The NBA and its partners lose money if Golden State sweeps Cleveland
A sweep of the Cleveland Cavaliers in the NBA Finals is a winning conclusion for the Golden State Warriors and their fans, but it is a losing situation for the business of the Association.
Obviously, the NBA and the two teams stand to lose money with three fewer games in the biggest series of the season. However, how much money does the NBA actually lose with the Finals concluding after only four games?
This third chapter of the Warriors-Cavaliers Finals saga was supposed to be the series for the ages. The Western Conference champion Warriors entered the series with a 12-0 postseason record, while the Eastern Conference champion Cavs entered the Finals with a 12-1 record.
Unfortunately, only Game 3 was competitive until the final buzzer. Still, Golden State sealed that win and a 3-0 series lead, which puts it in a position to sweep the defending NBA champion Cavaliers.
Thus, the NBA and its partners stand to lose money across the board should the Warriors win Game 4 too.
If the Finals ends in Cleveland on Friday, Golden State stands to leave two home games on the table. ESPN reports that this could cost the Warriors' ownership more than $22 million in revenue. This figure is based on estimated revenue from tickets, merchandise and parking for hosting Games 5 and 7.
Thus, the Cavaliers could stand to lose about half of that considering they would get an opportunity to host only Game 6 if the series lasted three more games. Granted, the average revenue from ticket sales in Cleveland could be less than Oakland given that the Warriors were the most expensive tickets on the secondary market, per Barry's Tickets.
Plus, the demographics and arenas are different for the two competing teams. As of early June 9, Game 5 tickets in Oakland started at over $1,000 on SeatGeek. Meanwhile, Cleveland's Game 6 started at about $500 on the same website.
Therefore, it is not an apples-to-apples comparison between how much money Cleveland could make in a Game 6 compared to Golden State's gains from additional Finals games. Nonetheless, both teams stand to lose millions with three fewer games due to the Cavaliers getting swept by the Warriors
Granted, both teams gain bonuses from the NBA's annual Playoff Pool. Last year's record-high $15 million purse awarded the losing team $1.76 million and the winning team $2.65 million, per Fox Business. This amount is divided between the players and coaches as a bonus. Both teams already earned similar bonuses for reaching different rounds in the postseason, as well as playoff seeding.
Regardless, Finals bonuses are based on the outcome and not how many games are played. Both the Cavaliers and Warriors have some sort of bonus awaiting them if the NBA Finals ends in four games.
Additionally, players are paid an annual salary. Thus, their salary per game actually increases with fewer games. A four-game Finals series results in a higher return on investment for the players, but a lower return for their owners.
Further, players appearing in the NBA Finals stand to earn more endorsements and possibly a higher contract, per MoneyNation.com.
Ironically, the Players seem to be the only partners that do not lose money due to a shorter NBA Finals. Funny considering they are the ones associated with the outcome. Even funnier when you remember they are the ones sacrificing their bodies and legacies.
Either way, the NBA gets a 25 percent cut of the playoff gate revenue. Therefore, the league loses millions in ticket revenue off all the Finals games forfeited by a Warriors sweep. The NBA would gain an average of $3.375 million for the two Warriors games, per the same ESPN article. If the Warriors sweep the Cavs, the NBA loses at least $6.75 million plus another 25 percent of whatever Cleveland would generate at the gate for Game 6.
This could impact the league's salary cap predictions, per HeatHoops' Albert Nahmad.
Warriors sweep would mean shortest NBA playoffs since 1st-round expansion in 2003, putting $1M+ of downward pressure on 2017-18 salary cap.
— Albert Nahmad (@AlbertNahmad) June 8, 2017
Thus, a Warriors sweep could impact the NBA's product moving forward. That extra few million in cap space could help a team like Cleveland add additional talent next year. It could also give them a few million in relief from the luxury tax. Either way, a Golden State sweep impacts the entire business of the league.
Not to mention, the NBA is in constant competition for relevancy. The NBA is not the same money machine as the NFL but an uncompetitive championship certainly won't help the NBA close the gap.
A Warriors sweep impacts the long-term business of the NBA as they are often competing for the same fans and sponsorship dollars as the other professional sports leagues. A 4-0 championship series for the Association perils to the dramatics fans and sponsors witnessed in the NFL's Super Bowl, MLB's World Series and NHL's Stanley Cup. Losing the attention span of fans and sponsors could cause unmeasurable losses for the NBA as they try to gain traction in a congested sports world.
Sure, ratings for the Finals are as high as ever. Through three games, Deadline.com shares that ratings are up 4 percent from the same series in 2016. However, AdAge reports that ABC would leave about $130 million in ad revenue on the table if the NBA Finals ended in four games. ABC could certainly use that added revenue since this is the first year of a billion-dollar broadcast deal with the league. They may really want those added considering a Golden State sweep would make this the fastest NBA postseason over. Last season, Games 6 and 7 were estimated to add $80 million in advertising revenue for ABC, per Time.com.
Moreover, the sports media misses out on three games to cover and create content about if the Cavaliers do not win Game 4. Happy broadcast partners translate to more dollars on the next TV deal and more exposure on the daily.
Hence, we often hear conspiracy theories from ranges of people when series are stretched to seven games. Like last season, Ayesha Curry screamed conspiracy after the Warriors lost Game 6. Disgraced referee Tim Donaghy has also made similar statements, per ABC News. This is because more games generally equal more dollars and more happy partners for the NBA.
Ultimately, it is logical to assume that many other industries indirectly lose money due to a shorter Finals series. The local service and hospitality industries in Cleveland and the Bay can not count on added business from fans traveling for the Finals. States also miss out on sales taxes from various tourism and transactions completed over those additional three games of the seven-game series. The secondary ticket market misses out on added revenue from reselling tickets. Sports books and fantasy apps also do not make wagers when games do not happen. All of these independent entities could miss out on added revenue due to the Warriors sweeping the Cavaliers. Again, this impacts the NBA's relationships with these industries which could indirectly hurt the league's bottom line in unquantifiable ways.
In the end, the NBA and its partners stand to lose direct and indirect revenue streams if the Warriors finish the Finals in Game 4. A Warriors sweep is bad business for the NBA and all of its partners, except for the players.
Although the exact loss due to a Warriors sweep is not a quantifiable figure, a lot of people can get a little richer if the NBA Finals lasts beyond four games. Surely, the NBA and league office will be rooting for the Cavaliers to extend the series with a home win in Game 4.