The NBA is all about the playoffs. Where most leagues have a balance between the post and regular season, there’s no doubt that current basketball has a focus on the electricity that comes with high-stakes games. They bring in more views, more fans, and more money.
When compared to most leagues, the NBA playoffs generate a lot of additional revenue for both the league and teams alike. That’s mainly due to higher viewership, more fan attendance, as well as specific deals. It all comes together to create an exciting, and lucrative, product.
It’s impossible to know exactly how much a team makes during a playoff game, especially compared to the regular season, but there’s no doubt that teams who make the postseason bring in additional cash in a variety of unique ways.
The Foundation of Playoff Revenue
The NBA is one of the most lucrative organizations on Earth. The basketball league is a billion dollar industry that generates tons of money for each and every team. That bar goes even higher during the postseason.
There are many ways NBA organizations bring in money, but almost all of them have to do with fans. Ticket sales, merchandise, concessions, and parking all play a huge role in each team’s bottom line. The less in attendance, the less money they make.
The playoffs avoid that pitfall because they almost always sell out. As such, there’s much more money to go around during that time. Packed arenas don’t just sell more tickets, they lead to more sales on everything else. It’s a trickle down effect that starts at the top and impacts the entire franchise.
Another reason the playoffs bring in so much money is ticket pricing. On average, a regular season NBA ticket sits around $50, with that price going up for bigger teams. In the playoffs, the average price jumps up to anywhere between $200 and $300.
Not only that, but big games between strong teams or popular franchises can command thousands of dollars per ticket. Teams can also set their own prices during the postseason, giving them the freedom to set their pricing at whatever they want.
Add that revenue to all of the other purchases listed above and it’s easy to see why franchises make so much more in packed houses.
Playoff Bonus Pool: A Closer Look
Beyond fan spending, teams also have financial incentive to make the playoffs through what is known at the bonus pool. That term refers to a sum of money that gets distributed to teams based on their playoff performance, and how far they go in the postseason.
Currently, the pool is worth $23,287,26. At that number, every team that makes the playoffs gets $347,545 to divvy up amongst their team members. The second round pays an extra $413,534, and the conference finals gives an extra $683,363.
The Finals pays out even more. The winners get north of $4 million, while the losing team earns almost $3 million. Totaling all of that together, some teams can bring in millions. That might not be as much to larger franchises, but it’s a lot to smaller ones.
Those numbers show how much it pays to do well in the postseason. Teams can get significantly more money if they strive for greatness, and even one playoff series can pay out in a big way.
Television Rights and Advertising: The Big Picture
It would be impossible to properly discuss franchise income in the NBA without looking at TV sponsors. Commercial deals and streaming contracts are where most of the money comes in and, as with in-person attendance, playoffs cause viewership to go up.
More people watch playoff games than regular season contests, and those numbers only rise as games get bigger and teams get closer to the Finals. Each progressive round in the postseason brings in a larger audience, which in turn leads advertisers to pay more.
Looking at the most watched NBA games of all time, Finals games and huge playoff matchups top the list. Not only that, but almost all of them were clinching games (6 and 7) of a series.
Currently, NBA TV contracts are long, multi-year deals that cover a multitude of networks. While the individual pricing of such deals are not publicly available, reports show that the NBA is trying to make their next agreement worth more than $75 billion.
That price is inclusive of all games, including the postseason. In that way, while advertisers are paying more on the backend to have exclusive rights to playoff games, that typically gets lumped in the larger rights to exclusively stream games.
Regardless, networks are paying for eyes on the playoff games. If they’re willing to pay the league massive amounts of money for streaming rights, they’re doing it with the postseason figures in mind.
Merchandise Sales: Capitalizing on Playoff Fever
As mentioned, a big way NBA teams bring in money is through additional product sales. Jerseys, hats, socks, and additional merchandise all add up over the course of a playoff run. The better a team does, the more likely fans are to support it.
In fact, franchises see a whopping 191 percent revenue spike when their team makes the Finals as opposed to the regular season. In addition, there is also a 24 percent rise in branded merchandise sales for teams that make the postseason.
Those numbers grow with each round of the playoffs, jumping 129 percent for the second round, and 148 percent for the conference finals. That shows another key incentive to make a deep run, as the sales help the franchise grow.
Market Size and Viewership: The Role in Revenue
Another critical factor when looking at playoff revenue is market size. It’s no secret that in the NBA some teams are worth more than others. The Knicks and Nets, for example, have the largest market in the sport. The Grizzlies have the smallest.
Those market sizes, which refer to how big a team’s fan base (and its usual viewership numbers) is, impact how much a franchise may earn during the postseason.
The more local fans who tune in for a game, the more money a team can get. The NBA enjoys having bigger markets because it means more viewers, and that then translates to better ad dollars or revenue contracts down the line.
Local TV deals can also be larger for teams with a big fan base. Looking at that in combination with the above data on viewership, it’s easy to see that larger markets tend to mean more money come playoff time.
Revenue Sharing and Financial Health
The NBA playoffs are a big deal, and the financial incentives don’t stop with the above factors. Something else that gives teams extra money in the postseason is what is known as the NBA’s revenue sharing model.
Normally, the NBA keeps 6 percent of all ticket sales during the regular season. That stake used to jump to a whopping 45 percent during the playoffs, but recent changes shifted that cap all the way down to 25 percent.
That’s a big deal for teams because it allows them to earn much more on inflated postseason tickets or expensive suites. By giving teams more of the revenue, the NBA hopes to push teams and create a more competitive league.
That program is also beneficial because it allows smaller market teams to get a lot more money, which then helps them catch up to larger market teams who make the bulk of their income through other means.
Challenges and Opportunities: The Economic Impact of the Playoffs
There’s a lot of money to be made in the NBA playoffs, but not everything gets distributed evenly. Teams who go further earn more, but it’s important to account for the fact that some franchises simply aren’t as popular as others.
That’s why some teams attempt to market their own playoff-specific merchandise or increase advertising during critical series. There will always be a gap between big and small teams, but the playoffs give certain teams a chance to close that gap.
That’s especially true because only so many teams make the playoffs each season. Even if a team only reaches the first round, they are still going to bring in additional money that the teams who didn’t make it won’t have access to.
It takes a lot of work to maximize playoff revenue, and franchises have to do all they can to strike while the iron is hot. Turning a bad team around is one of the best ways to bring in that extra income each and every year.
Conclusion
The NBA always brings in money, but during the postseason that cash goes to a whole different level. Ticket prices go up, merchandise and vendor sales skyrocket, and there’s additional money to go around from the NBA and advertisers as well.
That combination is one of the biggest reasons the NBA stays as competitive as it is, and why players and owners both want their team to do better. It’s not just a manner of winning for winning sake, the future of the franchise is impacted too.
Though it’s hard to say one way or another, revenue sharing will likely only go down as the years go on. If recent TV contracts are an indicator, the general income will rise as well. That combination will likely put more money into the playoff pool and provide even more incentives down the line.
