NBA Championship Economics and The $600 Million Lakers

June 21, 2010  |  

The playoff bonus is “extra pay” for postseason work. “For a player making more than $1 million a month, and there

5-time NBA champion Kobe Bryant is slated to be the next $30 million man in annual salary earnings

are some players making $3 million a month, this is a nice chunk of change,” said Bob Myers, sports agent with the Wasserman Media Group who represents, among others, Kendrick Perkins, the Celtics’ six-foot-10-inch, 280 pound center.

Winning the NBA championship increases the earning power not only for players but for the team. The playoff run added $20 million to the Lakers’ revenue in 2009, according to Forbes.com.

When the playoff drags out to seven games,the NBA and the teams make a killing. It results in higher ticket revenue, higher local media revenue, greater licensing and merchandise revenues, and higher response/ad rates from arena signage and web space.  And when the teams are bitter rivals, audience interest hovers at peak levels.

In fact, when the Celtics lost game 6 after having trounced the Lakers in game 5 in Boston, it only fueled speculation that the longer the playoff, the better it was for all concerned.

“The Celtics went into game 6 and should have won the championship in LA, but they didn’t even look like the same team,” said Hugh Lewis, former sportscaster and sports talk show host in Austin, TX. “As a result, [they went to game 7] and revenue kept pouring in. That made a lot of people very happy.”

The NBA Finals was a ratings bonanza. Game 6 had 13.9 million television viewers, according to Nielsen.  Before game 7, average audience levels were up by 2.1 million viewers overall compared to last year, when the Lakers defeated the Orlando Magic in five games. The TV ratings for game 7 marked basketball’s biggest ratings in 14 years.  Final numbers are not yet tallied, but it is thought that as many as 25 million people watched the game.

In the end, winning the championship can benefit players tremendously. “The public appreciates winning, so if you can be associated with a winning product or labeled a champion, it certainly can add to your attractiveness to a company,” said Myers. “Guys like Peyton Manning, Derek Jeter – guys who have won championships – are consistently winning in commercials, in advertisements, and endorsing products.  If you are able to win a championship, it garners more interest from corporations, from companies looking to use athletes to endorse products. It’s a clear positive to win a championship in whatever sport you’re playing.”

NBA players are paid among the best-paid athletes in professional sports. The median NBA salary is $3.1 million. In other words, players earn $37,804 per game – and there are 82 games per season.

Financial incentives abound. A rule of thumb might be: the more games a player wins, the more he is likely to earn. “In my estimation, 10-15% of players have what you’d call playoff bonuses in their team contract,” said Myers. “For a lot more players probably you’d find [bonuses] in their shoe contract” – meaning Nike, Adidas, Reebok, etc.

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