With the NBA season coming to a close, the last big piece of news before next season is the finalization of the new TV contracts. We know TV revenue will go up dramatically, which creates a golden opportunity to rethink the economics of the sport.

My proposal is to reduce the regular season to 65 games. As I will show, this can be done while still producing substantial revenue growth as well as improving the quality of the product.

Scarcity Value

Why is football the most popular sport in America? Because every game really matters. One bad play can lead to a close loss that proves the difference between making or missing the playoffs.

Contrast that with baseball where there are way too many games, so there is no urgency to see any single one.

It makes sense that baseball had a ton of games before TV. It was sort of like going to Vegas. Wayne Newton had to perform every night because different people were coming to each show.

Thus, it used to maximize revenue to put on as many shows as possible.

Now imagine if every Wayne Newton show was streamed. You would probably get as many viewers if he performed once a week as if he still went on every night.

Baseball’s popularity went down with each innovation. It started slowly with TV, accelerated with cable, and went exponential with the internet.

They should have adjusted by reducing the schedule but never did. The NBA has made the same mistake. Most regular season games don’t matter.

Nobody cares if you lose tonight or win tomorrow because it barely impacts who makes the playoffs. Fan interest doesn’t really ramp up until the playoffs arrive.

Anchoring

So why does the NBA still play 82 games? Because that’s how they’ve always done it!

We call this anchoring. Eighty two games must be the right number of games today because that’s how it’s been since the league had 12 teams!

But guess what? The league doesn’t have 12 teams anymore. And it had no TV contracts back then. It had to play as much as possible to sell enough tickets to pay the players.

Today, very few players actually play 82 games. Many of the stars only play 60 or so. Stars missing games for minor injuries has hurt the popularity of the game.

You never want to buy tickets for a NBA game more than a day in advance. Why? Because if you pay a premium to see the Lakers, but LeBron rests that day, then you wasted your money.

That is bad for the game. You don’t have to worry if Patrick Mahomes is going to play for the Chiefs (unless he has a serious injury) when you buy your ticket. But you very much have to worry about that in the NBA.

The NBA knows this is a problem, so it implemented a (dumb) rule that says you have to play 65 games to qualify for MVP or other awards.

The simpler solution is to only ask players to play 65 games.

The NBA Revenue Model

So the first response I get from people when I suggest a 65 game season is “but that will cost the player’s money, so they won’t want it”.

In a static world, this is true. But we live in a dynamic world. And in that dynamic world, the players are about to get a giant pay increase (see below).

Thus, they would only need to accept a somewhat less giant increase to move to a 65 game season.

Before I get into all the mechanics, let’s set the table with how players get paid today.

The NBA’s revenue is $10B. The labor agreement stipulates half of this goes to players, so they get $5B (it’s not quite this simple in practice, but close enough).

This results in an average salary of around $10M and a maximum salary near $60M.

The $10B of league revenue is $4B related to game attendance (tickets, parking, food, etc.), $2.7B for national TV contracts, $1.5B for local TV/radio, and the remainder is advertising, merchandise, etc.

Reducing the schedule from 82 to 65 games is a 20% cut, which would primarily affect that $4B of revenue related to fans at games.

However, that ignores some other important factors.

Expansion

The NBA is likely to begin the expansion process next year. This will add two new teams (likely Seattle and Las Vegas) which will raise the total from 30 to 32.

This will raise revenue 7% on roughly 75% of revenue sources, so a 5% bump to total revenue or $0.5B.

Note, expansion also increases the pool of games by 7%. Today, there are 1230 games in a season (82 games with 30 teams).

By expanding at the same time as reducing the schedule, the pool of games is only cut by 15%, not 20% (65 games for 32 teams = 1040). Thus, the $4B of gameday revenue only drops by $0.6B.

As there is a little bit of double counting with the $0.5B revenue gain above, the net impact of expanding the league, but contracting games, is a loss of $300M in revenue.

That assumes teams wouldn’t raise ticket prices slightly to reflect the reduced supply of games. That could arguably offset the entire $300M.

This suggests expansion alone is enough for the league to be roughly indifferent to cutting back to 65 games. But there is still one other big factor.

TV Contract

If you follow the NBA, you are probably aware the TV contract is being extended (including some change of broadcast partners).

This will increase TV revenue from $2.7B/yr to $6.9B/yr! This means all in league revenue, even at a 65 game schedule, will increase from $10B to $14B.

