Changing Times At The NBA
MGT 685
Group Assignment 1
Team Arsenal
Fay Bozich, Julie Burks, Stephanie Meade,
Stephanie Savicki, and Karen Simmons
Oct 11, 2012
Question
Though the NBA experienced substantial success and
rapid growth from the 1980s through the mid-1990s, it
experienced slower growth and a waning fan base in the
late 1990s and early 2000s.
With the changing
landscape of the NBA related to player profiles, fan
perception and internationalization of its product, what
strategic decisions should the league make to improve
the quality of its product in order to reverse the recent
negative trends and strengthen the existing fan base,
while expanding this fan base to new markets abroad?
Sub-Questions
What factors in the external and internal environment have an
influence on the league and how can the NBA capitalize on the
opportunities and mitigate the risks of the threats?
How has the NBA evolved from the 1980s to the 2000s and, as
of the 2004 season, what are the pertinent issues threatening
the NBA’s future success?
What specifically has led to the decrease in fan base and
overall popularity of the NBA?
Strategically, what does the NBA need to continue/change in
the future in order to revitalize its fan base and to establish
itself once again as a strong, sustainable brand that is
beneficial for all stakeholders?
What factors in the external and internal
environment have an influence on the league and
how can the NBA capitalize on the opportunities
and mitigate the risks of the threats?
NBA PEST Analysis Snapshot
• Political/Legal
• Economic
- Stable economy
N/A
- Globalization of
business operations
= Opportunity
= Threat
- Changing cultural
norms
- Changing player
demographics
• Socio-cultural
- Constant advances in
technology
- People want constant
connectivity
- Media coverage
instantaneous
• Technology
PEST Analysis (2004)
FACTOR
Trend
Political
• N/A
Economic
• Strong US economy
• Globalization in many industries to
decrease supply costs as well as to
explore new markets
• Opportunity – people have more
disposable income
• Opportunity – opens up new markets for
businesses
2
• Influx in international citizens entering
the US workforce
• Urban culture influencing fashion and
sports
• Opportunity / Threat – Could supply lower
cost players, however, also causes player
relation issues
• Opportunity / Threat – Makes young urban
people more interested in these things, but
could also isolate non-urban consumers
3
• Advancements in technology making it
easier for fans to stay connected
• Allow for the internationalization of TV
broadcasting
• Better quality television broadcasts
• Media can immediately release news
stories as they happen
• Opportunity – Consumers are more able to
follow the news they care about
• Opportunity – Gives fans in other countries
more opportunity to follow the league and
watch the games
• Opportunity / Threat – People more likely
to watch event on TV, but may be less likely
to attend the events
• Opportunity / Threat – Good for those who
want to keep up with the news ,but may be
bad if these news stories are negative.
4
Socio-cultural
Technological
Evaluation (opportunity / threat ,
why?)
IMPACT ON
COMPANY (1 =
low, 5 = high)
N/A
4
4
4
3
3
Finding: Amidst the decreasing attendance and revenues, it seems that there are not many external factors that are causing these
trends. Several of the above items could be seen as opportunities or threats, depending on how they are analyzed, but none of them
can be seen as a strong threat to the NBA’s success. It is apparent that there are crucial factors causing the NBA’s lack of success, but it
can be inferred that these issues are mainly internal, as opposed to external.
NBA Industry Analysis (2004) For the Die-Hard Fan
Factor
Evaluation
(Strong /
Weak)
Analysis
Intensity of
Rivalry
Weak
With the salary cap implemented and the media revenue split evenly amongst the 30 teams,
there are not many sustained rivalries between teams year after year. This hurts the NBA because
the fans want to see strong rivalries between teams
Power of Buyers
(fans)
Weak
Consumers who love professional basketball have no choice but to support the NBA by either
going to games or watching on TV. The main problem was CREATING these very loyal fans.
Power of
Suppliers
(players)
Strong, but
getting
weaker
With the dissatisfaction of their salaries, players used their Collective bargaining right more (1998,
2005), leading to lockouts and a worsening brand image, which in turn, has led to a decrease in
loyal fan support. The large increase in players salaries and the large % of total costs that the
players salaries represent also make this a stronger factor. However, will the pool of talented
players getting bigger (more international players), this decreases the power of the players in the
US, which will only decrease more and more in the future as the league continues to look to these
international markets for talent.
