Essay on Economics Of The NBA

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“The first time I stepped on an NBA court I became a businessman.” - Lebron James. The National Basketball Association is the pre-eminent men's professional basketball league in the world. It is widely considered to be the premier men's professional basketball league in the world. The NBA and it’s teams are part of the sports entertainment industry, just like any other major sports league in the world (NFL, MLB, NHL and other national sports leagues). A national sports team, in particular an NBA company makes it’s money by appealing the game to the audience in various ways. The company chooses a target group and a city to look for the customers who are willing to spend money.Then, the franchise gets paid with four main income sources of …show more content…
The gate receipts(tickets), concessions, sponsorships and media broadcasting all help the National Basketball Association earn its money. Also, the NBA needs to have an appeal of some sort to be popular among people and therefore earn money. Uncertainty of outcome of the game. Games being played at high stakes (championship games, playoff games, rivalry games) make it attractive to watch for the fans. Also games with heroics, dramatic events, great plays lure spectators in the arenas but the fact of social activity helps watching an NBA game make it such an enjoyable experience. The target group for an NBA team, are supporters with time, money, transportation, the media access who live in a densely populated urban area (The Economics of The National Basketball Association). As a result, 25 out of 29 NBA teams are located in the top 50 U.S. major cities. The only franchises not located in Top 50 Cities in the U.S. by Population and Rank are the Golden State Warriors, the Orlando Magic, the Utah Jazz and the New Orleans Pelicans (National Basketball Association).

The 5-forces Industry analysis examines the buyer power, supplier power, substitute products, rivalry among existing firms, and threat of new competitors to the market. Firstly, market growth in the NBA is reasonably balanced. This makes it an fierce market especially for teams sharing the same city. An example is Los Angeles and New York. Next, the NBA has designed the league so that all teams have equal

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