Photo credit: Carlo Allegri / AFP / Getty
As the NBA continues to expand its global reach, raise its brand awareness, and improve its overall product, it has found itself saddled with a really good problem: there is too much opportunity on its hands.
As its global growth expands and a brand that continues to reach the younger demographic on a higher level than other leagues, it is likely that the NBA could soon become the leader of global sports and the model guideline for how to grow the game.
It hasn’t all been rosy. Coming out of the COVID-19 pandemic, the league is more than likely going to post two consecutive years of financial losses.
Priority number one for the NBA right now should to create a cash infusion that can repair much of the damage the pandemic has done to teams in all markets.
The best way to generate cash as quickly as possible is by way of team expansion. It should also be the league’s first and foremost priority after ensuring that fans can return to seats, the COVID-19 pandemic dies down, and the NBA can return to its normal, safe operations.
The level of basketball talent globally has never been higher, and the NBA continues to expand into new parts of the world – most recently, the Basketball Africa League had its inaugural season – but it feels as though it’s time for the league to circle back to local expansion. Adam Silver has always placed an emphasis on moving the overall product forward, but when there is a chance to grow the game domestically, the NBA will always pounce on the opportunity.
Today, we’re going to look at the pros and cons and ultimately make a pitch for what a potential league expansion should look like.
Pros and Cons of Expansion
While the benefits generally far outweigh the drawbacks when it comes to league expansion, it doesn’t come without its own set of obstacles to overcome.
Benefit: Opening New Revenue Streams
The whole purpose of why the NBA would expand into new cities is, of course, to make money! By tapping into new markets, they can create a whole new slew of avenues to generate sales league wide.
For starters, the league instantly generates money from the expansion fee for all teams. There is also a big fee for selling the local television rights deals. Then, you have ticket sales, in-arena sales, merchandise, sponsorships, and a whole other slew of money makers at your disposal. It’s instant money, and if executed properly, it almost always winds up being a profitable endeavor.
Expansion is the way for the league to continually find long-term growth, particularly within North America. Foraying new markets adds millions in market share and positions the NBA that much better to be the long-term leader of sports, and it will be the reason they stay in that spot.
One key challenge is, of course, the uncertainty of a new business venture. Similar to a startup, it is very cost-intensive at the beginning, and when introducing something new to a market, the product has to capture an audience or risk flaming out.
Canadian basketball fans witnessed this firsthand with the Vancouver Grizzlies. When the NBA expanded into Canada for the first time in 1995, it faced a major barrier of trying to capture a country fixated on hockey and baseball. While the Toronto Raptors were able to find staying power within their city thanks to an exciting young core of players, the Grizzlies had little team success on the court, and this led to ownership hesitating on its commitment to the Vancouver market. The team was quickly sold off and relocated within five years.
The key here for the NBA will be to not get too experimental, and to locate the right markets that currently have an existing appetite for NBA basketball. Vancouver shouldn’t even be ruled out of the expansion talks either, despite what happened 25 years ago. The game of basketball has grown exponentially in Canada, and there is a very real market that if the NBA were to ever give it a retry, they would likely be able to sustain themselves this time around by using their past learning to fuel success.
Benefit: Job Creation for Staff and Players
Running an NBA team is an intricate process, and it requires a lot of human capital to make it work. From the front office, to the coaches, to the players, and arena staff, each individual basketball team alone employs several hundred people. By extension, several business that are tied to the league (sports bars, licensed apparel retailers, broadcasting and reporting, etc.) would put that job creation number upwards of one thousand per team.
Not to mention, fifteen additional roster spots are created with each new NBA team; in a league where the player talent is at an all-time high, we will see players that are deserving of roster spots in the league.
The circulation of job creation winds up creating more value around the league and sport industry itself, which can only be a positive thing for Adam Silver. The idea is to make the league as valuable as possible, and ensure it continues to grow sustainably. NBA expansion makes that possible.
Challenge: Convincing NBA Owners To Give Away Revenue Shares
The second major caveat is each team’s share of money being diluted; this makes owners a little less happy about having to share the wealth with each other. As mentioned earlier, because the NBA operates on a revenue-sharing program, splitting money across 31 or 32 teams means less for everyone overall.
That being said, if the league continues on its growth trajectory, the overall pool of money will continue to grow as well, rendering this point moot in the long run.
Overall, there are plenty of reasons to like the idea of expansion, and for what the NBA is trying to accomplish, it simply makes sense. The benefits outweigh the risks, and with the league on the precipice of overtaking the top spot as the world’s biggest sports league, it makes sense for the NBA to go in on expansion plans within the next two to three years.