Threat of
Substitutes
Weak
Consumers who love professional basketball have no choice but to support the NBA by either
going to games or watching on TV. The main problem was CREATING these very loyal fans.
Threat of New
Entrants (new
clubs)
Weak
Though there are other basketball leagues throughout the world, there is none quite like the NBA.
The leagues in these other regions are more fragmented, and focus on smaller geographical areas.
These leagues often have talented players come play for the NBA, which may show that the NBA
is seen as a higher tiered basketball league.
Finding: The NBA has multiple stakeholders, the player salaries are their largest cost, without fans buying tickets and watching the game
their revenue would suffer significantly. Knowing this where should the NBA focus their efforts? Stakeholder analysis is needed to evaluate
each impact.
NBA Industry Analysis (2004) For the Casual Fan
Factor
Evaluation (strong /
weak)
Analysis
Intensity of Rivalry
Strong
There are many options for entertainment. This creates intense rivalry between the
NBA and other entertainment sources, such as other professional sports, movies,
theatre, concerts, etc…
Power of Buyers
(fans/consumers)
Weak
To the NBA, the die-hard are much more valuable than the casual fans just looking
for some entertainment. In looking at the revenue streams for the league (TV
contracts, gate receipts, merchandise sales) the die hard fans are much more
powerful than the casual fans.
Power of Suppliers
Weak
No matter how attractive the entertainment option assumes itself to be the
consumer ultimately decides to support the option.
Threat of
Substitutes
Strong
Consumers have multiple entertainment options. Therefore, their dollar is strong.
The consumer will chose the most attractive option. If the NBA does not present
itself as attractive, the consumer will go elsewhere.
Threat of New
Entrants
Weak
The Entertainment Industry is a fairly well-developed and established market. While
there are new entrants, most can be distributed into an existing entertainment
category.
Finding: The NBA is in an industry that is strongly influenced by the consumer dollar and consumer choice. If the NBA does not present
itself as the most attractive option, the consumer has the ability to go elsewhere to find entertainment. The NBA must focus on what the
consumer finds to be attractive.
Target Market Segmentation Analysis
80s/90s fan profile
2004 fan profile
Age
Middle aged and young people
Young people (especially under 35)
Race
No clear division between White and African
American
Mainly African American fans
Loyalty
Grew to love college players and continued to
follow them into the NBA.
Like the young players that they can relate to
Don’t know early entry players until they join the NBA
Fans of teams were fans for many years.
Cheer for teams they know and who are more
established.
More likely to switch teams they cheer for, depending on
what players are on the teams or if the teams are doing well
or not.
Geographical
location
N. America only
Mostly N. America, though present in over 200 countries
worldwide. Though present in many countries, the strongest
fan base for NBA is the US, as other countries have their own
basketball leagues.
Critical
factors
Want a high quality of play
Like the sport for its entertainment value beyond just the
game itself – the player’s off the court personalities, their
apparel, and the related social aspects(what’s
trendy/fashionable/cool)
Enjoy strong rivalries between familiar teams
Finding: The main takeaway here is that the loyalty of the fans is centered on the players, not the teams. This is further evidence that the
league MUST focus on developing their players. The league must create respectable, mature players that the fans want to cheer for. Also,
with the league continuing to seek talent internationally, this will help to establish fan bases in these other countries.
Directional Policy Matrix – NBA League in the US
NBA League Ops
NBA Entertainment
NBA International (N/A)
WNBA (N/A)
National Basketball
Development League
Finding:
Though the NBA is
average in providing its fans with a
good
product
and
decent
entertainment,
its
current
struggles prove that it needs to
invest more heavily in their
product (their players) and in
providing their fans with a better
experience. In looking at the
NBDL, the NBA either needs to use
it more effectively or divest, as this
is currently not adding much value
to the organization.
Under-Utilized Program
National Basketball
Development
League
The NBA should use the NBDL as a
true minor league program. By
merging the NBDL and select
Player Development Programs,
the NBA can educate and develop
players that will attract fans, and
positively represent the league’s
mission.
• Training ground for staff,
officials, and players.
• Minimum 20 year age
requirement
• As of 2001, located in NC, SC,
GA, AL, and VA.
