9 Businesses Most Hurt by the NBA Lockout
Zen College Life
As the NBA’s billionaires and millionaires haggle over a new Collective Bargaining Agreement, the ongoing association stoppage is penalizing hardworking folks who depend on the league to keep their businesses afloat.
The cancellation of the first two weeks of the season — note that the entire first month has now been canceled — resulted in the cutting of 100 games and thus a loss of $83 million in tickets sales, according to NBA.com. That’s just scratching the surface of the fallout suffered by workers in a multitude of industries, which will only hurt more as the lockout continues. These businesses stand to lose the most in the following weeks — unless, of course, a deal is struck.
No games means no programming for the league’s television partners. After a season in which ESPN/ABC and TNT enjoyed record ratings, the networks could suffer a loss of $1.25 billion if the entire season in canceled, according to AdWeek. Additionally, regional sports networks that carry the games of local teams will be forced to endure big losses, which aren’t as easy for them to make up. Following the 1999 lockout, ratings fell dramatically, destroying momentum from a highly successful and entertaining 1997-98 season. Some forecasters expect the something similar to happen in 2012 (or whenever the season starts).
Companies that sponsor the league have been forced to find new outlets with which to conduct business, changing their strategies indefinitely until the lockout is resolved. For example, last year, BBVA Group committed $100 million over four years to the league. Now, its new partnership may be a bit less valuable, as the league’s popularity could diminish with a prolonged work stoppage. Advertisers such as Bacardi, which targets the NBA’s young male audience, have had to find alternative programming with the same reach.
From Reebok Pumps to Air Jordans, the NBA has been responsible for ushering billions of dollars into the shoe industry. Naturally, basketball fans love good sneakers, which is why the loss of the 2011-12 NBA season could result in $500 million in losses for the industry, according to NPD Group. Adidas would suffer the most, possibly losing half of its sales from NBA licensed merchandise. When the shoes are out of site, they’re out of mind. Fans who typically see them during the games or in ads during the games will miss out, and be less likely to frequent stores such as Foot Locker.
Sales of apparel have undoubtedly taken a hit. The Oregonian reported that the league could expect a 50 percent reduction in sales of paraphernalia such as jerseys, harming the aforementioned Adidas, the league’s official apparel provider, the most. While major companies like Adidas will survive the fallout, the mom and pop businesses that depend on day-to-day sales will struggle to make up for the lack of interest in all-things NBA.
The memorable 2010-11 NBA season also benefited video game makers such as Take-Two, creator of NBA 2K12, which sold 5.5 million copies. In August, gamespot.com reported that sales for the game are projected to fall by one million units if the season is cancelled, reducing the company’s earnings by $40 million. With a stale, nonexistent offseason, Take-Two attempted to maintain interest in its game by introducing NBA’s Greatest mode. All-time greats such as Magic Johnson, Larry Bird, and Michael Jordan will be featured, focusing on the league’s rich history instead of the here and now.
Without NBA basketball, sites that host fantasy basketball leagues and provide fantasy basketball-related content simply can’t offer a service. As a whole, the fantasy sports industry generates billions of dollars in revenue each year, with fantasy football being the most popular. Fantasy basketball bridges the gap between the NFL season and MLB season, a period in which sites such as Yahoo could use the extra traffic (those sites do just fine without the NBA during the fall, when the NFL is going strong).
Perhaps most distressed about the lockout are local pub and restaurant owners and employees who depend on the revenue they earn from fans who either watch the games at their establishments, or visit them after attending the games. This is especially the case in towns like Portland, Salt Lake City, and Orlando, where the NBA is the only professional sport in town, meaning there isn’t a hardcore following of a local NFL or MLB team to pick up the slack.
It’s on a much smaller scale than, say, the millions of dollars lost by the NBA’s television partners, but the money earned by the vendors and concessionaires during games constitutes a large source of their incomes, forcing many of them to have to find other jobs — which obviously aren’t easy find, especially ones that offer the same income — to make up for it. Meanwhile, Kobe Bryant reportedly lost up to $1.9 million during the cancellation of the first two weeks of the season — an enormous total, but just a fraction of his current $83.546 contract (which excludes endorsements).
You can’t sell tickets when there aren’t any games to attend. The $1 billion in losses that would come with a canceled season, according to Bloomberg News, is significantly impacted by lost ticket sales. During the shortened 1999 NBA season, NBA attendance dropped by 2.2 percent from 1997-98 and remained below the 17,000 per game benchmark for the next few seasons. Ticket holders of the canceled games were refunded the price of their tickets, and brokers had nothing to show for it.