Expanding the NBA

The National Basketball Association turns 68 this year. For most guys that age, expansion in all the wrong places seems inevitable. But the league has kept its trim, 30-team figure throughout its sixties, with the last new franchise having arrived in 2004. A recent discussion on the Phil Naessens Radio Show got us thinking about whether the NBA should add teams again, and, if so, where.

This summer, David Stern said : “I keep a little green book with a list of all the cities interested in NBA teams and could respond pretty quickly. There’s all kinds of stuff going on in Pittsburgh, Columbus, Louisville, Virginia Beach, Las Vegas, Vancouver, Mexico City, Kansas City.”⁽¹⁾

Of course, there were also rumors of contraction around the last labor negotiations ⁽²⁾ and the decision on what teams are in the league soon won't be Stern's. But the commissioner's list was specific enough that we can safely assume the league has not ruled out adding more members.

G. Scott Thomas wrote an article a couple years back at bizjournals.com where he cited On Numbers’ analysis of viable NBA expansion markets.⁽³⁾ The research used income available (factoring in money already conceivably spent on existing major pro teams in the market) to determine viability. It's a helpful, though not comprehensive, tool to use when evaluating cities.

Let's create some categories for cities that might be set up to host a franchise more successful than the Fort Wayne Pistons or Kansas City-Omaha Kings.

Big Media Market

Number one TV market New York City has the population base to sustain two teams even with competition from multiple franchises in every other sport and Kinky Boots on Broadway. National TV partners love big U.S. metro areas and the NBA has teams in 20 of the top 25.

Seattle is the clear front-runner for a team. It's the biggest market (#13) without a team, its NBA tradition runs from Jack Sikma through Shawn Kemp through Kevin Durant, and it has potential ownership in place. It faces competition for sponsorship dollars from three big teams (including the ultra-buzzworthy Sounders), but has only Major Junior hockey to compete with through a quarter of the year. Ok, this year it's a sixth of the year, but the Seahawks don't make the Super Bowl every season.

Tampa- St. Pete is the 14th biggest TV market, but On Numbers ranked it only 56th in available income due to competition. Top-30 competitive markets St. Louis, Pittsburgh, Baltimore, San Diego, Raleigh, and Kansas City also fared poorly on the available income index. Most of those markets do have suitable arenas available, but other than in Kansas City, the NBA team likely wouldn’t control important sponsorship revenue streams associated with them.

The top three areas on the On Numbers index don't add big markets for ESPN and TNT. Riverside-San Bernardino (1) and Bridgeport-Stamford, Connecticut (3) already occupy parts of the LA and NYC TV markets respectively.  Montreal (2) isn't a US TV market at all, being located in Canada, at least until the next Quebec independence referendum. Montreal could fit into category number three on this list, but how much might its francophonic hassles and frigid weather doom it as a destination for both free agents and league officials?

One-Team Cities

"Look at us, we've got a big league team which boosts our self-image!" say San Antonio/Portland/Oklahoma City. They may not be top-20 TV markets, but they love and support their lone big-league team, perhaps in part because it makes many residents of their city feel significant. With most large markets already in the league or out of the equation, most of the hopefuls probably need to convince the league that they're the next Spurs, sans the conspiracy theories about market-size-related playoff favoritism.

Louisville actually already has a hoops team that draws 20,000 fans a night⁽⁴⁾ and might beat the Bucks. In fact, the prospect of an NBA arrival has created controversy about a potential negative impact on the local scholar-athletes.⁽⁵⁾ When you're only the 49th biggest TV market, you might need to be more of a slam dunk.

The 42nd market ranked fourth on the income survey, but has, as Phil Naessens pointed out recently, a high population turnover. That perhaps mutes the one-team effect. Oh, and then there's the gambling. As long as the U.S. retains its schizophrenic wagering laws and its leagues maintain their healthy skepticisms of sports books, it's hard to imagine that what stays in Las Vegas could possibly be a major-league pro sports franchise.

Hartford made the income availability top ten and ranks as the biggest TV market (30) with no major league sports team. Connecticut has good college basketball tradition, but the market has a bit of an albatross. Or, to be more specific, a whale. The NHL's Hartford Whalers never averaged as many as 15,000 fans in a season.