NBA Player
Development
Programs
• Life Skills Training
• Counseling and
Assistance
• Education and Career
Transition
• Rookie Transition
Program
• Pre-Draft Player
Information Program
SWOT Analysis: The NBA in 2004
Strengths
- Large pool of resources/capital
- Minor league function to develop players
-Established organization with developed teams
-International offices/relationships (China, Europe,
Canada, Germany, France, Japan, Mexico, Spain,
Taiwan)
-The NBA is a desirable basketball opportunity.
Domestic players train to be drafted, and International
players want to enter the NBA.
Weaknesses
- Poor player relations
- Deteriorating brand image of some players
- Little/no control of the players off of the court
- Goal of creating a ‘fair’ playing field among all teams
has led to too much regulation
- Few superstars to draw fan attention/loyalty
Opportunities
- Untapped market segments in the US – Caucasians,
middle aged people, Urban culture
- No other real substitutes for professional basketball
- Pool of international players
-Can appeal to international citizens entering the US
workforce
-Ability to explore new markets
-Emerging technology to engage the fans (TV, Media,
smartphones, etc.)
Threats
-Focus on urban culture could isolate non-urban
consumers
-Emerging technology allows fans to watch event on
TV, but could make fans less likely to attend the event
- Real-time media allows for quick dissemination of
negative news stories
How has the NBA evolved from the 1980s to
the 2000s and as of the 2004 season, what
are the pertinent issues threatening the
NBA’s future success?
League Evolution
Past State
(1980s – mid 1990s)
Current State
(2004)
Popularity
-Attendance was up
-Revenues were up
-Fans want to cheer for teams who they know will
be SUCCESSFUL
-Attendance down
-Revenues down
-Each year, there are different teams that are successful – less
predictability in which teams will be superior
Regulation
-Less regulation in trying to keep all teams on a
level playing field
-No Salary cap
-Strongly discouraged players from entering until
4 years after HS
-More regulation to try to keep the competition ‘fair’
Presence of
Superstars
-High
-Many times there were several on the same
team
-Low
-Teams not able to afford several superstars on the same team
Team Profile
-Fewer teams (17 in 1970)
-Cost less to buy/manage a team
-30 different teams
-Very expensive to buy/own teams (hundreds of millions of
dollars)
-Teams in markets where there is not loyal fan base – kept alive
by even distribution of media revenue
-Prices relatively consistent among different
teams
-Salary cap
-Media revenue evenly distributed among teams
Rivalries
-High
-The same few teams were successful year after
year
-Low
-Teams are not always good year after year.
Geographical
Presence
-Focus was only on the US operations
-New focus on internationalization. NBA has operations in several
foreign countries (China, Canada, Germany, France, Japan,
Mexico, Spain, Taiwan)
Finding: The NBA has morphed into a different entity than it was in years past. In 2004, the league is drastically different than it was
prior to the mid-1990s. The league had a much stronger fan base in the 1980s and 1990s, so the NBA needs to focus on what made
them successful.
Player Profile
Source
1980s –
1990s –
mid-1990s 2000s
Effect on the game
Positive /
Negative
College
players only
Effect on the game is two-fold:
1. Younger players are entering the NBA without the
experience and maturity that the college players have. This
is seen negatively by fans who see their immaturity both on
an off the court, which in turn, leads to the perception of a
loss of quality in the game. If the NBA continues to take
players straight from high school, they must invest in their
development.
2. When these players attend college, they establish a solid
fan base with the college fans. The fans know these players
and follow them accordingly throughout their NBA careers.
When players skip college and go into the NBA straight
from high school, they lack this established fan base.
Negative
College players
More players
coming straight
out of High
School
Origin
Almost all
American
More
international
players (Japan,
France, China)
Larger pool of talent should increase the quality of play.
Expands fan base because international players have fans from
their home country – more global interest in the game – higher
TV ratings/revenues.
Positive
Superstars
Numerous
(Michael
Jordan, Magic
Johnson)
Not as many,
the ones that
are superstars,
come from
other countries
(Tony Parker,
Yao Ming)
American fans enjoyed having superstars from America. They
wanted to go watch them play. Superstars now are from all
over the globe, which attracts more global fans, but possibly
decreases the American fan base.
