A "Business" Story: Analyzing the Heat and Lakers' Christmas Day Showdown
By Rick Horrow and Brian Finkel
Forget Kobe and Pau vs. LeBron and Dwyane. When the Los Angeles Lakers and Miami Heat meet at Staples Center to celebrate Christmas, the game will feature several compelling business stories.
It was quite an offseason for the NBA. Collectively, the league’s 30 teams generated $100 million in new full-season ticket revenue over the summer. The NBA expects to earn $1 billion in gate revenue this season, with approximately 75% of sales coming from season tickets. The ticket windfall comes in large part from high-profile player movement, in particular, those pesky Miami Heat. In fact, every NBA team sees a huge increase in secondary market-ticket prices when the Heat comes to town. Tickets for Saturday’s game in Los Angeles are averaging $556 each, by far the most expensive for a game this season, according to ticket research site SeatGeek.com.
For those watching at home, catching the Heat and/or Lakers on TV is nothing new. The two teams combine for a whopping 56 national TV appearances this season. Boosted by early season telecasts featuring both teams, NBA games on all networks have reached more than 55 million unique visitors, up 28% from the same point last year.
Although Christmas Day basketball isn’t as entrenched as Thanksgiving Day football, the NBA quietly is claiming the holiday as its own. Christmas Day NBA games on broadcast TV have averaged a 4.0 Nielsen rating and nearly 7 million viewers since 2001. That’s on par with James’s return to Cleveland earlier this month.
Five Most Watched Christmas Day Games Since 2001
5. 2002: Kings/Lakers, 7.5 million viewers
4. 2005: Heat/Lakers, 8.1 million viewers
3. 2009: Cavs/Lakers, 8.5 million viewers
2. 2008: Celtics/Lakers, 10 million viewers
1. 2004: Lakers/Heat, 13.2 million viewers
The Lakers have played in the five most watched Christmas Day games this decade, and each featured an intriguing storyline. Considering the added interest in this year’s Heat team, Saturday’s game should easily top last year’s LeBron-Kobe showdown. It could also best the 2008 game, which was a rematch of the previous season’s finals. Despite the fanfare, don’t expect the game to draw more viewers than Shaquille O’Neal’s 2004 return to Los Angeles… but it will be close.
If nothing else, the high-profile Heat-Lakers game is an opportunity for advertisers to reach a wide, casual audience. T-Mobile, a NBA sponsor since 2006, will debut a new commercial during the game featuring Heat star Dwyane Wade. “The pressure isn’t quite at Super Bowl level,” T-Mobile ad executive Peter DeLuca told SportsBusiness Journal. “But Christmas makes it more of an event, and our campaign has been so popular, people expect us to top ourselves every time out.”
Because of the acquisition of James this offseason, the Heat leads the NBA in team merchandise sales with 23% market share, according to Darren Rovell of CNBC.com. By comparison, Miami accounted for just 4% of the merchandise market last season. Ranking second on the merchandise sales list is the two-time defending champion Lakers.
Players will use the game to push their products as well. Forget the stories about James’s “The Decision” hurting his brand. The King is owner of the NBA’s best selling jersey, and the Nike LeBron VIII was the best-selling basketball shoe during the month of November. For fans needing a last minute stocking stuffer, Bryant will debut his new snakeskin-styled Zoom Kobe IV during the game.
This year’s Christmas Day game has it all – superstars, popular teams, a projected large TV audience, even corporate involvement. NBA Commissioner David Stern should be salivating at the mouth. Ironically, he’s not. Should the Heat and Lakers ultimately meet in this season’s finals, the matchup won’t be a financial boon for the league.
While the Commissioner would love gaudy TV ratings validating interest in the NBA, there’s little money to be had in a Heat-Lakers series. Advertising sales go to the network broadcasting the games, so regardless of who’s in the finals, the league won’t see that money. The NBA already receives $930 million annually in broadcast rights, which run through the 2015-16 season. Sports are notorious for being cyclical, so a successful 2011 Finals means little for TV negotiations five years from now.
Expensive secondary market tickets won’t matter to the NBA. The league can only max out ticket revenue at face value.
Even a marginal increase in merchandise sales and sponsorship dollars represent a tiny drop in the league’s overall revenue bucket.
But before we worry about the last two teams standing, there’s still a big game to be played on Saturday. And it should make for a very Merry Christmas.