This blog was originally posted at: http://smartblogs.com/finance/2013/06/10/the-revenue-side-of-the-nba-and-nhl-finals/.
June is a busy month for professional playoffs in the U.S. The NBA playoffs started Thursday, pitting the San Antonio Spurs against the Miami Heat. In the NHL, the Chicago Blackhawks take on the Boston Bruins for the Stanley Cup starting Wednesday.
The NBA and the NHL are big business and generate huge revenue from multiple sources. The NBA has earned $5 billion this season, most coming from television rights, with a growing portion from China because of television rights and exploding interest in Chinese and Chinese-American players. The NBA’s per-game gate-revenue average increased 6% compared with last season. Regular-season attendance in 2012-2013 averaged 17,348 per game, up 0.4% from the 2011-2012 season. The Chicago Bulls led the league, with an average of 21,877 attendees per game; the Sacramento Kings ranked last, with 13,750 attendees per game, according to Sports Business Daily.
The NHL projects that it will make $2.4 billion for the 2012-2013 season, despite a lockout. Thus, the NHL expects to generate 72.7% of the 2011-2012 season’s revenue of $3.4 billion, while playing 58.5% of the season.
Who watches NBA and NHL games on television? Who goes to the games? Is there a difference for each sport? Where do these people live?
Fans of the National Basketball Association
Basketball is one of the most popular sports in the U.S. The NBA attracts all types of fans. Appeal outside the U.S. has increased because of the popularity of the original Dream Team at the 1992 Olympics in Barcelona, Spain, the formation of teams overseas and more foreign players joining the NBA.
Fans follow their favorite players as they begin their career in high school, play in college, then move on to the NBA. Who is most likely to watch NBA games on television? Who attends NBA games? Where do they live?
People who are most likely to attend NBA games live along the Eastern Seaboard and in California, Arizona, New Mexico and Washington. ZIP codes with residents most likely to attend NBA games include 10475 (Bronx, N.Y.), 35221 (Birmingham, Ala.), 48235 (Detroit) and 60428 (Markham, Ill.). Residents in these ZIP codes are twice as likely as the average American to attend an NBA game.
People most likely to watch NBA games on television live along the Eastern Seaboard and in the West. ZIP codes with residents most likely to watch include 13669 (Ogdensburg, N.Y.), 27708 (Durham, N.C.), 58105 (Fargo, N.D.) and 92617 (Irvine, Calif.). Residents in these ZIP codes are at least 1.5 times more likely than the average American to watch NBA games on television.
What type of American is most likely to attend an NBA game or watch a game on TV?
Esri, a company for geographic information systems, developed the Tapestry™ Segmentation system that classifies U.S. residential neighborhoods into 65 unique market segments based on socioeconomic and demographic characteristics.
Residents of Boomburbs, Dorms to Diplomas, Family Foundations, Laptops and Lattes, and Military Proximity neighborhoods are the most likely to attend NBA games.
Boomburbs neighborhoods are home to busy, affluent young families with young children who live an upscale lifestyle. Most households have two incomes. Residents of Dorms to Diplomas neighborhoods are focused on education. Most are enrolled in college or graduate school. Family Foundations neighborhoods are small, urban communities in a large Southern or Midwestern metropolitan area. Residents are family oriented and include married couples, single parents, grandparents and young-adult children. Laptops and Lattes residents are single, affluent renters and love big-city life. They are highly educated and hold professional or managerial positions. Residents of Military Proximity neighborhoods depend on the military for their livelihood. Most work in the armed forces or work in civilian jobs on military bases. Two-thirds of the households are young, married couples with children.
Those most likely watch NBA games on television are somewhat similar to people who are most likely to attend games. Residents of Dorms to Diplomas, Family Foundations and Metro City Edge neighborhoods are most likely to watch NBA games on TV.
Metro City Edge neighborhoods are found in older suburbs of a large Midwestern or Southern metropolitan city. Household types include married couples, single parents and multigenerational families. Nearly half of the residents who work are employed in service industries.