Negative /
Positive
Finding: The internationalization of the sourcing of NBA players proves to help the league, in that it increases the quality of play, as well as
broadening the fan base to now include fans from countries from all over the world. The main negative related to the current player profile
seems to be the younger players coming straight from high school. This is an issue that the NBA needs to address immediately in order to
improve the fan perception of these young players and of the quality of play in the NBA.
Transformation of the Recruitment Process
Year
Event
Effect
Pros
Cons
1946
Created a business in which the Proved to be a very successful
Basketball
Association
of
revenue stream was dependent business model. People were willing
America League was formed to
on the quality of these to pay to see these college players
continue to display college
basketball players and the game play the game after they graduated
basketball stars
they were playing
college.
1971
Supreme Court ruled that
The league could begin reaping the
Early draft players did not
Allowed players to declare
players less than 4 years out of
benefits from this pool of talent
build fan base in college.
themselves available for the
high school could make
years before they could do so
Since they did not play in
draft without waiting four years
themselves available for the
before.
college, the fans did not know
after high school.
NBA draft
who they were.
1994
Allowed the NBA to select these These young players were still
NCAA instituted a rule that
college players before having to wait very immature on and off the
College players were able to
allowed collegians to return to
till they were graduated. The player court. The league did not
attempt to get drafted into the
college basketball if they did
themselves didn’t have to wait to invest in their development.
NBA. If it did not work out, they
not get drafted or did not like
graduate if they thought they were
could still develop in the NCAA.
their draft position
already good enough to play in the The NBA accelerated the rate
NBA.
of young players entering the
1995
Kevin Garnett was drafted 5th More players were trying to gain
by
the
Minnesota early entry in the draft, missing
Timberwolves with a multi- out on the maturity and
million dollar contract right out development
gained
from
of high school
college basketball
league
without
properly
aiding their transition and
development.
Finding: While the league allowed early entry candidates into the league to financially gain from their talent, the league did NOT put any
emphasis on their transition into the NBA, their maturation on/off the court or the development of their skills, both in the game of basketball
and in their personal lives. If the NBA is promoting this trend, they need to then invest in these players so it doesn’t backfire on them in the
way of hurting in the brand image.
NBA Facts: 1984 vs. 2003 Comparison
1983-84 season
2002-2003 season
% change
NBA retail sales
$44 million
$2.15 billion
4786%
NBA attendance
10 million
21 million
110%
# teams
23
29
26%
Avg. player salary
250,000
4.1 million
1540%
TV contracts
$5.5 mill/yr. (USA/ESPN)
$23 mill (CBS)
Total => $28.5 mill
$290 mill/yr. (TNT)
$385 mill (ESPN/ABC)
Total => $776 mill.
2623%
Avg. salary as a %
of retail sales
0.57%
0.19%
-66.44%
Avg. salary as %
of T.V. contracts
0.88%
0.56%
-39.77%
Comments
The huge increases in sales, attendance
and TV contracts are evidence that the
NBA has yet to feel the dire financial
impact of negative fan perception. At
this point, the NBA can still salvage it’s
deteriorating brand image, as it is not
yet in true financial distress.
With the substantial increases in retail
sales, attendance, average player’s
salary, and TV contracts, the % changes
are most surprising. Given the amount
of revenue these players are bringing in,
this analysis shows that the players
have a right to feel they are not being
adequately compensated, given the
salary cap regulations.
Finding: Since the last union lockout had very negative effects on the league, the NBA needs to work with players to ensure this doesn’t
happen again, even if it means increasing their salaries or loosening the restrictions of the salary cap.
NBA Revenues and Expenses -2004
Revenues
Costs
Team gate
receipts
12%
TV contracts
42%
37%
63%
46%
other sources
(Sponsorships,
licensing
partnerships,
concessions,
preseason
promoter fees)
player salaries
operations,
promotions, arena
rentals, g&A
Finding: Player salaries are 63% of costs, while major revenue sources are TV and Gate receipts, signifying the financial
importance of a strong supportive fan base. Out of these revenues and costs, which ones are fixed and which are variable?
Can the NBA do anything to decrease the costs, while increasing revenues?
Analysis of Major Revenues/Expenses
% of total
Revenues /
Expenses
Controllable?
