NBA Championship Economics and The $600 Million Lakers

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June 21, 2010 ‐ By TheEditor

by Steven Barboza

In professional sports, there are often financial incentives tied to winning. How much are they and how do they relate to figures like a team’s valuation, star salaries and revenue generation? The Lakers provide a good case study.

 

The Los Angeles Lakers, who won their 16th NBA championship, get to take home the Larry O’Brien trophy for the second time in as many postseasons. The team also gets to take home a little pocket change: $2,125,137 in playoff bonus money. In fact, even the losers of the NBA Finals are winners in a sense. The Boston Celtics get to split a $1,408,168 pool, or roughly two-thirds of the Lakers’ take.

In the NBA, there is no championship prize money – just a $12 million bonus pool split by the playoff teams. “Like most professional sports leagues, there is a pool of playoff money generated from a portion of home gate receipts that is allocated to players on playoff teams,” said Patrick Rishe, Director of Sportsimpacts and associate professor of economics at Webster University in St. Louis, MO. “The team amount earned escalates as one’s team advances in the NBA playoffs.”

Considering the relatively high salaries of professional athletes, and considering the fact that we just witnessed one of the best rivalries in sports, the NBA bonus pool isn’t an earthshaking amount.  But it’s hardly chump change either.

The Lakers’ $2.1 million bonus will be split according to each player’s relative value or contribution to the team, but every player comes out looking like a winner. The playoff pool is icing on the cake. The monies come with a year’s worth of bragging rights – and the potential to earn tens of millions of dollars in product endorsements.

“It’s kind of the old saying: ‘to the victor goes the spoils,’ and I think that does translate individually to players in helping them get individual sponsorship deals,” said John Black, director of communications for the L.A Lakers.

In addition to the Lakers’ and Celtics’ share, the $12 million NBA playoff pool is distributed to teams as follows:

Best Record in NBA:  $346,105

Best Record in Conference, $302,841each (for $605,682)

Second Best Record in Conference, $243,411 each ($486,822)

Third Best Record in Conference, $181,706 each ($363,412)

Fourth Best Record in Conference, $142,800 each ($285,600)

Fifth Best record in Conference, $118,990 each ($237,980)

Sixth Best Record in Conference, $81,157 each ($162,314)

Teams Participating in First Round, $179,092 each ($2,865,472)

Teams Participating in Conference Semifinals, $213,095 each ($1,704,760)

Teams Participating in Conference Finals, $352,137 each ($1,408,548)

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