Contending for a Championship: the Business Side of it

[Barnabas]

Ok, we know that teams who make it deep into the playoffs make a lot of money from Tv, right?  So, what else are the financial benefits to a team that does well?  Do the better teams make more money than teams who are not so good?  Will the Celtics be a lot "richer" if they win the Championship?  We know the Lakers make a lot of money and their admission is quite high to begin with.  Will winning the championship allow a team to raise their ticket prices and still keep attendance high?

Are there some teams, because of their market situation, who are better off by keeping their payroll low, even though that will keep them at a mediocre level?  I understand that a high payroll will not necessarily result in a good team.  Likewise, a low payroll will not necessarily prevent a team from doing fairly well.  I just want your opinion.

[Roy Hobbs]

I'm actually not sure; do teams that play in the Finals get a bigger chunk of the television pie?  I always assumed not.

Areas where I expect the Celtics to make money:

* Ticket revenue for the playoff games
* Increased ticket prices next year
* Increased sponsor fees next year
* Television revenue on their local television deal, depending upon when it can be negotiated
* On-site merchandise sales (I believe teams get the profits from these)
* Increase in franchise valuation
* Increase in shared revenue if the NBA is more successful as a whole

One area where the Celtics *don't* make revenue where other teams might is on parking and concessions.  They don't own the Garden, and from what I understand, they don't get a cut in concessions revenue.  Also, I believe the team only gets a part of premium ticket sales (luxury boxes, etc.) and on-site merchandise sales.

[johnnymost]

The Celtics organization needs it. We have been successful telling him where to spend his money , now would be a good time for him to maybe get some back.

[Roy Hobbs]

The Celtics organization needs it. We have been successful telling him where to spend his money , now would be a good time for him to maybe get some back.

Yep.  This is why Wyc and Co. invested the money in the first place, and if they increase ticket prices (slightly) I don't begrudge them in the least.

[Barnabas]

"* Television revenue on their local television deal, depending upon when it can be negotiated"

What do you mean, Roy?  By local, are these stations catering primarily to their city?  I live nearest Atlanta, so I'm comparing it to the local stations that broadcast Hawks games.  I'm guessing that there's not a lot of revenue in this, right?  Or am I wrong in this assumption. 

[Barnabas]

The Pau Gasol-Kwame Brown trade got me thinking about the money side of the sport.  I've read over the years that the Clippers, for example, are happy not to contend for a championship as long as they're making mega profit.  The Knicks, who one could presume to have the highest revenue of the teams, certainly has the money to spend.  But so far, they've not had much luck during the last couple of decades.

[Brendan]

Comcast Sports Network and WEEI own the broadcast rights to the Celtics.

My belief is that for a successful franchise in a big market - or at least big sports market, these deals are quite substantial.

[LarBrd33]

as long as the team is making enough money to cover the luxury tax and everything... and having 3 guys who make like 60 million combined....   I don't want to have a cheap franchise who refuses to sign free agent help.   So hopefully the team is making some money with all these 7 game series and the finals.

[Roy Hobbs]

"* Television revenue on their local television deal, depending upon when it can be negotiated"

What do you mean, Roy?  By local, are these stations catering primarily to their city?  I live nearest Atlanta, so I'm comparing it to the local stations that broadcast Hawks games.  I'm guessing that there's not a lot of revenue in this, right?  Or am I wrong in this assumption. 

Teams get television revenue from two places.

First, the national contract (TNT, ESPN, ABC) & overseas broadcasting.  This is split amongst the 30 teams.

Second, the "local" contract, where the local games are broadcast.  In Boston, the "local" market extends throughout all of New England, and is shown by Comcast Sports Network.

I'm not sure how much the broadcast rights are worth, but I know a large part of franchise valuation is based upon the local television contract.  The broadcast right can be pretty lucrative.