OT - You can't afford the NBA anymore and thats by design

[Harcore Fenton Mun]

NBA franchises aren't your normal assets.

For one, NBA teams can only carry up to $475m of secured debt, so if an owners wants to take on more debt, they would have to take it out against other assets (which they don't) or bring in more equity partners (which they do). And while it's true that the cost of capital has gone up, over the last 5 years the NBA opened up new sources of capital to the owners: PE/institutional funds can own up to 20% in any 1 franchise and 30% in aggregate across the league while Sovereigns can now own up to 5% in any NBA franchise. It's worth noting that we are seeing record valuations during the highest rate environment of the last decade. Will valuations keep going up? Who knows. But what you said about the recent past is factually incorrect.

They have to pay more to service debt, so they have less to spend. Like, if the group who bought the Celtics had to use current rates, maybe they don't qualify. Maybe they can only afford Charlotte now. Maybe they just don't tender that offer now.

1) The Celtics were just bought
2) Rates are going down, not up - the fed last cut rates in Dec last year and the market is pricing in at least 1 cut this year
3) As I already mentioned, the most debt any team can carry (secured against the franchise) is $475m which would only be ~8% of the Celtics purchase price
4) There is no indication that Chisolm and his group took out any debt against the franchise to fund the purchase with all indications being that the $6.1b (really ~$3b given they bought 51%) was funded through equity from Chisolm, Sixth Street and other equity partners - though there are questions about the equity structure that I haven't really found a good explanation for

The days of purchasing an NBA franchise largely financed through debt (which is how the Celtic's former owners purchased the Celtics in 2002) is over in the NBA. You can't lever up a franchise purchase under current rules: average valuations are are at ~$4.5B, controlling owner must own at least 15% personally, and teams are allowed $475m in max secured debt. And as I explained previously - while cost of capital has gone up, the NBA has opened up new sources of equity for owners which gives them a larger pool of capital to tap into.

Not while the US$ is dropping.

[basketballto]

Yes, people are getting laid off. Yes, inflation is a problem. Yes, people tuned out last year because we were tanking.

But no, revenues are not shrinking, and no, the fan base is not shrinking.

https://www.sportsvalue.com.br/en/nba-teams-surpassed-us-11-3-billion-in-revenue-in-2024-total-valuation-reached-us-132-8-billion/

By pretty much any source I can find, the NBA in the past decade, apart from the pandemic, is in it's by far most successful era. International growth being a material contributing factor.

Generally speaking, owners don't care too much about revenue, they care about valuation. And while those two things are related, they are not correlated.

Yes, but when rates go up. Valuations tend to go down.

They did get a big boost from gambling, but we all see that isn't working. People notice games being fixed.

Valuations are not going down. What source are you looking at which is suggesting that?

Everything I can find suggests valuations are massively up in the past 10 years. Last year alone Forbes is estimating league average valuations are up 15%.

https://www.statista.com/statistics/193442/average-franchise-value-in-the-nba-since-2000/

For the Raptors, even with us tanking / being bad since the championship, our valuation is significantly up.

https://www.statista.com/statistics/194739/franchise-value-of-the-toronto-raptors/

Income and revenue has taken a hit, in a big part due to pandemic, but still up over the time frame.

https://www.statista.com/statistics/196772/revenue-of-the-toronto-raptors/
https://www.statista.com/statistics/286101/operating-income-toronto-raptors-national-basketball-association/

Valuation are up for all but the Raptors use to be a top 10 team for money earned now we are down to the low teens.

Overall tv deals mainly the tv deals provided for the increases. Now sportsnet/rogers (netflix/nbc) has to get viewer and sell ads against the billions they paid. And Rogers and Bell are losing money these days even gambling ads won't turn them a profit.

[CPT]

As long as they can fill the seats with corporate suits, they’ll be fine.

[brownbobcat]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

Well, other than the complete opposite is what is actually happening.

It's a stretch to say revenue is shrinking especially as there's still a lot of push for international revenue growth + gambling. TV deal is guaranteed until 2036. However, I would say there are a couple of canaries in the coal mine.

1. BRI income was lower than expected last year, causing players to forfeit around $480M of income held in escrow.
2. TV numbers down 2% nationally and 9% locally

Some of this is being offset by streaming growth, but I'm not sure that has legs. Casuals are not going to sign up for NBA league-pass or whatever the RSN equivalent is, so at some point you're going to run out of die-hards and the younger generation is losing access to the game - both in-person and viewership. Yes, there's revenue growth but there are some signs that there may be bumpiness ahead.

[NBA Sheady]

Sometimes someone being loudly wrong about everything makes for an informative thread.

[TheGeneral99]

Yes, and in big cities ticket prices as astronomical, so most people paying to watch these games are simply rich.

The rich can afford to watch the games, and buy the merchandise while the rest of the population does not.

However, to play devils advocate, a lot of people are just streaming content for free, and highlights get uploaded instantly on YouTube.

[Mister Ze]

Ever since the 2019 championship & pandemic, I’ve lost a lot of interest in the NBA and barely watch anymore. I’ve noticed others in the same boat are also realizing and exploring other hobbies cause getting to the title again is gonna take years.

Increasing prices will drive away people faster.

[Shaazzam]

I remember listening to an interview with, IIRC, Peddie, on the Fan about a decade ago. And he said that pricing was to extract the maximum value they can get based on the people in their market only attending one game/year.

[ItsDanger]

Not just limited to NBA. This is a trend that's been going on in many areas. Coincides with wealth variance.

