The Hornets won the lottery with the first pick. Now one of the most touted prospects will be going to a small market. Fans of parity and fairness in the NBA should be happy. The real question is if this is a good thing for the NBA. While there are many ways of the looking at the NBA, it is a business. One of the big reasons given for the lockout was lost revenues. While parity has never been shown to help league earnings in the NBA, we do know that fans pay for winning. There’s a problem though, markets do not have the same number of fans and so wins aren’t worth the same in all markets. Let’s actually use New Orleans as a prime example of revenue earning.
|Season||Gate Revenue||Other Revenue||Total Revenue||Revenue League Rank|
New Orleans had its best season in terms of league rank for revenue its very first season. This was similar to what was seen in the Wages of Wins in regards to new teams in Major League Baseball. However, after a few seasons of not performing well the Hornets saw a drop to the bottom of the league in revenue. They saw some upticks in revenue: when they temporarily moved to Oklahoma City; when they were a good team briefly; and when they were taken over by the NBA. What should be noted is that throughout their entire run they have always been in the bottom third of the league in terms of revenue ranking. Why is that? Well, New Orleans is small!
The New Orleans metropolitan area consists of seven eight (editor’s note: thanks Bill!) parishes. As we can see there hasn’t been growth, in large part due to Hurricane Katrina. What’s more New Orleans already has a popular football team as well. Even in the ideal circumstances New Orleans shouldn’t have an NBA team.
What if basketball just got more popular in New Orleans you ask? Well, the thing is that New Orleans apparently already loves basketball. Here’s another fun breakdown.
Top 10 franchises by Revenue per Fan (in dollars) for the 2010-2011 Season. (via Forbes)
|Franchise||Revenue per fan||Total Revenues Rank|
|Oklahoma City Thunder||$67||16|
|New Orleans Hornets||$53||20|
|San Antonio Spurs||$49||11|
|Portland Trail Blazers||$40||15|
The problem with New Orleans isn’t popularity. The New Orleans market seems to like basketball. The problem is the New Orleans market is small. In fact, of the markets that are most popular with the fans in their area, only two are also the top revenue getters for the NBA. Winning drives revenue in the NBA. The problem is that smaller markets only have so much to give. Even winning teams like Oklahoma City and San Antonio can’t crack the top ten. It should be noted that both of these markets are bigger than New Orleans!
The NBA has some big markets, where some atrocious basketball is being played. The New Jersey Nets, for instance, earn $5 per fan. If they could get a mere $1 dollar more per fan they would make as much as the Hornets would if the Hornets suddenly became as popular per fan as the Thunder. If the NBA is worried about revenue streams then we should ask why they are trusting blind luck to put money makers on poor teams in poor markets. I’m sure New Orleans fans, who already love basketball, are very happy about acquiring such a great player. The NBA shouldn’t be happy though and neither should the millions of fans in bigger markets.