SBJ/20100927/This Week's Issue

Offseason frenzy drives NBA box office

Fueled by an offseason of high-profile player moves, the NBA will begin the 2010-11 season next month with more than $100 million in new full-season-ticket revenue, a record amount for the league, and also having sold more new full-season tickets than all of last year.

Through Sept. 22, NBA teams had sold more than 50,000 new full-season tickets, a 40 percent increase from the same date last year. With the yield to the league from season-ticket sales for this year being about the same as what the league posted last year, that means revenue to the league because of the new sales is up roughly 40 percent as well.

Overall, the NBA expects $1 billion in gate revenue, with approximately 75 percent of the gate coming from the sale of season tickets. The league’s season-ticket renewal rate is more than 80 percent, up from 75 percent last year.

The Bulls and Knicks are among the five
teams with the highest number of new
sales.

Prior to this season, the 2007-08 season stood as the league’s best for new full-season sales, with 48,000 tickets sold. Last year, eight teams had full-season-ticket sales of at least 10,000. To date this year, 10 teams already have sold more than 10,000 full-season plans.

“There are a confluence of factors, with player movement creating a number of story lines and teams adding more sellers, but the growth isn’t just concentrated at top teams with runaway success like in Miami,” said Chris Granger, senior vice president of team marketing and business operations for the NBA. “We have 21 teams that have sold more than 1,000 new full-season tickets. Last season, there were 11 teams that sold more than 1,000 new full-season tickets.”

The crush of new full-season-ticket revenue comes during collective-bargaining talks between the NBA and the National Basketball Players Association. NBA Commissioner David Stern said that while the league is experiencing a boost in season-ticket revenue, the league also is seeing higher expenses.

Last season, the league said it lost $370 million.

“Coming off of last season’s Finals, which were among the highest [rated] we have had, we were optimistic,”  Stern said. “It was followed by a frenzy around the existing draft class and a mind-bending free agency period. We just have to keep it going by incentivizing our owners to keep making investments by making sure they make a modest profit.”

League officials would not disclose which team ranks the highest in new full-season-ticket sales, but the five teams with the highest number of new full sales are the Chicago Bulls, Miami Heat, New York Knicks, Oklahoma City Thunder and Orlando Magic.

The Heat, Bulls and Knicks all benefited from the free agency race for LeBron James that was ultimately won by Miami. The Thunder got a boost from its playoff appearance last season led by Kevin Durant. The Magic’s full-season-sales run is led by the opening of its new arena this fall.

“Our success in free agency and anticipated on-the-court success going forward with the emergence of Joakim Noah, Derrick Rose and the addition of Carlos Boozer is what has primarily contributed to the growth in the number of season tickets we have sold,” said Steve Schanwald, executive vice president of business operations for the Chicago Bulls.

The league’s gains are also being driven by successes at smaller-market teams, such as the Sacramento Kings, Memphis Grizzlies and Charlotte Bobcats, all of which have sold more than 1,000 new full-season tickets this summer after struggling to sell last year.

League officials stress, however, that the increase in revenue is being offset by an increase in selling costs, with many teams hiring additional staff to boost business.

“Our teams know how to generate revenue, but there is a cost,” Stern said.

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