Virginia Beach-Norfolk, ranking as the 45th TV market, has long been considered a potential target for pro leagues. With the closest teams in Washington (200 miles) and Charlotte (300 miles), it had the potential for regional rivalries without cannibalizing fans. It has ACC basketball tradition, and the closest franchise in the four top leagues is the NHL Hurricanes 185 miles away in Raleigh. Neither the International League's Tides nor the American Hockey League's Admirals have set any attendance records (like Oklahoma City did for CHL hockey pre-Thunder), so backers would have to show basketball would be different.

Austin, Texas placed well in income availability, has the 40th TV market, and profiles as a young, growing city. On the other hand, it's Spurs country, a UT Longhorn town, and the D-League doesn’t draw especially well there. There are no other major pro teams, though, so maybe the NBA would work in a northern suburb like Round Rock or Cedar Park. Those municipalities host, and built stadiums for, Triple-A baseball and hockey respectively. It's no sure thing, however.

Sexy Geography Market

This means somewhere the league wants to go to expand its marketing footprint. Another way to phrase it would be "a country whose initials are not "U" followed by "S" followed by "A."

Mexico City is a huge city that fits into this category. There's a lot to like, including an accessible time zone and some of the features of category 2. Smog, perceived crime, and language differences might make it tough to attract free agents. The failure to stage one game there this year might also be held as a negative when the league considers whether to award the market 41+.

Europe/Asia/Other Continents/Arctic Circle/Guam and any other non-North American aspirants would have to figure out how to deal with scheduling, travel, and a host of other issues. We opined on what the league should do in those markets in a whole nother blog post (spoiler alert : not promising in the near term).

Really Rich Dude Market

Mark Cuban said in November : “I just think the price of the expansion fee has to be so high that the NBA owners think, ‘OK, we’re crazy not to do it.' What that number is, I don’t know. But I’m open to it."⁽⁶⁾

Being open to receiving a large influx of cash has proven a sound financial strategy for Mr. Cuban. While we don't have a specific municipality in mind for this strategy, a buyer who leads with his wallet could overcome a lot of resistance. The structure of the deal matters as much as the dollar amount, however. You don't want to take crazy money upfront only to give it back through revenue-sharing because the Bentonville Walleyes couldn't draw or add to the value of the national TV and radio packages.

Politicians With Panache Market

If you can find a group of elected officials who either believe they're doing something civic-minded or just want free tickets, they can redistribute their way into becoming a viable choice for you. Free arenas, free development, free parades when you win the 2045 Dave Stern Trophy : who wouldn't want that? Maybe someday one of the other former NBA Johnsons (Ervin, Earvin, or one of the Eddies) gets elected mayor of Anderson, Indiana and makes a push for the return of the Packers, following Kevin's lead in Sacramento.

As with the previous category, you still have study the market. The NHL's Coyotes gladly accepted stacks of taxpayer cash to move to Glendale without remembering that their fan base lived and worked at the other end of Phoenix's traffic jams. If you expand and the team declares bankruptcy, you've done it wrong.

Does the Association need to expand? It's hard to say that it does. Unlike the NFL the NBA's national TV carrier have plenty of product to air.

The perfect storm might be a combination of an owner with the crazy money Cuban wants in a big market. Maybe it happens right about the time the league is negotiating a new national TV deal and needs that market to justify rate increases. Maybe it happens during a labor negotiation when the league can trade another team or two worth of jobs for player concessions on testing for the latest drug scare. Or maybe it happens because Amir, Vinnie, or Avery Johnson got elected to the Rochester city council and restarted the Royals. In any case, the NBA can afford to wait for its preferred scenario.

Like any business, a sports league wants to grow. That doesn't necessarily mean it has to add more teams. It can also mean adding more revenue streams from other sources. New media and international outreach might provide those without having to dilute the product, because while the world produces a lot of good ballplayers, adding roster spots can't help but thin the talent base.