The Proposal for a Two-Team Expansion
All things considered, it’s time to officially propose a two-team expansion for the NBA to take place within the next three to five years.
This will take the league up to 32 teams. I selected two markets that already have a proven sports market, have both the logistical and financial means to secure an NBA team, and have already forged close partnerships with the league. It also allows the league to pull it off without needing to change the playoff format, or having to make too many drastic changes logistically.
Without further ado, the fully fleshed out plan is here:
Expansion Team #1: The Long-Awaited Return of the Seattle Supersonics
It’s a pretty neat photoshop of what a star NBA player would look like in a Seattle jersey, right?
All jokes aside, Seattle is always going to be the absolute top priority when expansion talks come up, rightfully so. The Seattle Supersonics were a storied franchise dear to the NBA’s heart before they were cruelly ripped away from the city in 2008. The team won an NBA championship in 1979, and made the Finals in 1996.
Since the departure of the Sonics, the city of Seattle has been yearning for an NBA team to return, and they finally have the means to do so. The city just recently finished its rebuilding of the Climate Pledge Arena, which was repurposed to host their newest sports team, the NHL’s Kraken – an expansion team beginning play in the 2021-22 season.
Equipped with a brand new venue to bring fans to, a city starved of basketball for the last decade, and longtime roots to the NBA, Seattle is practically a perfect fit to add an NBA team. Add to the fact that branding wouldn’t be an issue due to having already established a presence within the city, it makes the expansion simpler and the story for the NBA a whole lot more compelling.
Expansion Team #2: Las Vegas Rolls the Dice
Las Vegas is the life of the party. It also happens to be home to one of the biggest sport industries in the world. They are a logical choice for the second expansion franchise.
The city has always had one of the strongest tourism presences in North America, and is home to many of the United States’ gambling bureaus. In Vegas, the show never seems to end, and adding an NBA team to the mix is the perfect way to build a fanbase, but also provide another avenue for entertainment and large-scale productions.
This isn’t to say that a Vegas NBA team would be purely for show, or that none of their fans would actually be from the state of Nevada. It’s quite the opposite, actually; the allure of having a team right within the heart of downtown holds plenty of appeal, and it should allow them to become an instant success within the league.
Las Vegas has only recently forayed into sports teams, but they have been a smashing success to date. The NHL’s Golden Knights were founded in 2017, yet they are already the league’s 13th-most valuable franchise, based on Forbes’ most recent valuation. The Raiders, who recently moved from Vegas to Oakland, should play in front of fans for the first time in September at Allegiant Stadium.
As far as naming and branding go, there are plenty of ways to go for a Vegas team. The easy way to go is to stick with the theme of their bright entertainment district, considering they already have three fantastic team brands within this: the Golden Knights (NHL), Aces (WNBA), and Lights (soccer club). Still, there are some still on the table they could work with, such as the Sharks or the High Rollers.
Since Nevada is mostly a desert territory, they could play into that and go with the Vegas Vipers, or perhaps the Scorpions. There is plenty to choose from, but knowing how robust of a sports complex Las Vegas has, it would be a big draw to the betting industry and likely become a high moneymaking entity for the NBA quickly.
Moving a Team to the Eastern Conference
Since both Seattle and Las Vegas are in the western region of the United States, they would both be put in the Western Conference. Seattle would return to the Northwest Division, while Las Vegas would join the likes of the Californian teams in the Pacific Division. This would leave an imbalance of 17 teams in the West, and only 15 teams in the East.
In order to balance this number, one team will have to move from the Western Conference to the East. Based on a map of the United States, the choice will be to move the team that is the “most” eastern.
As such, the choice to make the move to the Eastern Conference would be the Memphis Grizzlies.
The Grizzlies are, by location, much closer to the East teams than the West anyhow, which makes them a perfectly suitable choice to shift conferences.
The Grizzlies would likely join the Hornets, Magic, Heat, and Hawks in the Southeast Division, as they are much closer geographically than all the teams in the Central Division, despite being much closer to the center.
The time for the NBA to consider their domestic expansion is now. With the state the league is currently in, it makes sense not only to bring a large cash infusion to existing teams that badly need it, but it also serves as an opportunity to grow the game on an even bigger scale.
In need of money, it will certainly be interesting to see what the NBA does over the next couple of years. If we can be sure about one thing, they will do everything in their power to constantly grow the game until the NBA becomes the top sports league worldwide.
Even then, they probably won’t stop there.