and fans globally
Revenues from stadium management ticket sales, advertising,
etc.
Brand Management marketing of individual star players like
Jordan, Kobe, LeBron

Revenue Streams

Fan Base

The NBA has the youngest audience, with 45

percent of its viewers under 35. It also has the
highest share of black viewers, at 45 percent
three times higher than the NFL or NCAA
basketball.

The league's games are now shown in 215

countries and territories. The NBA says a total of
114 games have been played in 32 international
cities across 17 foreign countries since 1988.
Through social media, the league says it engages
320 million fans - that's more than the entire U.S.
population - across the globe, and seems to put
the NBA at the front when it comes to interest
internationally among the four major U.S.
leagues.

League Structure

Conflicts
By the 199798 season, 57 percent of basketball-related income was
used to pay players, while the previous deal called for a 48 percent
split. According to the NBA, 15 of the 29 teams posted losses that
season. The NBPA disputed this figure and claimed that only four
teams had losses. The league's owners voted on whether to reopen
the CBA on March 23, 1998, and the vote passed by a 272 margin.
Negotiations between the NBPA and owners started on April 1, and
nine further bargaining sessions took place in the next three months.
It capped players' salaries at between $9 million and $14 million,
depending on how long they had played in the NBA. The league
became the first major sports organization in the U.S. to limit the
salaries of its players. A rookie pay scale was introduced, with salary
increases tied to how early a player was selected in the NBA Draft.

Conflicts
The 2011 NBA lockout was the fourth lockout in the history of
the National Basketball Association (NBA). The owners began
the work stoppage upon expiration of the 2005 collective
bargaining agreement (CBA). The 161-day lockout began on
July 1, 2011 and ended on December 8, 2011. It delayed the
start of the 201112 regular season from November 1 to
December 25, and it reduced the regular season from 82 to 66
The
NBPA re-formed as a union on December 1, receiving support
games
from over 300 players, exceeding the requirement for at least 260
signatures. Signature cards were sent to the roughly 440 players
on rosters at the end of the previous season, as well as to the 60
rookies drafted in 2011 and to players who signed at least two 10day contracts.The re-formation enabled further negotiations with
the league on secondary issues such as the age limit for the NBA
draft and rules on players being sent to and recalled from the NBA