Which brings us to a final potential market : Harrisburg, Pennsylvania. It ranks as TV market number 43, higher than Louisville or Hampton Roads. We mention it not so much because we consider it a viable candidate for a team, but rather because of what happened in a town in its DMA on March 2, 1962. On that night, playing for the Philadelphia Warriors before they moved to California, Wilt Chamberlain scored 100 points in a game in Hershey.  If expansion adds two or more teams worth of D-league and Euroleague defenders to the NBA, that record will drop like a 68-year-old's hairline.

Rush Olson has spent two decades directing creative efforts for sports teams and broadcasters. He currently creates ad campaigns and related creative projects for sports entities through his company, Rush Olson Creative & Sports.

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Footnotes

(1) “Stern includes Pittsburgh on short list of possible NBA expansion cities,” Pittsburgh Sporting News. http://www.pittsburghsportingnews.com/stern-include-pittsburgh-on-short-list-of-possible-nba-expansion-cities/ (accessed January 22, 2014).

(2) David Steele, “Is NBA contraction a legitimate possibility?” Sporting News. http://www.sportingnews.com/nba/story/2011-08-15/is-nba-contraction-a-legitimate-possibility (accessed January 25, 2014).

(3) G. Scott Thomas, “22 markets meet the NBA’s financial threshold,” The Business Journals. http://www.bizjournals.com/bizjournals/on-numbers/scott-thomas/2011/08/22-markets-have-nba-potential.html?appSession=300822721061063&RecordID=&PageID=2&PrevPageID (accessed January 22, 2014).

(4) Mike Rutherford, “Louisville Leads The Nation In Overall Basketball Attendance,” Card Chronicle. http://www.cardchronicle.com/2012/5/11/3014634/louisville-leads-the-nation-in-overall-basketball-attendance-cardinals (accessed January 25, 2014).

(5) Darren Heitner, “Why Louisville Should Top The List For An NBA Franchise,” Forbes. http://www.forbes.com/sites/darrenheitner/2012/12/18/why-louisville-should-top-the-list-for-an-nba-franchise/ (accessed January 22, 2014).

(6) Eddie Sefko, “Mark Cuban: NBA expansion will happen before relocation, if the price is right,” Dallas Morning News. http://mavsblog.dallasnews.com/2013/11/mark-cuban-nba-expansion-will-happen-before-relocation-if-the-price-is-right.html/?utm_source=twitterfeed&utm_medium=twitter&nclick_check=1 (accessed January 25, 2014).

Discussing NBA Expansion on the Phil Naessens Show

Rush appeared on Phil Naessen's radio show this evening. The topic was NBA expansion, and it was so much fun we're going to write a blog post building on it in the next couple of days. The show also features good Spurs and Thunder talk from Phil's other guests. Thanks to Phil for the appearance.

An audio special - ROCS explains its blog on a radio show

Rush appeared on the Phil Naessens Show today to discuss the most recent ROCS Blog post regarding NBA expansion overseas. You can check out the audio here. Our part comes up at the 19-minute mark. You'll also enjoy Phil's segments on the San Antonio Spurs and the NBA game this week in London.

Associating Internationally : An alternative strategy for NBA overseas expansion

Slovenia, Haiti, New Zealand : Players from each of these nations made NBA Opening Night rosters in 2013. 39 countries provided a record 92 international players to start the league’s season.⁽¹⁾ America’s pro league has long welcomed stars from abroad to play the game James Naismith invented here. NBA teams have played games against international hosts since 1978, and the Hawks will play the Nets in London next week.⁽²⁾

That ongoing dedication to maintaining an international presence no doubt led respondents to place the basketball league second in a Street & Smith’s Sports Business Journal poll on which U.S. league would become the first to place a team outside North America.⁽³⁾ So, in our third of series of posts related to the poll, we ask how might the NBA go about placing a representative in the land of Yao Ming, or Dirk Nowitzki, or Šarūnas Marčiulionis?

Incoming commissioner Adam Silver has suggested he likes the concept of overseas franchises,⁽⁴⁾ but the schedule looms as an enormous obstacle. Travelling for 82 games within the United States already drains the players. How attractive would free agents find signing with the Rome Legion or the Tokyo Green Pheasants if they knew 41 of those games involved trans-oceanic travel? The jet lag alone for a short playoff series might end the experiment.

