SBJ/September 19-25, 2011/Franchises

NBA clubs face up to $1.5M loss in gate revenue for every regular-season game canceled

Some NBA teams could lose up to $1.5 million in gate revenue per game if the 12-week lockout stretches out into the regular season, a possibility that loomed more likely after last week’s stalled labor talks. But the league’s renewal rate is holding steady with last summer’s at 75 percent, as fans continue to spend around the game despite the labor turmoil.

With about two weeks left before the scheduled start of training camps and six weeks before the start of the regular season, teams are bracing for what could be a box office blow should the league cancel games. On average, NBA teams generate about $1 million in gate revenue per game, with the league’s highest-revenue teams, such as the New York Knicks and Los Angeles Lakers, generating more than $1.5 million a game, according to former team executives familiar with NBA finances. Low-revenue teams such as the Sacramento Kings generate about $400,000 in gate revenue a game, creating a wide revenue spread among the league’s 30 teams.

Last season, 10 teams boasted sales of at least 10,000 full-season tickets, and at least 75 percent of a team’s gate is derived from season-ticket sales. While teams have booked much of their season-ticket revenue, the loss of gate revenue in the NBA will be the result of teams’ offering fans full refunds plus interest to ticket holders should games be canceled.

It’s those same offers of refunds plus interest that helped the league protect its season-ticket renewal rate, along with rolling out plans early this year as labor clouds were gathering.

“We remain on pace with last season’s renewal numbers while new season sales and partial plan sales are solid,” said Chris Granger, executive vice president of the NBA’s team marketing and business operations division.

The league did not disclose specific new full sales or team sponsorship sales figures posted this summer during the lockout, and attempts to get team-specific numbers were unsuccessful.

As of late last week, talks between the NBA and union had broken off with no new negotiations set as the owners headed into their league meetings in Dallas.

Now, without a new collective-bargaining agreement, the league soon will be forced to cancel preseason games, beginning what could be a very costly lockout for teams and players.

During the 1998-99 lockout, which saw the NBA season shortened to 50 games, the league announced the postponement of its training camps Sept. 24. In mid-October, it began canceling regular-season games.

Should the lockout roll into the regular season, which is scheduled to start Nov. 1, teams also will face more difficulty selling individual game-day tickets, group sales and sponsorship inventory.

“Once you get beyond the season-ticket renewals and full-season-ticket sales, the challenge is selling the [remaining] inventory,” said one former front office executive. “And sponsors make their budget decisions in advance, so the longer the [lockout] goes, the more spot-buying there is, and that’s done on a discounted rate card.”

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