Residents of Las Casas, Rooted Rural and Southern Satellites neighborhoods are the least likely to attend NBA games. They live in rural areas that might be far from NBA venues. Their lower income also might prevent them from attending games. Las Casas residents are young, Hispanic families found primarily in California. Approximately half were born outside the U.S. Residents of Rooted Rural neighborhoods are married couples living in rural areas. Southern Satellites neighborhoods are found in the rural South. Residents are married couples who work in manufacturing and service industries.
Residents of Southwestern Families neighborhoods are the least likely to watch NBA games on television. These ethnically diverse families are the bedrock of Hispanic culture in the Southwest. Most of those who work are employed in blue collar or service occupations.
Fans of the National Hockey League
Ice hockey might not be as popular across the U.S. as in Canada, where it was invented, perhaps because of a lack of youth leagues and high-school and college teams. Kids in warmer climates might not have access to rinks and teams. However, NHL fans can be as loyal as fans of the NBA and other professional sports.
Who is most likely to attend an NHL game? Who watches games on TV? Where do they live?
People who are most likely to attend a hockey game live along the Eastern Seaboard, in the Chicago or Minneapolis area and in the West. ZIP codes with residents most likely to attend an NHL game include 10996 (West Point, N.Y.), 32508 (Pensacola, Fla.), 66442 (Fort Riley, Kan.) and 98433 (Tacoma, Wash.). Residents in these ZIP codes are three times as likely as the average American to attend a hockey game.
People who are most likely to watch hockey games on television are in similar places as people who attend games: along the Eastern Seaboard, in the Chicago or Minneapolis area and in the West. ZIP codes with residents most likely to watch games on TV include 37916 (Knoxville, Tenn.), 55455 (Minneapolis), 78712 (Austin, Texas) and 92617 (Irvine, Calif.). Residents in these ZIP codes are at least twice as likely as the average American to watch hockey games on television.
What type of American is most likely to attend a hockey game or watch a game on television?
Residents of Military Proximity and Wealthy Seaboard Suburbs neighborhoods are most likely to attend a hockey game. Wealthy Seaboard Suburbs neighborhoods are older, established and affluent. Residents are primarily married couples living in a single-family home. About half work in management or have a professional career.
Residents of Dorms to Diplomas neighborhoods are most likely to watch hockey games on television. They live in dorms or share off-campus housing with one or more roommates. Most employed residents work part time to support themselves while attending school.
Not everyone is a hockey fan. Rooted Rural and Southern Satellites are the least likely to attend a hockey game. Residents of Las Casas and Urban Villages neighborhoods are the least likely to watch hockey games on television.
Most Rooted Rural neighborhoods are in the South; others are scattered nationwide. Approximately one-third of households receive Social Security benefits. The lifestyle of Southern Satellites residents is similar to that in Rooted Rural neighborhoods.
Residents of Las Casas neighborhoods are part of the latest wave of Western pioneers. Urban Villages neighborhoods are diverse. They are multicultural enclaves of young families in densely populated cities. All types of families live in these areas; the average family size is 4.16. Unemployment is relatively high; however, many households are supported by two workers in construction and services industries.
Why this matters
Leagues and teams can increase revenue by knowing more about the demographics and lifestyles of their most loyal fans. This information enables team owners to raise promotion-response rates, expand channels to attract less-avid fans and reach out to those who might not know much about the sport. By developing marketing strategies and promotions targeted to each type of fan, leagues can create additional revenue streams. For example, they can craft packages of tickets, hotel rooms and restaurant discounts to reach fans who would attend games. For TV fans, they can offer discounts for team merchandise or chances to win a trip to see a game. They can consider collaborating with TV channels to provide discounts on packages of games. By “slicing and dicing” promotions by demographics and lifestyles, leagues might be able to keep their most devoted fans, turn casual observers into fans and attract those who wouldn’t ordinarily be interested. Teams also can generate additional revenue by working with local economic-development groups to promote attractions around arenas. These activities can increase the value of such areas and bring much-needed cash into league cities.
Pam Allison is a consultant for digital media, marketing strategy and location intelligence. Visit her blog at PamAllison.com.