Explanation
Team Gate
Receipts
42%
Yes
Owners could increase gate receipts to get more revenue; however, fans already think
ticket prices are high. Would increasing prices help the NBA’s cause? If arenas are
already 90% full, they could also expand arena capacity to get more receipt revenue;
however, this may not be financially feasible. Another option to increase this revenue
would be to expand the league internationally. The NBA already has offices in several
countries overseas. Lastly, the league could expand the season with more games to
increase this revenue stream, but this will also increase expenses related to arena
rentals, arena operations, player salaries, etc.
TV contracts
46%
No, but can
influence
The NBA cannot directly control the revenue offered from TV contracts; however, if
they make their product more valuable to fans in the US and abroad, these TV
contract will become more valuable. If the TV ratings for the NBA are strong in the
US and in other countries, the revenue from the TV contracts will be much higher.
Player salaries
63%
Yes, but steep
price to pay
The NBA can cut the players salaries; however, with the players’ union, their hands
are tied so to speak. If they try to cut players salaries, another lockout could ensure,
which could be even more detrimental to the league’s reputation and fan perception.
Operations,
promotions,
arena rentals,
etc.
37%
Yes / No
The NBA can control the costs associated with operations and promotions. They
could try to cut costs associated with the league, but this will not help the fan
perception that has been waning as of recent years. The league cannot control the
cost of the arena rentals, and with these type of arenas being in short supply, this
would not a feasible way to cut costs.
REVENUES
COSTS
Finding: It seems that the only truly controllable revenue stream for the league at this point is the gate receipts. With fans perceiving
current ticket prices as being too high and the product as lacking in quality, will this really bring more fans to the games? It would be
cheaper for fans to go, but will they want to? Would international fans view the product differently than the fans in the US? TV contracts
represent the largest source of revenue, and it appears that the NBA could strategically increase this revenue stream by increasing the
quality of their product and continuing to broaden their fan base internationally. Common denominator to increase these revenues =
INCREASE THE QUALITY OF THE PRODUCT!
Significant League Events
Event
Effects
Comment
Players lost $500 million in salaries
1998
A dispute during the collective Teams/ owners suffered large financial
The lockout was a disaster to the league, the players
bargaining period over harder losses as a result of cutting the regular
and the fans. The NBA needs to ensure that another
salary caps resulted in the season from 82 to 50 games
lockout does not happen in the future.
longest NBA lock-out.
The league suffered considerable
financial losses and brand damage.
1998
A Sports Illustrated article
This began to erode the fan base, as the fans saw that
revealed significant number of
Tarnished player reputation, which hurt the players were immature and they were not
paternity suits and out-ofthe reputation of the league as a whole respectable people. This lowered the fans interest and
wedlock
births
among
enthusiasm in the league.
professional athletes
2001
The
National
Basketball
Development League became Opportunity to play in a minor league
the official training ground for they were not in the major league
staff, officials, and players
2003
The league finally realized that it needed to invest in
the development of the younger players. However,
if this league was not used as a true minor league for
development purposes, as it was seen as being just for
the players who were not good enough to play in the
NBA.
These players were already accustom to life on the
road, playing against grown men, and playing in front
Gave the league a larger pool of talent to
NBA draft set a new record with
of hostile crowds. Although most of them were
pull from. These players were more
20 international players drafted
unknown to American fans, they had very strong fan
mature/developed and did not much
in the first 2 rounds
bases in their home countries. American fans also
controversy among the league offices.
appreciated that they were more mature and clean
reputations.
Success Factor Evaluation
FACTOR
REALITY
What can be done?
Priority
Public perception
of our product
Player lockout, player indiscretions and
immature players have all aided in the negative
reputation of the league as it is in 2004. The
younger players also do not have an
established fan base from the collegiate level.
1
Image of players
on and off the
court
Many players are in conflict with other players
or coaches, or find themselves with legal
issues.
League needs to address this issue and prioritize
the development of its players. The focus of the
league should be to repair its image, and to
regain the faith lost by the fans. The NBA also
needs to evaluate the early entry candidates to
determine if this is still a viable strategy, and, if
so, how they can make it more effective.
Expertise of the
athletes
New players coming just out of high school
with less developed talents. Fans thinks this
has decreased the quality of the game.
Existence of
“Superstars”
No emerging superstars to replace the likes of
Michael Jordan, Larry Bird, or Magic Johnson.
Quality of the
games being
played on the
court
Fans want to see high scoring games, as they
see this as quality entertainment. As of 2004,
average scoring is down from its peak in 1999.
