The NBA is a commercial behemoth but its revenue still trails the likes of English soccer’s Premier League by some margin.
The Golden State Warriors are regularly cited as the most valuable franchise in the league at around $11bn, which is more than any soccer club worldwide. But their annual turnover of roughly $880m in the last financial year, which is the highest in basketball, would barely crack the top-10 in soccer.
The difference, of course, is profit. While NBA teams generate less revenue, a system of salary caps, collective bargaining agreements, revenue and cost pooling ensure that spending is always surpassed by turnover.
As a business model, it simply makes far more sense than the Premier League, where clubs can lose hundreds of millions of dollars in a single season and are seldom profitable at all, except for when an owner chooses to sell up and move on.
The dream for an investor would be buying a business with the financial discipline of an NBA franchise but the global brand appeal of a major soccer club.
That discrepancy is illustrated by the Golden State Warriors’ new jersey badge sponsorship deal with Iren.
The exact length of the contract with the AI firm was not disclosed, but it will be worth at least $100m to the Warriors of what was characterised as a “multi-year agreement.”
At $50m per season, it is the most valuable single sponsorship agreement in history for a North American sports team. But in European soccer, it would be a mid-ranking deal at best.
Newcastle United, who are outside the Premier League’s so-called Big Six, for example, earned over $160m from retail and sponsorship last season. The Big Six themselves meanwhile – that’s Manchester United, Manchester City, Liverpool, Arsenal, Tottenham and Chelsea – earn between $270m and $450m from the same income streams.
Speaking exclusively to HITC, soccer finance expert Kieran Maguire, who is a professor at University of Liverpool, explained the disparity and how that might change in future.
“To a certain extent, it is a cultural issue in that the shirt is sacred and it would be besmirched if the adverts were as prominent as they are for a Premier League football club,” said the Price of Football author.
“But I expect to see more of the same throughout the NBA in the future as more teams get wise to the value on offer. At heart, NBA team owners are pragmatists.
“Sponsors are paying for a monopoly relationship with NBA teams. By diluting that with too many sponsors, you risk reducing the value of your sponsorship opportunities.
“But ultimately, when you look at the overall package, the NBA makes so much money from TV advertising that they don’t need to sell as many sponsors as European football. They are all profitable, unlike, say, the Premier League.”
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