NBA Championship Economics and The $600 Million Lakers

June 21, 2010  |  

Kendrick Perkinshas incentives built into his four year, $4.25 million team contract and his shoe contract according to Myers. “The total number surpasses six figures,” he said.

Thursday’s win, his fifth NBA championship, put Kobe Bryant atop the basketball heap.  In fact, he may be the king of basketball. With his three year contract extension, signed in April, he will join the sports megastars. He is destined to become basketball’s second $30 million man.

Bryant is slated to earn $31.5 million in 2013-14 season. Michael Jordan, the only other NBA player to make that much, earned $30.1 million in 1997 and $33.1 million in 1998.

By the time it’s all said and done, Bryant will have been paid $280 million by the Lakers. And that’s just his salary.  He makes many millions more in product endorsements. In 2008, Bryant earned $45 million, ranking No. 10 on Forbes’ list of powerful celebrities.

Is he worth it?  His statistics say so. For the 2010 playoffs, Bryant averaged 29.5 points, 5.6 rebounds, and 5.6 assists. “People want winners on their team,” said Myers. “People want winners endorsing their products. It’s all tied together.”

Winning will almost certainly earn Lakers coach Phil Jackson more if he decides to return next year. Jackson is a virtual franchise, having won more NBA championships, 11, than any single team except for the Lakers and the Celtics.  And he earns more than any other coach in sports history. He is the NBA’s $10 million man.  He earns $3 million more than the second highest paid coaches – NFL Super Bowl winners Bill Belichick and Mike Shanahan.

NBA players costs have skyrocketed.  Including bonuses and benefits, they increased to $2.3 billion during 2008-09 season, from $2.2 billion the previous year. The Lakers have the highest team payroll in the NBA – at nearly $91.4 million annually, versus the Celtics’ $86.5 million.

But the Lakers are the league’s most valuable franchise. The team’s current valuation is $607 million, and its 2008-09 revenue was $209 million, with operating income at $51.1 million. The New York Knicks ranked second, valued at $586 million with revenue of $202 million. The Celtics ranked as the league’s eighth most valuable franchise, at $433 million, with revenue of $144 million.  By way of comparison, the average overall revenue for the league’s 30 teams was $126 million last year.

At the beginning of this past season, the Lakers held the record for having the most wins (3,000), the highest winning percentage (61.8%), and the most NBA Finals appearances (31).

“For the past few seasons, the Lakers have sold out every game, giving us an average attendance of 18,997,” said Tim Harris, the Lakers’ senior vice president for business operations and chief marketing officer. “Average ticket prices for the 2009-10 regular season were $143.69.”

Courtside seat ticket holders are willing to cough up $107,500 for the season. The renewal rate is around 97-99%. “The last few years, we have enjoyed rates in that range.  I am assuming we will do the same this summer but won’t know for sure until we get through the process,” said Harris.

With the priciest tickets in the NBA, each game generated $2 million in revenue for the Lakers’ owners last year, according to Forbes.

Kobe Bryant is the team’s main attraction. And he can afford to be a grateful champion. In 2008, he bought $9,000 Swiss watches for each of his teammates. It was his way of saying thanks for helping him win his first MVP award. So now the question is, what will he buy them this year – a car?

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