Bad for Business

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Pandemic Created a 33 Percent Decrease in Revenue for the NBA in 2020-21

It is no secret that the COVID-19 pandemic has created plenty of challenges over the past year.

The NBA faced some hefty challenges of their own.

According to reports, the league’s revenue was down by approximately 33 percent in 2020-21 due to pandemic, which actually finished favourably compared to their initial 40 percent drop projection. The league played most of its shortened season in either empty arenas or venues with capacity limitations.

“Financially, for the season, without getting into it too specifically, we did somewhat better than we initially projected,” said commissioner Adam Silver. “As you recall, I think I had said at the beginning of the season that roughly 40 percent of our typical revenue is attributed to not just ticket sales but those revenue streams that come from the related activities in arenas. Because of our ability to get fans back in the arenas for the playoffs, as great as that’s been, it’s a relatively small portion of the season in terms of number of games. So I think now we don’t have the exact numbers yet, but maybe we’ll be down roughly a third in revenue, something around there, instead of 40 percent.

“And so no question, the league will incur significant losses for the pass two years. I will say, though, I’m not here to complain about that. I think speaking for our team owners, they view it as a long-term investment in the league and something very necessary to keep these organizations going. And by the way, it was shared sacrifice by our players as well, just based on the way our system works. We worked something out with the Players Association where they all took, frankly all the players took, significant reductions this season. We were able to in essence advance some of the money they otherwise will be getting in future seasons by spreading out the deductions, so that they were able to make a little bit over the percentage, but it was definitely a shared sacrifice.”

The NBA has said in the past that around 40 percent of its revenue comes from gate receipts and money spent by fans at and around the arenas.

The NBA hopes that a normal season come the Fall would bring back a sense of normal on the business side as well.

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