Other issues include displacing club teams already established in areas where basketball enjoys popularity, a dearth of NBA-appropriate arenas, and possible security concerns.

Someday, the bottom could drop out of domestic TV rights and second-, third-, and fourth-screen use could diminish live game attendance to the point where staging an 82-game season in one country no longer makes sense. The NBA would then perhaps find it in the league’s interest to split the year between two or even three continents. Perhaps a team plays 40 games in the U.S., then plays 21 in their European city and another 21 in their Asian city.  You’d still have to deal with how the teams already in those areas accommodate it, but maybe the Boston Celtics becoming the Glasgow Celtics becoming the Seoul Celtics triples your TV audience? Playoffs and the overly pessimistic economics make this scenario an unlikely one, certainly. However, the league already owns a property with the necessary attributes. If it wants to exponentially elevate its brand presence across the waters, perhaps it should start with the WNBA.

The NBA’s women’s league doesn’t play 82 games. The regular season consists of 34 summer contests, plus up to 11 more in the playoffs.  A number of American female pros also play in more than just the WNBA, as they travel overseas to spend the winter season with European or Asian club teams.

There they play a domestic league schedule consisting of 20-some games. The best teams may also play a dozen or more games in Euroleague or Eurocup inter-country competitions. Many of the clubs, especially in Europe, have histories a lot longer than that of the WNBA. Women pros played abroad before the American league existed and have continued to do so to supplement their capped WNBA salaries.

Could the WNBA partner with existing clubs, perhaps starting with the top flight ones in the biggest women’s hoops countries (like Russia, Turkey, Spain, and Italy)? The WNBA’s brand would provide cachet, especially with international sponsors, and the clubs’ brands would provide tradition. They could brand the venture as the WNBA’s winter season, with the stateside campaign branded as the summer season. 

The NBA would get to strengthen its brand and the relationships that could streamline future moves on the men’s side. In turn, the WNBA could potentially help many clubs professionalize their operations, getting them up to Association standards. This assistance could prove critical to the survival of some, or even many clubs. Subsidies provided by wealthy owners and state federations may not have the staying power they once did⁽⁵⁾ and clubs will have to maximize revenues to remain viable. Revenue generation is something the NBA does well.

Could the NBA's marketing minds offer suggestions to make European scoreboard shows more compelling?

American star players traveling abroad to play have often made outsized salaries provided by hobbyist team owners. Standardization of labor standards under the WNBA model could encounter resistance from these women and their agents. They would have to agree that the merged model represented the best hope for professional women’s basketball to remain sustainable over the long run. NBA marketing muscle generating additional ancillary revenue for them in the form of merchandise sales might assist in bringing them around. Another selling point could be that synchronizing the schedules would help the players avoid overlap between seasons and perhaps build in some time off they don’t currently get.

The NBA, of course, would have to convince itself that taking its brand worldwide mattered enough to justify the sizable expense and hassle a regular WNBA presence abroad would require to set up and then maintain. Can the benefits in exposure and sales of branded products outweigh the costs of doing business internationally? They would need a business plan even longer than this blog post to evaluate all the permutations.

For instance, should the WNBA choose to integrate with Asia or with Europe? Could they play one off the other in negotiations? Europe has a more established hoops culture but Asia has incredible growth potential. It is possible they could go to both continents. American players already go both places and perhaps a winter season championship could pit an Asian titlist against the Euroleague winner. Speaking of the Euroleague, FIBA would have to get involved at some point. The NBA would hopefully convince world basketball’s governing body of the mergers’ merits.

We do know the NBA men can’t play more games abroad without disrupting the league’s domestic business, at least in the short term. The WNBA, however, might make its league and its sport healthier by doing so.

Rush Olson has spent two decades directing creative efforts for sports teams and broadcasters. He currently creates ad campaigns and related creative projects for sports entities through his company, Rush Olson Creative & Sports.

