NBA commissioner Adam Silver, citing the high cost of operating the Disney World campus, said his league’s resumption is not as financially beneficial as people think.
Operating the three-month completion of the NBA season at Walt Disney World will cost the NBA more than $150 million, multiple sources told ESPN.
Those are expenses. What about revenue?
Canceling would have reportedly cost the league $900 million in national TV money for the playoffs alone. By holding seeding games, the NBA will also protect local TV revenue. Though not having fans in arenas is a major lost opportunity, games promote other economic activity that benefits the NBA (like gambling and jersey sales). There are other estimates that aren’t quite apples-to-apples, but Bobby Marks of ESPN projected revenue generated by the resumption at $2 billion. I’ll use that.
Owners are responsible for expenses. Owners and players split revenue about 50-50. So, once players get their cut, that leaves about $1 billion in revenue for owners.
Subtract $150 million in expenses, and that leaves $850 million in profit for owners.
Don’t be fooled by accounting tricks.
Maybe the NBA already has TV money and would have to return it if the season were canceled. Maybe the NBA hasn’t gotten the money yet. Either way, owners will have the money in their pockets at the end of the day only if the season is played.
Some teams might lose money this season. They still have expenses unrelated to the Disney World operation. But they’d have those expenses, regardless. At worst, the resumption will minimize losses.
Will NBA owners make as much money as usual from the playoffs? No. Ticket sales are non-existent, and months-long accommodations in Disney World plus frequent coronavirus testing are expensive.
But will NBA owners increase their profit (or decrease their losses) by finishing the season? Yes.
Silver ought to stop talking about some altruistic obligation for the league to return.
This is about money. Common sense said that. And now that we’re seeing them, so do the numbers.