Sports analysts have been concerned for years that the urbanization of the National Basketball Association would prove costly to the league. It now appears these concerns are well founded. At a time of significant contraction in the advertising market, the NBA is seeking a premium for a product that has been delivering lower ratings the last several years.
Compounding this problem, the NBA now needs to convince potential broadcast partners that basketball provides the broad audiences advertisers seek. Networks will only pay billions of dollars to televise sports if they believe the games are reaching large and diverse audiences. Niche audiences, while important, are less sought after by networks because a narrower viewer demographic may limit their ability to recoup their rights fee from advertisers.
With the NBA's new TV contract scheduled to begin with the 2002-03 season, it must address the numbers of African-Americans who watch its games. According to Variety, NBC averaged a 2.9 rating for its regular-season games in 2000-01, but within that total, the African-American rating was a 9.2, 317 percent above the statistical norm. Conversely, the African-American audience for CBS' Sunday afternoon regular-season NFL games last year was a 10.0, only slightly higher than the overall average rating of 9.5.
Jerry Solomon, a TV sports consultant and former president of SFM Media, was blunt in his assessment of the situation. "White people are increasingly turned off" by players with gangsta-rap images like Allen Iverson of the Philadelphia 76ers. Just last season the tattoo-laden, corn-row wearing Iverson was reprimanded by NBA Commissioner David Stern for recording an album filled with profane, derogatory lyrics directed at women and homosexuals.
This is not good news for a league that is in the process of negotiating its new contract. Under its expiring TV deal the NBA received over four years $1.75 billion from NBC and $890 million from AOL Time Warner's TNT and TBS. The 140 percent increase realized in its current contracts won't be as easily achieved this time around.
Having televised the NBA since 1990, NBC can ill-afford to lose the high-profile programming and extraordinary cross-promotional value the NBA provides, especially on the heels of its ill-fated experiment with the XFL and tape-delayed Sydney Olympics. It must also be concerned about the financial risk associated with over-paying for a broadcast property.
In previous years, competing networks would sense NBC's vulnerability and make a strong play for the broadcast rights. But the changing audience composition may cause other broadcast networks to rethink their bidding strategies.
The wild card is Michael Jordan's return. Although he will help the NBA sell tickets, merchandise and local advertising in the short term, his real value lies years down the road.
Fortunately for NBA, the 38-year-old Jordan transcends race and bridges generations. If his reappearance as a player for the Washington Wizards reestablishes interest in the NBA among the currently disenfranchised casual fans, the NBA will be poised to continue to deliver the audiences advertisers covet. This, in turn, could result in higher ratings and incremental revenue for the networks.
But for this to happen it is imperative that the NBA provides fans a product they can relate to and be excited about. The league must also provide these viewers, many of who are merely sampling the product, an inclusive entertainment experience at all levels. If it does so, large and diverse viewing audiences will embrace the NBA by opening their eyes and their wallets.
David Carter teaches The Business of Sport at the University of Southern California Graduate School of Business and is a principal of the Sports Business Group in Los Angeles.
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