RushOlson.com

Linkedin.com/company/rush-olson-creative-&-sports

Facebook.com/RushOlsonCreativeandSports

Footnotes

⁽¹⁾ “NBA Tips Off 2013-14 Season With Record International Player Presence,” nba.com. http://www.nba.com/global/nba_tips_off_201314_season_with_record_international_presence_2013_10_29.html (accessed January 6, 2014).

⁽²⁾ “History of the NBA Global Games,” nba.com. http://www.nba.com/global/games2013/all-time-international-game-list.html (accessed January 6, 2014).

⁽³⁾ “Reader Survey,” Street & Smith’s Sports Business Journal. November 25-December 1, 2013. P.26.

⁽⁴⁾ Larry Fine, “NBA Commissioner-in-waiting eyes global expansion,” Reuters. http://articles.chicagotribune.com/2013-03-28/sports/sns-rt-us-nba-silverbre92s006-20130328_1_adam-silver-national-basketball-association-nba-teams (accessed January 7, 2014).

⁽⁵⁾ James Bowman, “The state of the WNBA: 2012 edition,” Swish Appeal. http://www.swishappeal.com/2012/12/28/3812448/the-state-of-the-wnba-2012-edition (accessed January 7, 2014).

Major Liga

Our last ROCS blog post explored the possibility of American football expansion to Europe. The NFL had won a recent poll conducted by Street & Smith's Sports Business Journal about which U.S. league would become the first to place a team outside North America^.(1) For this post, we'd like to skip the runner-up (no disrespect, NBA) and discuss the bronze medalist.

Major League Soccer came third in the poll. The placement actually seems a bit high because, as you may have read, they already have soccer teams in other countries. In fact, they have a lot of them. By a lot, I mean every single town bigger than a standard suburb (and many smaller) has one. That club has probably been there a hundred years, too. To find a footballless (I just made up a word with three consecutive "Ls" in it) area, you wouldn't just have to build a stadium, you'd have to go ahead and build the entire city.

"The Football Players," painted in 1952 by Nicolas de Staël

MLS has indeed talked about expanding more than any other league^,(2) so perhaps that fueled its place on the poll's podium. They seem to favor New York over old York and Atlanta, Georgia over Akhaltsikhe, Georgia. But what if the league did want to establish the MLS brand overseas? What we need here is a farfetched scenario so crazy it just might work.

Simply placing a team or two in some other country or two seems unlikely to work. Even with the summer schedule, you'd still have to compete with the established leagues at the beginning and end of your year and the national team tournaments in the middle. It's hard to see Old World fans getting excited to go see the new team take on the visiting Vancouver Whitecaps when a big Euro2016 match looms the next day. The logistical difficulties of transatlantic fixtures certainly factor in as well.

If you can't beat the establishment, maybe you have to join it. Could MLS form a mutually beneficial alliance with a European league? England seems an obvious locale because of the common language, but the Barclays Premier League already has a foothold in America through its television deals. As the world's most commercially powerful soccer league, the BPL likely wouldn't receive much of a boost from an MLS association.

But what about Spain? Why would the winners of the last three big international trophies want to marry their country’s footballing fate to what many perceive as a minor league? We can actually find a number of reasons that might interest both sides.

From the MLS perspective, an affiliation with La Liga allows it to instantly shed some of that minor league perception. If you compete on a regular basis with Barça and Real Madrid, you elevate your standing in the eyes of soccer fans. Suddenly you really are major league.

MLS does plenty of Spanish-language marketing and broadcasting already, simplifying joint ventures in those areas. The alliance also gives them a high-level inroad to broadening its Hispanic fan base.

The travel is easier than any other European league with whom the MLS might realistically partner. When the New England Revolution goes to play Celta Vigo,⁽³⁾ they’ll fly only 500 miles more than when they trek to LAX⁽⁴⁾ for a fixture with the Galaxy or Chivas USA. The traffic from the airport might go more quickly in Vigo, too. You’d still have long flights, but certainly shorter than the ones to play, say, Zenit Saint Petersburg. They’ll find a relatively mild Spanish climate awaiting them when they land as well.