The low scoring could be due to several factors –
less offensively talented players or more
defensively talented players. If fans see the
players as being high quality, they may not be so
concerned with the actual score.
4
Level of
competition
between the
teams
No true competition like days past. No real
rivalries like the Celtics vs. Lakers. With more
players to pick from and with a higher talent
level than in years past, these players are more
dispersed, rather than being on just a few
select teams.
The NBA cannot directly affect this reality, but
they can begin to promoting this as a good thing.
This gives more fans the opportunity to have a
winning team, rather than the same teams being
good year after year.
3
If the NBA insists on continuing to recruit these
early entry candidates, they need to focus on
their development and make it priority, not just
see it as a nice gesture.
Finding: The NBA knows the Critical Factors they need possess to be successful. Currently, they are lacking strong success factors; however,
four of them have a very clear solution. The league needs to focus on these young players and their development in order to change the fan
perception of their players and the quality of the league.
NBA’s Present Stakeholder Dissatisfaction
• Unhappy with eroding
brand image
• Worried about
dissatisfaction of
players and how it may
negatively affect their
products
•
•
Players
Vendors
• Unhappy with eroding
brand image
• Worried about
dissatisfaction of players
and how it may
negatively affect their
performance
• Have a lot of money on
the line and frustrated
with the decrease in
attendance and
revenues
NBA
Want higher salaries
Veterans mad about
international players
and early entry
candidates taking away
from their
salaries/playing time
Fans
•
Owners
•
•
Dissatisfied with
player off-court
behavior
Don’t like rising
ticket costs
Can’t identify with
players
Finding: The NBA has multiple stakeholders, and in order for them to be successful again, we strongly recommend the NBA address each of
these stakeholders needs and ensure that they are satisfied. Their success will be the direct result of the satisfaction of these stakeholders.
Critical Issues facing the NBA in 2004
Issue
Possible Causes
Perception of Player
Dissatisfaction
•Union lockouts
•Harsh feelings between veteran players and new players
•Salary cap – Players think they should earn more, especially veterans
•American players may feel resentful toward international players
Decrease in Revenues /
Decrease in Attendance
•Decrease in long term loyal fan base
•Fans don’t identify with players anymore
Negative Brand Image
•Players off the court indiscretions very public
•Players seen as greedy for wanting more money, even though making a lot
•Lockouts prevent fans from watching the game and they become resentful
Negative impact of early
entry candidates
•Young players are immature and their skills are not as refined as more experienced
players
•The NBA has not invested in their personal and professional development
Decrease in Superstars
•Young players from high school who are not mature enough for the NBA
•Early entry players have not built up good fan base via a college basketball career
What specifically has led to the decrease in fan
base and overall popularity of the NBA?
Correlating Trends: What is the message?
9
8
7
6
Early entry
candidates (in tens)
5
4
Attendance (in
thousands)
3
TV ratings (Total
NBA)
2
1
0
1993
1996
2001
Finding: This graph proves that the NBA needs to focus on the largest revenue stream, which is TV contracts. If the TV
ratings are negatively impacted by early entry candidates, this could have a negative impact on TV contracts as well.
What does the NBA need to do to reverse the negative impact that early entry candidates have on overall fan
perception and, ultimately, TV ratings.
Fan survey-Negative Fan Perception
Survey question
Percent of interviewees who believe this is a
problem
Players’ off court behavior
50%
Overpaid players
48%
Ticket prices
30%
Lack of effort from players
28%
Lack of teamwork
28%
Questionable calls
26%
Poor league management
20%
Lack of importance of regular season
20%
Style of play
15%
Low scoring games
11%
Should the NBA draft high school players
Yes
Neither favor nor oppose
No
30%
17%
47%
Finding: Results from an ESPN fan survey shows the main reasons fans are dissatisfied is directly related to the
players themselves. By addressing these issues, the NBA may be able to rejuvenate their fan base, thereby
increasing attendance and revenues.
Destructive Cycle of the NBA
Higher regulation makes league
more competitive (salary caps,
media revenue evenly split).
