Cavaliers

How the NBA could reduce games and not lose money

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When discussing the NBA, its schedule and rest, I think it is too easy for debate to devolve into emotional opinions. Scott did a nice job of covering what happened this week with LeBron James and the emo bleating that Jeff Van Gundy and crew did on the air, but I want to take it to a different place today. I want to talk about why the NBA should shorten the schedule and also why they should be willing to talk themselves into it even though it looks like it might cost revenue in the short run.

First of all, this is all hypothetical, and I don’t expect it to happen. Brian Windhorst was doing a spot on ESPN Cleveland recently, and he said in no uncertain terms that he didn’t believe a schedule reduction would never happen due to the local cable TV deals that call for a certain amount of air time and game inventory for club partners. I think he’s right, but that doesn’t mean I shouldn’t make the case, right? So let’s talk inventory.

There are 30 teams in the NBA, and each of them plays 82 games. If you multiply that out, that gives you a game inventory of 2,460 contests. Now, I know that’s not completely accurate. When a game is on ABC or some other national broadcast, it might or might not be on the local regional sports network. I could spend time doing exact accounting, but it isn’t important to my point, so let’s assume it’s 2,460 and that the math is this simple for calculating inventory. What’s the real number, though?

A game inventory of 2,460 assumes you’re making widgets and that all widgets are the same size and quality with the same demand. As we all know from watching NBA games, that’s simply not the case. When a team is on the second night of a back-to-back — even if they’re not resting major players — they’re likely not going to be as good as they would be with more rest. We also know that rebuilding teams with no stars playing other rebuilding teams with no stars aren’t marquee matchups. We should do something to account for quality in this equation.

NBA games are pretty good right now. Not all of them, of course, but as a Cavs fan, I’m jaded to think the NBA product is pretty good so let’s give the current NBA regular season product a score of 75 percent quality on average. By taking 2,460 and multiplying it by a quality percentage, your new adjusted game inventory drops to 1,845.

Now, what happens to the quality score of an average NBA regular season game if you drop the number of games each team plays? This is all subjective of course, but shouldn’t the quality go up the more you drop the numbers of games, at least within reason? My point is that there’s an optimal number of regular season games, and that number wouldn’t be one that includes back-to-backs if your primary goal is to boost quality while not abusing your TV partners.

Let’s assume if the NBA dropped 10 games from the schedule they could boost the average game quality to 85 percent. Now you’ve got 30 teams playing 72 games for an inventory of 2,160. You multiply that by 85 percent, and your new adjusted inventory number is 1,836 compared to 1,845. Your effective quality game inventory would only drop 0.5 percent as opposed to the 12.2 percebt you might think you’re taking by reducing games from 2,460 to 2,160.

Yes, I’m making up numbers, and the quality metric is pure speculation and subjective. If you take it to the next level, however, and presume the NBA could boost their quality score to 90 percent, their effective inventory drops to 1,944 compared to 1,845, which is an increase in quality inventory by 5.4 percent. Obviously, it would be a leap of faith to think you could boost NBA regular season game quality by 15 percent simply by reducing the number of games from 82 to 72, but you see where I’m going with this. A reduction that boosts quality doesn’t cost you nearly as much as you might think.

NBA Game Reduction Chart

Let’s talk about financial realities in the NBA. According to Forbes’ reporting, in 2013 NBA teams generated 54 percent of their revenue from national television partners and 33 percent from local deals. The “hit” that NBA teams might take from reducing their overall game inventory will disproportionately impact the lower margin part of their business. The nationally televised games will only get better, and they represent a higher margin part of the NBA’s overall media rights business.

It’s like if you were running a restaurant and you decide to make only a a small percentage on Coke products in your restaurant so you can make a much bigger markup on cheeseburgers. To take the example further — and probably too far — people are here for the cheap pop, and they’re also questioning the quality of the cheeseburgers. That’s not good, and Adam Silver’s right to sound the alarm. I wouldn’t respond by forcing guys to play more, however.

The NBA is full of people who are much smarter and more successful than I am. They also have an owner in Mark Cuban who warned of excesses as it relates to the NFL and getting hoggy, playing games on Thursdays and oftentimes twice on Mondays and the quality disruption that has subsequently followed. They should be able to figure out the right balance between changing the schedule and their revenues. They should be able to do that up to and possibly including a shrinkage factor. If they time it right and actually do boost the quality of the game, they will not lose revenue, and while boosting their chances for even higher highs in the future as the shift continues toward national games with a primetime appeal. Oh, and when they do have those matchups, the teams are healthier and not resting.

Well, except maybe the Spurs. You can never discount Pop.