From a La Liga perspective, they need a way to remedy the top-heavy structure that threatens to cripple the league.⁽⁵⁾ FC Barcelona and Real Madrid, with the occasional addition of one or two others, dominate competitively and financially.  The top clubs’ tradition and market sizes will always give them certain advantages, even if the league could somehow remedy the inequitable domestic television revenue distribution. The big franchises currently have limited motivation to take steps that compromise their positions. However, a potential entrée into the lucrative North American markets that gave them an advantage over the Manchester Uniteds, Bayern Munichs, and Juventuses might incentivize the giants to make some domestic concessions.

The Spanish economy’s downward spiral adds motivation. The United States may have a zillion-dollar national debt, but its economy remains an order of magnitude healthier than those of the Iberian Peninsula. Spanish teams would love to tap into a fresh group of consumers with money to spend on shirts, tourism, and sponsors’ products. None of the other relatively healthy economies in the world have the scale of the U.S./Canadian market, and the biggest, England and Germany, have no need for any sort of alliance with Spanish football. An infusion of American sports marketing knowhow could benefit Spanish clubs, too.

The Liga/MLS scenario is still a long shot, of course. You’d have to find a way to deal with issues of winter/summer schedules, relegation, salary caps, UEFA competitions, and playoffs. Competitively,  Barça and Real Madrid might win the MLS spotting their opponents two red cards a game. Still, playing the 1992 Dream Team helped spur basketball programs around the world to get better to combat American dominance.  Perhaps the elevated competition will hasten the American league’s ascendance as well. And Financial Fair Play initiatives could ease the salary discrepancies.

Perhaps one could start with having teams participate in each other’s domestic cup competitions. Or maybe it could work like baseball’s early years of interleague play, with limited crossover games and a meeting of league champions at some point.

Barcelona toyed with the idea of involvement in a Miami MLS franchise a few years back⁽⁶⁾ and has a regular preseason presence in the States.⁽⁷⁾ But can you imagine the atmosphere in Seattle for the second leg of a tie against Barça with the allied league’s title on the line? Now that would truly be major league.

Rush Olson has spent two decades directing creative efforts for sports teams and broadcasters. He currently creates ad campaigns and related creative projects for sports entities through his company, Rush Olson Creative & Sports.

RushOlson.com

Linkedin.com/company/rush-olson-creative-&-sports

Facebook.com/RushOlsonCreativeandSports

Footnotes

⁽¹⁾ “Reader Survey,” Street & Smith’s Sports Business Journal. November 25-December 1, 2013. P.26.

⁽²⁾ Ives Galarcep, “GARBER: MLS TO EXPAND TO 24 TEAMS BY 2020,” SBI. http://www.soccerbyives.net/2013/08/garber-expand-teams.html (accessed December 31, 2013).

⁽³⁾ “Distance from General Edward Lawrence Logan International Airport (BOS) to Vigo Airport (VGO),” Air Miles Calculator. http://www.airmilescalculator.com/distance/bos-to-vgo/ (accessed December 31, 2013).

⁽⁴⁾ “Distance from General Edward Lawrence Logan International Airport (BOS) to Los Angeles International Airport (LAX),“ Air Miles Calculator. http://www.airmilescalculator.com/distance/bos-to-lax/ (accessed December 31, 2013).

⁽⁵⁾ Tom Conn, “Gay de Liebana: All but Real Madrid, Barcelona and Athletic will disappear,” Inside Spanish Football. http://www.insidespanishfootball.com/35857/gay-de-liebana-all-but-real-madrid-barcelona-and-athletic-will-disappear/ (accessed December 19, 2013).

⁽⁶⁾ “After Florida once had two MLS teams, and after a Miami Barcelona bid looked on the fast track to approval by 2010, the whole idea is scrapped and the state remains without a team in the U.S. top-flight.,” goal.com. http://www.goal.com/en-us/news/1110/major-league-soccer/2009/03/03/1137156/miami-barcelona-mls-campaign-is-dead (accessed December 31, 2013).

⁽⁷⁾ Associated Press, “Barcelona signs five-year deal with MLS,” ESPN FC. http://espnfc.com/news/story?id=535599&&cc=5901 (accessed December 31, 2013).