While we often hear about teams tanking on purpose to miss the playoffs and get valuable draft picks, it’s not so common to hear about the incentives NBA officials have put in place for playoff-bound teams. It’s pretty straightforward: if a team makes it to the playoffs, they receive a significant portion of the ticket sales and television viewership generated.
Essentially, the more fans they can draw to their games and the more viewership they generate, the more money they make. So, how much do NBA teams earn in playoffs?
How Much Do NBA Players Make on Average?
For context, let’s figure out how much an NBA franchise has to spend each year. This information should offer us a better perspective on the importance of playoff revenues and bonuses.
On average, NBA players make $8.5 million annually. Franchises, therefore, have to pay an estimated average of $130 million for a 15-man roster.
So, as you’d expect, NBA teams run a tight ship and look for every opportunity to either earn more money or save a little bit of what they earn so they can afford to bring in quality players that can help them win championships.
Do NBA Teams Get Money for Making the Playoffs?
With keeping a competitive 15-man roster intact being as expensive as it is, the NBA has instituted playoff incentives designed to help teams sustain their roster. The NBA playoff revenue sharing program gives teams a bigger slice of the pie in terms of overall ticket sales, TV revenue, and other income-generating opportunities.
For starters, each playoff team in the 2023 playoffs was guaranteed $402,479 just for making the playoffs. Conference leaders are also given extra incentives depending on their rankings. The breakdown is as follows:
|Team with the best record overall||$777,840|
|Teams with the best record in their conference||$1,361,206 ($680,603 each)|
|Teams with the second-best record in their conference||$1,094,078 ($547,039 each)|
|Teams with the third-best record in their conference||$816,729 ($408,364 each)|
|Teams with the fourth-best record in their conference||$641,862 ($320,931 each)|
|Teams with the fifth-best record in the conference||$534,822 ($267,411 each)|
|Teams with the sixth-best record in the conference||$364,782 ($182,391 each)|
|All teams with clinched playoff spots||$6,439,658 ($402,479 each)|
How Much Money Do NBA Teams Make in the Playoffs?
The NBA has instituted a Playoff Bonus Pool for NBA teams who have made it to the playoffs. Teams get more of the pie as they advance in the postseason.
Here’s a breakdown of the estimated amount of money each team made in the postseason during the 2023 season, according to the sports website Marca:
|Conference Semifinalists||$3,831,216 ($478,902 each)|
|Conference Finalists||$3,165,594 ($791,398 each)|
The Nuggets, therefore, earned almost $8 million when they won it all in the postseason.
What Factors Influence Team Revenues?
An NBA franchise is a complex business. And like most businesses, its revenues depend on several controllable and uncontrollable variables. It also depends on how well it manages its expenses and whether it can keep its operation sustainable.
So, if you’ve ever asked yourself how do NBA teams make money, here’s a quick breakdown of the major factors that affect revenues:
Advertising Revenue and Television Contracts
The prevalence of NBA games on both local and international broadcasts yields lucrative contracts with various television networks and digital platforms. These contracts represent a substantial portion of the NBA’s overall earnings. For instance, a nine-year, $24 billion contract with ESPN and TNT increased the league’s annual revenue from $930 million to about $2.6 billion.
Besides straightforward contract profits, these broadcasting agreements also serve as platforms for advertising revenues. Advertisers are willing to invest substantial sums due to the wide viewership of NBA games. Prominent advertisers involved in the 2021-22 NBA season, such as State Farm and AT&T, contributed around $40.9 million and $39.6 million respectively, contributing to the $1.3 billion in ad revenue booked by NBA’s TV partners.
Ticket Sales and Attendance
Ticket sales represent a big portion of an NBA team’s revenue. And during the playoffs, ticket demand surges astronomically as fans are eager to watch their teams compete on the league’s biggest stage.
The heightened demand and the limited supply of stadium seats trigger a price surge that fans are only too eager to pay. In the Finals, courtside seats can even rise by up to 1366.67%.
Merchandising and Licensing
In the playoffs, fans are more likely to spend on merchandise to show support for their hometown team than they are during the regular season. The NBA’s licensing program has been a success, with sales more than doubling in the last decade. It has even become one of the league’s most profitable assets. All told, licensed merchandise generates more than $3 billion annually for the NBA.
Naming rights to an arena can have a substantial impact on an NBA team’s revenue. By selling the right to associate a corporate sponsor with their arena, teams can generate millions of dollars annually. For example, Houston reportedly receives annual naming rights revenue of $4.75 million from Toyota through 2023.
These agreements provide franchises with a consistent income source, and the funds can be used to support team operations, player salaries, and other expenses. Securing a naming rights deal can be particularly valuable, as it can last for several years and represent a significant revenue stream.
Player Performance and Salaries
The salaries of players and their on-court performance can also influence a team’s revenue. High-performing players attract more fans, potentially improving the team’s performance in the factors mentioned above.
Do NBA Teams Get Paid More for Playoffs?
While there are some competitive games in the regular season, the playoffs is where the real action happens. For instance, eighth-seed teams have come out with an upset win against the first-seed on four different occasions. The most recent occurrence happened just a couple of months ago when the Miami Heat beat the Milwaukee Bucks. These exciting matchups are crucial to drawing in more fans to games.
With the level of competition rising in the postseason, more and more fans come flocking into the stadiums and tuning in to games on the television. Subscriptions for live streaming also experience a massive boost during this period. As such, revenues for both the organization and the playoff-bound franchises also experience a significant increase.
During the playoffs, NBA teams typically earn income from the additional ticket sales and TV revenue. In a lot of cases, just these two factors can already increase a team’s per-game earnings by about 40% – 50% or about $5 – $6 million per playoff game as opposed to a regular season matchup, according to the Sports Business Journal.
Teams who play a lot of postseason games can typically make up to $140 million – an amount that can cover roster salaries for the entire season. One of the most recent examples of this that we could get our hands on was the 2018-2019 season, which saw the Golden State Warriors come out on top after beating the Toronto Raptors in six games. This victory earned them an estimated $4 million per game in revenue from ticket sales alone during the series.
A franchise’s merchandise and licensing operations also experience a significant boost during the playoffs as fans are eager to show their love for the team by purchasing team-branded apparel and accessories.
As it is with ticket prices, the sudden demand for merchandise also triggers a price surge, with some items going for 75% more than they usually sell for during the playoffs. This is a major opportunity for teams and their merchandise partners as they can increase their profit margins by selling the same items at a higher price.
Wrapping Things Up: How Much Do NBA Teams Earn in Playoffs?
NBA franchises, first and foremost, are businesses. They exist to make money, and the playoffs is one of the most opportune times to do so with the fanfare and excitement that comes with the postseason.
And with roster salaries that often go above $130 million per year plus other league-sanctioned luxury taxes, teams must do everything in its power to make the right financial decision, whether this means acquiring a superstar talent or trading a massive contract just to make the playoffs.
Fortunately, the league has smart incentives in place to make reaching the playoffs a worthwhile goal for NBA teams. Just the $30 million Playoff Bonus Pool alone is already a huge deal for some teams.
And with fans willing to pay up to ten times more than regular season ticket prices for a chance to see their hometown teams raise the Larry O’Brien trophy, it’s no surprise that teams are willing to spend so much money to get there. In addition, the NBA playoff revenue sharing program also increases each team’s share in these line items, which means this price surge often translates to hundreds of millions of dollars in revenue. In some cases, the additional cash flow from the playoff appearances can help teams pay for the massive roster salaries that come with the pursuit of the NBA championship.
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