What is the economic incentive for expansion?

[One_and_Done]

Look, I want 4 teams or more added. I love the idea of expansion. For the owners though it really makes no sense. Let's say 2 new teams are added, and each pay an expansion fee of 1.5 billion. OK, so the existing teams get 1/30th of that each, which amounts to $100 million each. But the new teams also take 6.25% of the TV revenue every year. Eventually the loss of revenue will exceed the expansion fee for owners. Even if the expansion fee were 3 billion it wouldn't make sense.

You could argue adding new teams grows the pie, but does it? The NBA is a global sport with fans everywhere, including places with no teams. I think the increase $ from new fans would be negligible unless they're bringing a whole new country in like Mexico. Plenty of fans in Seattle or Vegas still watch the NBA on pay to air, and the lost gate revenue doesn't go to other owners.

This is why expansion hasn't happened yet, and may not happen. It's a dubious economic prospect.

[Lalouie]

more audience more money

[Gusto1903]

more audience more money

Do you really grow the audience that significantly more?

[One_and_Done]

more audience more money

But they're already watching in Seattle and Vegas. Are there going to be so many new viewers from those places it offsets the loss in % of revenue? I doubt it.

[SlimShady83]

4 teams won't happen next season maybe 2 at most = Vegas, Seattle or Vancouver But to make things fair, 1 eastern team 1 west team. soz It's my Friday I'm drinking lol spelling might be off

[Wagonband]

There's also stuff like tickets, merchandise, tourism, business etc... It's hard to quantify, but believe me, they wouldn't ever do it if it weren't profitable. If the biggest profit would be made by just the Celtics and Lakers playing 82 games, that's what the NBA would be

[Statlanta]

I actually think there is no incentive which is why they haven't done it yet.
Splitting the bread 32 ways instead of 30 doesn't sound enticing, especially with the major costs for whoever wants a franchise.

The NBA knows the ideal scenario if they were to expand but I bet they think it is a lofty ideal with the rising prices of franchises.


Personally the NBA should add two Western teams to weaken the power of the West and bring back the balance to the East.

[One_and_Done]

There's also stuff like tickets, merchandise, tourism, business etc... It's hard to quantify, but believe me, they wouldn't ever do it if it weren't profitable. If the biggest profit would be made by just the Celtics and Lakers playing 82 games, that's what the NBA would be

Nah, there's other considerations. Stern got Charlotte a new team ASAP because he wanted to, but as Mark Cuban noted it was a terrible business decision in hindsight. They didn't even have a high expansion fee.

[Cactus Jack]

more audience more money

But they're already watching in Seattle and Vegas. Are there going to be so many new viewers from those places it offsets the loss in % of revenue? I doubt it.

There's a fairly large contingent of people in the region that love Basketball, but who refuse to support the NBA. You'd be surprised at just how many fans of the Sonics actually stopped watching the NBA altogether when the team left town. At the same time, these same folks would tune in again if/when the Sonics return. Would there be a bump in television ratings? Absolutely. But the Sonics will be one of the hottest tickets in town, when it does happen. Same goes for Vegas.

Yes, expansion is indeed happening. Sooner than later.

[zimpy27]

Connecting to a new attendee base..

That's pretty much it, it's why Seattle and nother large city will be the targets..

Las Vegas honestly doesn't make much sense for expanding the game.

Mexico city, Montreal or European cities make more sense for expanding the game

[zimpy27]

But also, you add 41 games to the total of 1230.. so you also increase revenue for next TV deal.. increase advertising..

[zimpy27]

more audience more money

Do you really grow the audience that significantly more?

You grow the number of total games by 41 for every new team.

Even if same audience, you grow the number of views because you have more games.

[One_and_Done]

But also, you add 41 games to the total of 1230.. so you also increase revenue for next TV deal.. increase advertising..

But that's all potential revenue increases in the future, it does nothing for them over the life of this TV deal. The revenue doesn't go up because more Seattle fans tune in. They've already agreed on the current money. So why would you add new teams before this new deal expires?

[Gusto1903]

more audience more money

Do you really grow the audience that significantly more?

You grow the number of total games by 41 for every new team.

Even if same audience, you grow the number of views because you have more games.

Thats fine, but do you really grow it THAT significantly?
Because i wont tune in to 41 games more. Im already oversaturated with all these games and watch less and less RS games every season. Its not like you can market 41 games more to national TV and grab the bigmoney ad revenues either. The Arenas will be empty as soon as those franchises start sucking. And every new team also means, one more team that wont make the playoffs.

[Lalouie]

more audience more money

Do you really grow the audience that significantly more?

You grow the number of total games by 41 for every new team.