[WuTang_CMB]

higher revenue means more money to players means tickets and merchandise will all be up

[dTox]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

The revenue and the fanbase:

[lolekszmolek]

Every year I attend a couple of the 905 games. You can get a seat at centre court just a few rows up from court side for very little cost. The games are entertaining. I watch as many Raptor games on TV as I can and when they are terrible, which was often this past year, I can just change the channel or drink more/smoke more to manage the frustration. But I refuse to pay the extortionist prices they charge and you cant smoke cannabis.

[Mikistan]

Every year I attend a couple of the 905 games. You can get a seat at centre court just a few rows up from court side for very little cost. The games are entertaining. I watch as many Raptor games on TV as I can and when they are terrible, which was often this past year, I can just change the channel or drink more/smoke more to manage the frustration. But I refuse to pay the extortionist prices they charge and you cant smoke cannabis.

Some examples of how times have changed for fans

- 7ish years ago they removed the in/out privileges for in arena fans, so people could go out at halftime and have a smoke before going back in

- you know those collectors plastic pop cups and popcorn buckets? Ya those used to be refillable. My friend and i would buy a bucket at the beginning of the season and bring it with us each game. We would use it to put our keys and other electronics on at the security check even instead of their arena bins, and just get a refill right at the start of the games and save money. Not allowed anymore

[OakleyDokely]

The way people follow sports is different now. Before you either went to the games or watched them on cable at home.

Now...

Some go to the games.
Some watch on cable
Some watch on streaming
Some watch using illegal means
Some watch at the bars
Some watch the highlights on youtube
Some follow via social media
Some listen to podcasts
Some listen to traditional radio
Some do a combination of these things.

There's a lot of competition for your dollar and your time, not just from sports, but now there are now so many ways to consume the content the way you want, that fits your lifestyle and budget.

The oldheads will remember when not every Raptors game was televised, and some games would be on random channel like the New VR. It's much easier to dip in and out now. The cost to attend games is super expensive, but everything is super expensive now, from concerts to shows to theatre.

[JB7]

The way people follow sports is different now. Before you either went to the games or watched them on cable at home.

Now...

Some go to the games.
Some watch on cable
Some watch on streaming
Some watch using illegal means
Some watch at the bars
Some watch the highlights on youtube
Some follow via social media
Some listen to podcasts
Some listen to traditional radio
Some do a combination of these things.

There's a lot of competition for your dollar and your time, not just from sports, but now there are now so many ways to consume the content the way you want, that fits your lifestyle and budget.

The oldheads will remember when not every Raptors game was televised, and some games would be on random channel like the New VR. It's much easier to dip in and out now. The cost to attend games is super expensive, but everything is super expensive now, from concerts to shows to theatre.

Yes, everything is super expensive now, but with a concert, show or theatre, those are generally one off events you go to sporadically, and might be willing to shell out more for the unique experience.

In the case of sports, there are many games to fill, and a lot of seats to sell. Makes me think the NBA, rather than expanding, is just going to be relocating teams to other North American markets, where they can sell the seats at the highest possible price.

I'm predicting Pelicans and Hornets get moved to Seattle and Vegas.

[REJECTEDBYCLARK]

Watch on YouTube

Not sure how reputable this channel is or the content creator but interesting analysis.
Is this true at least for Toronto and other arenas you ahve been to?

Haven't been to a game for a long time now. They are making league pass and cable TV more expensive.

Too Long Didn't watch: The NBA is phasing out the regular fan experience in the areas and making it more of a bougie/luxury experience for the casual fan. Creator cites NY, Brookyln, and Golden State

Very interesting

[Westside Gunn]

The way people follow sports is different now. Before you either went to the games or watched them on cable at home.

Now...

Some go to the games.
Some watch on cable
Some watch on streaming
Some watch using illegal means
Some watch at the bars
Some watch the highlights on youtube
Some follow via social media
Some listen to podcasts
Some listen to traditional radio
Some do a combination of these things.

There's a lot of competition for your dollar and your time, not just from sports, but now there are now so many ways to consume the content the way you want, that fits your lifestyle and budget.

The oldheads will remember when not every Raptors game was televised, and some games would be on random channel like the New VR. It's much easier to dip in and out now. The cost to attend games is super expensive, but everything is super expensive now, from concerts to shows to theatre.

the mention of concerts just reminded me

i was never an arena concert guy those didnt seem valuable for 3 figures and you can barely see the performer.

but even those small theatres now are charging 3-4x more compared to the precovid era. i cant imagine what the weekends, drakes, biebers and swifts are charging.

[mihaic]

It's not only the NBA, other entertainment too. Was just looking to get a pair of Paul McCartney tickets, and I look at 2k+. He can sing to himself. I usually go to a concert every other month, but it's getting out of hand for the marquee artists.

Coldplay concert was cool though, if a bit shaky if u know what I mean.

[Hero]

Ever since the 2019 championship & pandemic, I’ve lost a lot of interest in the NBA and barely watch anymore. I’ve noticed others in the same boat are also realizing and exploring other hobbies cause getting to the title again is gonna take years.

Increasing prices will drive away people faster.

Very similar for me. The Raptors and NBA isn't helping itself with how expensive games and how expensive it is to have a cable subscription to watch live on tv.

[refshateRaps]

It certainly does get more absurd every year. Way better things to do with my time and money. Been that way for years.

Very minimal value for 3 hours in a box which is overly commercialistic with a corny atmosphere these days.

Saying that, they have enough people with in the social media algo these days who will spend their disposable wads on whatever they are told and I'm sure the the NBA and teams know the market well enough. They are the customer that lives for corny ass experiences and theres alot of em.