Written by Shayna Beth Korsh
When the COVID-19 pandemic intensified in mid-March, the National Basketball Association was forced to temporarily suspend its 2019-2020 season. Once it became obvious that teams would be unable to safely host basketball games within their home stadiums without a high risk of the disease spreading, the NBA began devising a plan for an isolation zone where teams would all congregate and play. This NBA “Bubble” took place at Walt Disney World, where 22 teams were invited to participate and compete for a playoff spot beginning in late July. Due to its strict isolation policies and routine testing, the Bubble was an expensive yet necessary investment by the NBA to maintain its credible reputation and minimize financial losses during the 2019-2020 economic season.
The basketball hiatus had a strong impact on the league financially, which was only six weeks away from the beginning of the playoffs when play stopped. According to Forbes, the total revenue across the NBA reached nearly 8.76 billion dollars during the 2018-2019 season. However, this revenue is contingent upon the notion that professional basketball is actually being played. “The loss of ticket sales alone, due to no fans being allowed at the games, is estimated to cost each team nearly $2 million on average per game” (Reiff). The NBA Bubble quickly became essential to save the league from a significant financial loss.
ESPN estimated that the Bubble would cost the NBA over 150 million dollars to construct and execute. According to Reuters, among these costs are “Daily tests for COVID-19, treatment and quarantine associated with positive tests, and meals, security, transportation, sanitation of facilities including practice gyms and staging of games at multiple stadium sites.” In addition to these costs, the Bubble presents a unique economic problem due to its isolated nature. Essential goods and services such as food, medical care, and even haircuts all needed to be provided to the athletes, which made the Bubble even more expensive. In other words, the NBA Bubble essentially required the creation of an entirely new relevant geographic market.
In response to criticism that the Bubble would be too costly to the league and would make recoupment of revenue loss even more difficult, NBA Commissioner Adam Silver explained that “It comes into play that we feel an obligation to our sport and to the industry to find a new normal. It doesn’t come into play in terms of dollars and cents because, frankly, it’s not all that economical for us to play on this campus. It’s enormously expensive.” Commissioner Silver emphasized that the Bubble gave fans the opportunity to watch the remainder of the 2019-2020 basketball season. Even though he says the decision to construct the Bubble wasn’t based on economics, it ultimately “Prevented the league from losing $1.5 billion in expected revenue,” according to the Sports Business Journal. It is obvious, therefore, that the league utilized the Bubble for both financial and marketing purposes.
The Bubble provided the NBA with a unique marketing opportunity of highlighting its tight-knit community to the rest of the world. By giving players the ability to have social justice messages written on the back of their jerseys, the Bubble became synonymous with calls for social and political reform. This fostered a sense of community within the Bubble, which the NBA utilized to bolster its brand image. Additionally, a crucial component of the Bubble’s success was contingent on the notion that it could safely contain and prevent the spread of the disease. The Bubble ultimately resulted in zero positive COVID-19 cases. This positively reflected on the NBA’s efforts of safely bringing back professional basketball and the league’s overall image.
One important aspect of the NBA Bubble was the fact that fans would still be able to watch the basketball being played. Even though fans were prohibited from watching games in person, the games at the Bubble would still be televised. “The majority of the money the league was able to conserve was tied to national and local television revenue via pre-existing contracts.” Fans could still watch their favorite teams at no additional cost other than the subscription to their cable provider. Despite this, the viewership of NBA playoff games declining drastically, with TV ratings being down 37% compared to the 2019 playoff season.
COVID-19 has undoubtedly changed the way the professional sports industry operates, and the NBA bubble is proof. The concept of an isolation site is one that other leagues, such as the National Hockey League, are beginning to emulate. Without the Bubble, the NBA would have incurred a serious loss in revenue and would have missed out on crucial opportunities to showcase its athletes in what is arguably one of the most popular sporting events of all time: the NBA playoffs. Even though it was a costly investment, the Bubble seemed to save the NBA from billions of dollars in financial loss and helped them curate their brand into a beacon of hope, social justice, and success.
References:
Beer, Tommy. “Report: NBA’s Bubble Prevented $1.5 Billion In Losses.” Forbes, Forbes Magazine, 20 Oct. 2020, www.forbes.com/sites/tommybeer/2020/10/20/report-nbas-bubble-prevented-15-billion-in-losses/.
“NBA ‘Bubble’ Cost over $150 Million – Report.” Reuters, Thomson Reuters, 1 July 2020, www.reuters.com/article/us-basketball-nba-nba-bubble-cost/nba-bubble-cost-over-150-million-report-idUSKBN24275J.