Even if same audience, you grow the number of views because you have more games.

correct, and let me add,,,,

you grow for the sake of growth. that is, growth validates existence. tell me gusto1903, in what universe is growth NOT essential. there are other factors to consider as well. the nba is very loud about the expansion of it's world wide audience and social media, so now growth becomes a self fulfilling prophecy that needs to justify itself.

there is always going to be tribulations that come with growth - it doesn't matter if the nba expands now or 2yrs from now. those issues will still be there because they're part of the whole process. you will always pay the piper - it's called growing PAINS

i think parity is a particularly good time to expand. it's like when you beef up, rest is the time your muscles need to grow

[Gusto1903]

Do you really grow the audience that significantly more?

You grow the number of total games by 41 for every new team.

Even if same audience, you grow the number of views because you have more games.

correct, and let me add,,,,

you grow for the sake of growth. that is, growth validates existence. tell me gusto1903, in what universe is growth NOT essential. there are other factors to consider as well. the nba is very loud about the expansion of it's world wide audience and social media, so now growth becomes a self fulfilling prophecy that needs to justify itself.

there is always going to be tribulations that come with growth - it doesn't matter if the nba expands now or 2yrs from now. those issues will still be there because they're part of the whole process. you will always pay the piper - it's called growing PAINS

i think parity is a particularly good time to expand. it's like when you beef up, rest is the time your muscles need to grow

Growth of course is important.
But let me tell you this. The way, how you grow, is the bigger quesetion. More teams, doesnt do anything. With that Strategy, you can only grow so far. As i was saying, the NBA has a different problem at hand, other than growing in that regards. They dont need more games. They need more interaction. People are already exhausted and skipping large parts of the regular season. Especially international fans, due to the Timezones. I for myself, live in Europe and have one humane Game per week, i could actually enjoy watching, and thats the early game on Sundays. And even thats not given every week and still somewhat late for me at 9pm. I miss the restof the week, if i dont torture myself to stay up late during workdays, or waking up early to catch the late night western conference window. I cant be arsed, because regular season isnt interesting at all, the good teams seperate from the bad teams pretty quickly and the restof the season is managing and coasting. Whats more teams gonna go for that, for example?

Lets look at how the NFL has grown over the last few years. Internationally, the NFL has gained a HUGE following, the hype is big especially in Europe. The revenue has eclipsed the NBA's by a landslide. And when was the last time they have expanded? Its over 20 years ago, and the reason the Houston Texans got into the league was to even out the total number of teams. There have been 4 expansion teams in the NFL from 1996 to 2002, with once again no new teams for 20 years prior.

How come they can grow? They have significantly less games. Only recently they have added one more game week to cash in on the growth. But the important difference here is, they are cashing in on the growth, by adding this game week. They arent trying to expand for the sake of hopefully growing in the future by 41 games who no one cares about.

And also please always keep in mind. I am talking about significant growth. Not minuscule growth like "well yeah 41 more games mean 41 times ticketsales, and stuff". Thats not significant. Significant is the audience. And you cant grow the audience, when the stuff you put out, isnt accessable like the NFL. Theres nothing more accessable from my timezone, than NFL Sundays with like 10 games, 20 teams @ 7pm of my time. I can follow my team pretty easily and comfortably without missing out for most of the season and even have the flexibility to still follow the nfl, when my team sucks and there are other interesting or exciting games on. With the NBA, for a casual fan, you are restricted to the garbage ass eastern conference games, that are on at the early sunday window. I have watched plenty of Charlotte, Orlando, New York, Detroit and Cavaliers games in my lifetime. And if those games suck, i would have to wait one more week to have a chance at watching an NBA game casually. And that game would be 2 totally different teams, that probably sucked aswell. I cant follow a team constantly, i cant switch between games, i am forced to watch teams like Detroit or the Nets. And yeah, that wont do it for me, if i were a casual.
The Casual experience in the NFL is much more engaging and exciting, even with only 272 regular season games, instead of 1230.


You grow more significantly by exploring new audiences, not by milking the same audience a bit more.

[One_and_Done]

But what is the incentive for the current owners.

[Gusto1903]

But what is the incentive for the current owners.

The Incentive being, hoping that those expansions generate so much growth in revenue, that they compensate the smaller piece of the pie.

[One_and_Done]

But what is the incentive for the current owners.

The Incentive being, hoping that those expansions generate so much growth in revenue, that they compensate the smaller piece of the pie.

Seems like a longshot though.

[Fencer reregistered]

What fraction of revenue is national, vs. regional or local?

E.g., tickets, overpriced concessions, in-stadium merchandise and so on would surely increase.

Interest in local broadcasts would surely increase, although some of the networks providing those broadcasts are going bankrupt these days, and the tackiness of some TV ads even in the decent-sized Boston/New England market makes me wonder how big that part of the business is.

There would surely also be a few more local jersey sales and so on.