  • Steve

    Will people pay more for tickets knowing there is a greater chance that Lebron or Curry wont be rested?

    Sports leagues operate in an interesting part of the supply and demand curves, one that is not going to be easy to negotiate through come CBA time.

  • RGB

    The thing Cuban fails to address is the most distinct difference between the NFL and the NBA is that NFL fans pay to see teams. NBA fans pay to see stars.
    I honestly don’t care about billionaires haggling over millions.

  • CleLawAndOrder

    As a Cavs season ticket holder who has tickets in the lower bowl, the cheapest ones in the true lower bowl. 450 bucks to the Cavs Warriors and opener game was per ticket price. I wouldn’t pay a penny more to see Michael Jordan unretire for one game and play for that obnoxious price. Flex pricing that is 5x the average face value is crazy. That means I better see everyone on the floor playing. It already “should” be a guarantee.

  • Natedawg86

    Pump the brakes man. Tickets already push a lot of people out of the market due to the cost

  • Steve

    Neither the owners nor the players are going to live with a solution that puts less money in either group’s pocket. Fewer tickets to sell means more dollars per ticket.

  • Steve

    Did you, and 20,000 other people pay that much despite the risks associated? That’s the face value with the risks. Without them, it has to be even higher.

  • I tend to agree Steve. You could lose a couple bucks on tickets ONLY if you’re making even more from the broadcast revenue, presumably the national contracts.

  • scripty

    I’ve been repeatedly blasted over the years for saying MLB could easily reduce ad inventory between innings and here we have a blogger saying a league can shorten a season. I love it.

  • Steve

    And I’m having trouble seeing how much more they could be making on national tv deals, and local deals will almost certainly have to smaller. ABC and TNT are already getting the prime matchups, and these deals were negotiated before players resting became such an issue. I highly doubt they were getting any sort of discount for that. So they’re going to be negotiating for the same games they thought they were getting – prime matchups featuring all the stars. There can’t be much more money available on that end.

  • CleLawAndOrder

    With season tickets I’m forced to buy all the games (forced in the sense if i want season tickets of course.) Now the 8k I pay per seat per year has each ticket priced differently. The big games (with the big names) cost more. The added premium would suggest that I am paying to see said superstar/team play. At least, that’s what we would all think, right?

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  • Steve

    “forced in the sense if i want season tickets of course”

    This is what it comes down to. Are you forking over that money despite the risk?

    The added premium is solely due to people being willing to pay more, not a guarantee of better quality.

    I’m sympathetic to those affected by high prices of going to games. But when I see people do little more than gripe about their tickets, and not actually stop buying them, I’m left to believe that the price actually isn’t that big of a hurdle.

  • CleLawAndOrder

    With season tickets, I’m going to see a full squad and get hozed maybe once or twice, so to me the “risk” isnt there. That being said, for someone that goes ahead and buys the premium priced game, that premium price game is all they buy. Expectation is all healthy guys plays. Short term, NBA is fine. Long term, this could really hurt NBA a lot.

  • CleLawAndOrder

    And I wouldnt “risk” not buying them and losing out on playoff tickets. Only reason I really have the season tickets to be honest.

  • JM85

    The season is too long. You could easily cut 10-12 games as Craig suggested. The season could end in late March and the playoffs could start the beginning of April.

  • NankirPhelge

    Everything is negotiable.

  • Steve

    I’m not sure how this moves the needle. These people still splurge on the high priced game despite the risk. That’s the fair market price for the game with the risk that the stars won’t play until people actually stop buying them.

  • mgbode

    I wonder if people have started to become savvier shoppers. If people are buying less on the 2nd night of a back-to-back or if ratings have dropped for the Thursday games (which are often force-fit into schedules).

    Trying to come up with reasoning why Silver would be willing to go public with his condemnation on it.

  • Steve

    The point of cutting games would be to eliminate any back-to-backs, not to shorten the season.

  • Steve

    I’m pessimistically betting that it’s just a bad look for the league, like long games in baseball. It would be incredibly difficult for me to overestimate the average sports fan, I have incredibly low expectations from them. I would guess this is just the media griping, and like baseball with game lengths, the league will roll out some pathetic half-measures that don’t actually solve the real problem.

  • mgbode

    no doubt there. 1/2 measures are what leagues do best.

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  • ChefDave Frank

    Isn’t the inventory 1230? Since each team is playing another team the actual number of games played should be 1/2?
    For example. Tonight, 10 teams were playing – but only 5 games…

  • mgbode

    Each local network plays the game. So, while there were only 5 games, there were 10 broadcasts.

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