How the NBA is Cashing In on Its Biggest Postseason in Decades

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1:07JPMorgan Chase and Company. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Bloomberg Audio Studios. Podcasts. Radio. News. Guys, what an insane week for the NBA.

1:52Thank you both for being here. Thank you for having me. Best week ever. Best week ever. Best week ever. You just won the NBA finals for the first time in 50 years. These fans have been waiting decades. Your NBA champions, your New York City Knicks, are making their way through the parade route. Go New York! Go New York! Go! I'm not hype! The Knicks hit different in New York. I think you saw it just as a resident of the city. There is no team that galvanizes New York and the culture. Jason Kelly is the host of Bloomberg's The Deal with Alex Rodriguez and Jason Kelly. You had a team of destiny in the Knicks, maybe one of the biggest stars we'll ever see, assuming he stays healthy, in Wembenyama, a global superstar.

2:35It was everything the NBA wanted, and it's going to be hard to top. I'd seen New York City erupt with joy after the New York Knicks beat the San Antonio Spurs to take the NBA championship Saturday night after a 53-year drought. You know, the ratings showed that, you know, through the first four games, double last year's viewership, the biggest viewership, I think, since 1998. I'm hard-pressed to think about a finals that could have been any better for business. The only thing that could have been better for the NBA is if this series ended at Madison Square Garden or it ended in seven games. That's Randall Williams, a co-host of Bloomberg's Business of Sports podcast.

3:15The seven game series is always going to do better. Yeah. But at the same time, I want to say game one and game two and all of these games were probably watched more than game seven of last year. That is ridiculous. Yeah. I mean, I watched all the games and I'm not like a huge basketball fan. You're one of millions of viewers. I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, who's making money off the record-breaking NBA finals? And what it all means for fans, teams, and the league as it considers expansion.

3:58There was a lot of money at play in this series, as we've already alluded to, starting with ticket prices, especially for Knicks games. We're talking$10 ,000 for Nosebleed, Six Figures for Courtside, Timothee Chalamet, Heim Sisters. I'm not going to ask why these tickets are so expensive. I think that might be a little self-evident. But where is that money going? How much is going to Jim Dolan and MSG? Oh, James Dolan. What a complicated figure on the New York scene and across the broader sports team. MSG, of course, is Madison Square Garden. James Dolan controls Madison Square Garden Sports Entertainment, which owns the venue, and Madison Square Garden Sports, which owns the Knicks team.

4:44You know, a lot of the money is going to MSG, for sure. You know, a lot of money is going into the pockets of long-suffering season ticket holders for the Knicks or the Spurs. The Spurs, despite probably being very grumpy about it, made a lot of money off of New Yorkers who were trying to buy tickets. As you saw on the broadcast, there were plenty of Knicks fans at Game 5 and Game 1 and 2. Yeah, totally. And the economics, which I'm sure you've heard about, Sarah, were such that it was substantially less expensive for people to buy a plane ticket, get a hotel room, and still get tickets to a Spurs game than it was to get into Madison Square Garden.

5:24We've talked to the head of the New York City Economic Development Corporation who talked about hundreds of millions of dollars, probably upwards of half a billion dollars, maybe more, that are marginally going into the New York City economy. And that's just from, you know, bars who probably made their budget for the year serving thirsty and excited Knicks fans all across the five boroughs. Yeah, not an empty bar to be seen. Any of those nights. Yeah, yeah. Nowhere.

5:59What about in San Antonio? Was there that level of economic stimulus there? Definitely. I think so, too. But they had three games and New York had two. And so when you think about that impact, yes, New Yorkers filled up San Antonio's arena. But at the same time, they were eating at these restaurants. They were filling up these hotel rooms. They were walking all around the city spending money. And that means money for San Antonio. Now, if you ask San Antonio what was the best case scenario, of course they would have won at a game seven, not just so that they had an opportunity to win because it would have brought more money to the economy.

6:31James Dolan will tell you, I just want to win a championship. But in all reality, here in New York, a game six in which the Knicks would have won in six would have been insane in the city. And that's what I was rooting for, selfishly, because I think that would have been the best story. However, the Knicks getting revenge on the Spurs, winning in five games the same way that the Spurs beat them in 1999, that's not so bad either. So in terms of how the players end up profiting, Sportico reported that teams who made the playoffs will get roughly$36 million in bonuses total. The Knicks players will split roughly$9 million of that for coming in first, and the Spurs will split about$4 million.