Less revenues to spread to teams –
Org. has less revenue and tries to
implement more regulation to
control costs and increase ticket
prices
NBA
Teams cannot invest more money to
acquire
several
superstars,
therefore, they cannot maintain a
successful team year after year, so
there are LESS RIVALRIES
Players become unhappy
salaries – new CBAs, Lockouts
Decrease in attendance leads to
decrease in revenues
with
Fans see the unhappiness of players
and their off the court antics, and
public perception is that they are
greedy and immature, which leads
to less popularity
Finding: The NBA’s attempt to create a fair and balanced league has led to a litany of issues for them, ultimately
deteriorating their brand image and creating a substantial loss in their fan base, which has led to decreased revenues
and lower attendance. The NBA needs to focus less on creating a sense of equality among teams by implementing
salary cap and more on their players, which are the main product. The fans want to cheer for players they respect
and who they can related to, and they want to see games that include several superstars playing for both teams.
Strategically, what does the NBA need to
continue/change in the future in order to
regain the popularity it once enjoyed and
establish itself once again as a strong,
sustainable brand that is beneficial for all
stakeholders?
Directional Policy Matrix – NBA League in the US
NBA League Ops
NBA Entertainment
National Basketball
Development League
Finding: In investing more in the
NBA players and enhancing the fan
experience, our recommendations
will help to increase the NBA’s
competitive
capabilities
by
satisfying all stakeholders, which
will result in these divisions being
leaders in the industry.
Recommendations
Needs
Actions
Reasoning and Outcome
Priority
More mature /
respectable
players that
fans can
respect and
relate to
Force early entry
candidates to
develop
professionally and
personally by
requiring:
- college play
The players are the NBA’s most valuable asset, as the NBA players ARE THE
NBA’S PRODUCT. Fans come to games to see the players. They want to
cheer for players they respect, and want to see succeed. The NBA needs to
invest in these players, not only by fairly compensating, but also in their
personal development. There is no doubt that the dramatic increase in
early entry candidates has negatively affected the fan base.
- These players will develop their skills and establish a fan base. When they
enter the NBA, these fans will follow them.
- The NBA needs to use its development league more effectively to force
these young players to develop not only their basketball skills but also their
maturity level
1
- Work with the
players
in
a
positive way to
avoid
union
disputes
and
possible lockouts.
-The labor disputes and NBA lockouts had a negative impact on the fan
perception of the players and the league in general. The NBA needs to
forge a mutually beneficial relationship with the players in order to show
the fans that they are a stable organization, dedicated to providing fans
with the best product possible. When fans see the league and players are
unhappy, they become resentful and may abandon the NBA. By working
cooperatively, personal frustrations are reduced and off the court
indiscretions may be less as well.
2
- Train and develop
players early in
their careers to
deal with the fame
of NBA play
- Players need to be able to handle the pressures of immediate fame at an
early age. This doesn’t come naturally, so requiring this type of training and
counseling only makes for more mature players able to cope with the
pressures. Public media indiscretions can be handled better as well.
-minor league play
Positive brand
image
Recommendations – Players, Fans
Needs
Actions
Reasoning and Outcome
Priority
Increased
international
exposure
Capitalize on the
international
presence of current
NBA
offices
to
increase recruiting
international
players
If the NBA continues to recruit from international markets, this will have
several positive effects on the league:
- Larger pool of talent to pull from – increase the quality of play
- These international players will have solid fan bases in their respective
countries, which will increase global TV ratings, the value of TV contracts,
international merchandise sales, etc.
3
To connect
better with fans
Invest more in
mobile media and
telecommunications
In using its Entertainment division, the NBA should explore enhanced options
for keeping players better connected, both via traditional media (TV, radio),
as well as new mediums, such as interactive computer platforms and mobile
technology (phone text messages, etc.). This will help the die hard fans to
follow their favorite teams/players with more ease, as well as satisfying the
NBA’s other consumer segment with the enhanced entertainment value.
4
Players feeling
respected by
the league and
appropriately
compensated
Implement a policy
that compensates
players based on
the amount of
revenues they bring
in – retail sales, TV
contracts, etc.
Retail sales and TV contracts have increased by 4,786% and 2,623%
respectively, yet player salaries have only increased by 1,540%. The players
are the ones bringing in the revenues, therefore should be compensated as
such. If the players recognize they are being fairly compensated, and if they
know their salaries are partially determined by the league’s revenues, they
will be more motivated to give the fans a better experience. This will also
alleviate the risk for union disputes and lockouts, which will result in a more
positive brand image.
5