That results in player salaries rising from $10M to $14M and max salaries increasing from $60M to $85M.

Sure, if they stay at 82 games, they could make slightly more, but not much. Average salary would be closer to $15M than $14M, but you would easily make that up through longer careers (8 seasons today is 656 games but that would be 10 seasons going forward).

There is really no good reason for players to not be in favor of the shorter season.

But what about the owners? They’d only be sacrificing a small amount of revenue. The risk for them is if having fewer games somehow hurt TV ratings and thus lowers future TV revenue.

I would argue it does just the opposite. Ratings will go up because star players won’t sit out games.

TV Inventory

Currently, 165 games per year are on national TV (100 ESPN, 65 TNT). That’s 13% of the total schedule.

We don’t yet know the number that will be shown under the new contract, but presumably it will go up. I’ll estimate 200.

Relative to a 65 game schedule, 200 national games would be 19% of the total.

So can you show one out of every five games, instead of one out of every seven or eight games, without diluting the product and hurting ratings?

I believe you can. The main reason is mentioned above. Star players are more likely to play and each game will matter more.

But also, the league is far more balanced than it used to be. There are fewer terrible teams, and the talent is more spread out across the middle of the league.

Pretty much any matchup between the top 20 teams can be compelling. That is something like half the games, so televising 19% is very feasible.

Today’s schedule is highly tilted towards the top four or five teams. It could actually benefit ratings by spreading that out and letting fans see other star players more often.

So, I don’t think this will turn into Thursday Night Football where you see too many bad teams playing bad games.

Schedule

OK, so quickly on the mechanics of how this would all work. With 32 teams, playing every other team twice is 62 games. So how do I get to 65?

Each team will have three “rivals”. They will play those teams a third time.

NortheastNorthSoutheastSouthMidwestSouthwestWestNorthwest
BostonTorontoCharlotteMemphisMinnesotaDallasLA ClippersUtah
New YorkDetroitAtlantaNew OrleansMilwaukeeOKCLA LakersVegas
PhillyClevelandOrlandoHoustonChicagoDenverSacramentoSeattle
DCBrooklynMiamiSan AntonioIndianaPhoenixGolden StatePortland

Furthermore, we will do the stupid “In Season Tournament” (IST) right with a new format.

The nine total rivalry games count as the qualifier for the IST. One team advances from each region to an eight team single elimination tournament.

The tournament portion creates seven extra premium games for TV. Why will they be premium? Because there will be a real reward to the winner.

Each win counts toward any playoff seeding tiebreakers (so if there is a tie for 4th and one team made the IST and won a game, they get 4th and the other team is 5th).

Also, whoever wins the IST trophy gets to steal a first round playoff home game (so if you’re the 6 seed, you get four home games instead of the normal three). There might be better ideas than that, but you get the point.

Instead of a dumb tourney played for small prize $, it now a) establishes rivalry regular season games which get higher ratings b) creates premium TV games during the actual tournament and c) has a tangible prize the players will care about beyond pride.

The other thing I should add is people like to say “the NBA doesn’t start until Christmas”. So guess what? We’re going to start the season on Christmas!

No need to compete with the NFL for the first two months.

Final Thoughts

I’ll be honest. I think even 65 games is too long. I would be OK with a 40 game season to try to make each game as meaningful as possible, but that’s not as realistic financially.

This is the last chance to make this change. After expansion and after the new TV contract money starts to flow, it will be perceived as too big a cut in revenue to step back from 82.

By doing it concurrent with the big revenue boost, nobody has to take a pay cut and there will still be big annual wage increases.

More importantly, making this change will cement the NBA as the #2 sport in the country. Raising the quality of play for each game will have a dramatic impact on popularity. It will ultimately prove accretive to revenue.

Unfortunately, nobody in the league is talking about this idea, so it seems unlikely, unless one of you reading this happens to have some connections and gets this proposal into the right hands!

2 thoughts on “Why It’s The Perfect Time For The NBA To Cut To 65 Games”

  1. Expansion doesn’t really count, you increase the total $ value but you also have to divide that figure by additional teams and players.
    But the real topic here is TV revenue (I wasn’t aware such a massive jump was expected), and overall you nailed the point!
    I really hope they’ll do it, but I’m afraid they won’t 🙁

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