7:11Randall, walk us through how the teams make money here. The more games that a team has, the more money that a team will make. Unlike the NFL, where the Super Bowl is hosted by the NFL. So, for example, San Francisco, they've reached a deal to host Super Bowl 60. They hosted it, but they don't see any money from it. All that money goes straight to the NFL. In the NBA finals, the more games you host, the more money you make. So that's why my argument is that game six at MSG would have been insane. But it didn't happen. So how meaningful is that misrevenue for the NBA and for television partners?

7:44Uh, television partners are fine because the games were very, very good. There were no blowouts. So if you're a viewer and you were watching and I was at game four, which was the largest comeback in NBA Finals history, there was reason to turn off the game. And then there wasn't. And fans and bandwagoners alike kept watching. 24.5 million people tuned into game five. By around 11.15, right as the Knicks were about to clinch their playoff win, that number surged to 33 million. To find a series with more viewers, you'd have to go back to when Michael Jordan's Chicago Bulls beat the Utah Jazz for its second three-peat in 1998, Jordan's last season with coach Phil Jackson.

8:26A few years ago, the NBA signed this 11-year media rights deal with Disney, Amazon, and NBC's parent company Comcast. It's expected to generate$76 billion in fees for the league. What has that meant for viewership? Does that have anything to do with the record viewership we were seeing this year? Or is it, I mean, just amazing basketball? The NBA has a knack for incredible storylines. You were introduced this season to these new superstars in a really meaningful way. And, you know, one of the really interesting things going forward, and we've talked about this a little bit, is the Wemby storyline.

9:02He's a little bit of a villain now. That's actually kind of a great storyline for the NBA. You have Jalen Brunson, this like ultimate underdog who's been like doubted at every single level and also has won a championship at every single level, you know, putting him in the company of people like Kareem, you know, winning at high school, college and the professional level. And so that's good for everybody's business. And so if you're the media rights holders for the NBA, you're probably, I think right now saying, yep, it worth every penny. There was a lot of conversation about who was watching and when could you watch.

9:39That is still an adjustment for a lot of fans because there are subscriptions that you need. However, viewership was high. And so from that aspect, if you're the league, that's a problem that you can fix over time. And the NBA also cleaned up on merch this series. The league said that the 2026 finals overall set new league records for merchandise sales, doubling the previous record from 2020. And on the big sports retailer Fanatics, the Knicks set an all-time merchandise record in the 24 hours after their victory. The most for any championship team in any sport. The Knicks, because of the fan base that we've been talking about, it's a national, certainly maybe a global fan base.

10:22You couldn't get a real, you know, licensed piece of merchandise anywhere, basically. I mean, like my eight-year-old daughter was wearing a Go New York, Go New York Knicks shirt that my wife literally had to make her because we couldn't buy one anywhere. And one more thing I'd add is that this conversation really matters to the NBA because of the fact that months ago there was a debate about who was the number two league in America, Major League Baseball or the NBA. And Major League Baseball has been scorching hot. You think about the World Series two years ago between the Yankees and the Dodgers.

10:59You think about the World Series last year between the Dodgers and the Blue Jays, just three Titan organizations in which the ratings were crazy across the world. And now the NBA has the Knicks on a 50 year drought. You have Wemby, a seven foot four behemoth. And those two things, an underdog in Jalen Brunson versus the Titan in Wemby, the New York market, number one media market versus San Antonio, a franchise that has won many championships. Those things really, really matter. And the NBA won this year.

11:34After the break, where does the NBA go from here? Why expansion might or might not be a slam dunk.

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14:05I want to talk a little bit more about Jalen Brunson, NBA Finals MVP, captain of the Knicks. famously, to Knicks fans at least, he signed this team-friendly contract in 2024. The team would have paid more than$100 million extra to keep him if he'd waited till he was a free agent to re-sign. And those savings have been credited by some with helping the Knicks build out the team with players that ended up being so critical to the win in the championship. How much did it help the Knicks? You know, for Jalen Brunson, and this is something that, you know, we talk about a lot on our show, the deal that I host with Alex Rodriguez, is it's one thing to play in New York and to be a professional athlete, but there's a whole other thing if you are a professional athlete in New York who won a championship, and that's Jalen Rudson now.

14:52He has elevated his brand. He has elevated his business opportunities in an exponential way that probably will make that lost, quote unquote, hundred plus million dollars look like a very, very good investment over the next 10, 20 years for him. So the question to me in regards to Jalen Brunson is not about how much money he will make after sacrificing$100 million. He's going to make a ton. It's about which brands are willing to pay him. What's interesting about him is that he does not have a signature shoe with Nike. Does Nike decide to give, I believe he's 28 or 29 years old. It takes about 18 to 24 months to develop a shoe by the time his shoe would come out.

15:32He would be either 30 or 31. and on the tail end of his career, is that a risk that's worth it to Nike? Now, there are plenty of businesses in New York that Jalen Brunson could be a part of. You think of the largest sports sponsors, insurance companies. I mean, you think of Progressive. You think of State Farm with Patrick Mahomes. He will have no shortage of options. And so for him, the$100 million is going to be worth it, especially if he can do it again. Well, I want to ask about what's next for the NBA. The Board of Governors is actively exploring expansion franchises in Seattle and Las Vegas.

16:10What incentive does the league have in keeping smaller markets engaged versus just like building on the teams that are already dominant? Well, I think that the way in which the league has changed rules around the cap system so that it makes it tougher to keep all the players that you draft because of the salary cap. You'll have to pay penalties if you exceed a certain mark by paying players. With that in mind, it does two things. It makes it difficult for teams to keep their core together. And it also gives smaller market teams who may not draft well or put teams together. It gives them an opportunity to sign players.

16:45And so if you are one of these smaller time owners who has not been to the playoffs, who has not made a championship, but the media rights deals keep going up. Why would you bother competing in this the same way that some of the higher or bigger market teams can? The MLB is dealing with this crisis right now where you have teams who are just OK with not winning because they're making money. And the NBA is trying to avoid that by incentivizing teams to win. And so you've had, I believe it's eight different champions in the last eight years. There are some people who are happy with that. There are some people who are not.

17:20But the reality is it's good for fan bases. For fan bases to feel like they have a chance, it will drive people to arenas and it will drive people to their screens to watch. You know, when we talk about expansion, you know, one of the great potential storylines that comes with expansion is the return of the Supersonics to Seattle. They're likely to get one of the expansion teams. Vegas is likely to get the other. There is a fan base in Seattle that is... Rabid. Hungry. They're ready. It does not describe it. They're ready for their moment. They are ready. to Randall's point, if you can build these fan bases in different markets across the country, that is good for the game.

17:58And that, again, accrues to the valuations, not just to the teams, but also to the media deals going forward. Well, I want to talk about the Knicks valuation, because Sportico had the Knicks valued at$9.8 billion headed into the Eastern Conference finals. Does this championship change that? Championships mean a lot to teams. They don't add a lot of incremental value to a valuation. Now, for the Knicks in particular, and for all NBA teams, and I believe MLB teams as well, the more games you play at home, the more revenue, but it's not going to increase you from$9.8 billion to$10.5 or something along those lines.

18:33It'll be interesting to see if this finals, this playoff run, the Knicks storyline, the sort of revelation of Wembenyama has sort of a rising tide effect on all NBA valuations. You know, it helps justify this media rights deal. That's a big underpinning for valuations in any major sport. You know, we're on the verge of likely expansion in the NBA. So you do wonder if it has an incremental sort of broad effect on investors and ownership groups who are looking at the NBA, you know, being more confident to pay more as the next few years go on. And I got to bring it back to the Knicks and James Dolan.

19:15Right now, investors can own a piece of the franchise through Dolan's MSG Sports, but he's reportedly considering spinning off the Knicks into its own entity. Broadly speaking, Jason, what would that mean for the team and for investors and for fans? It is one of the very few situations where a public shareholder can own a piece to the team. To me, the most interesting thing would be if it was an entity in and of itself, you would have a maybe a cleaner and clearer proxy for what these teams are actually worth. Because right now a team is worth whatever someone is willing to pay for it. The mechanism by which they would do it would be fascinating, but the transparency with which we could actually see what these teams, what these businesses are worth under real financial analysis and a real look at the book, it would be super interesting to me at least.

20:15It's a once-in-a-lifetime moment for a lot of people in New York, and we've never seen anything like this. You know, we do this for a living. You know, we've had the benefit of going to a lot of championships, a lot of important games, been around a lot of fans. And there's nothing like the New York Knicks winning a championship. And from a business perspective, it's one of the most fascinating stories I think we've covered in a long time. And I just say that if you hate the Knicks, things are going to get a lot worse over the next year or so because they're the reigning champions and they can tell you that for another 365 days.

20:49So good luck. It's electric. Thank you guys so much.

20:57This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. Thanks for listening. We'll be back tomorrow.

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