NBA, NHL Playoffs Generate Windfall for Clubs, Unlike NFL Model
The NBA playoffs tipped off Saturday with a quartet of games, including the first playoff game in Sacramento in 17 years—ending the longest active postseason drought in pro sports. The Kings delivered on the court with a tight win over the Golden State Warriors, and it allowed the club to tap a lucrative revenue stream in playoff tickets for the first time since Vivek Ranadivé bought the team in 2013.
The NBA delivers the biggest financial rewards for its individual teams that make the playoffs. The league traditionally kept 45% of home ticket revenue in the playoffs versus 6% in the regular season. In 2016, the league reduced its playoff cut to 25%, providing a significant boost in the opportunity for postseason profits. Ticket demand in the playoffs is also extremely elevated, which allows clubs to boost prices. Games in the NBA Finals are often priced 200% higher than their regular season equivalent. Cutting the NBA’s take of playoff revenue provided even more incentive for teams to maximize pricing.
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The Warriors have been the biggest beneficiaries. They already earn the most of any team from tickets, at more than $4 million per regular season game at Chase Center, which has helped the Dubs become the NBA’s most valuable club at $7.56 billion. The ticket tally is twice as much as any other team aside from the Los Angeles Lakers and New York Knicks, who both generate roughly $3 million per game.
Yet, the Knicks and Lakers have hosted fans for a paltry two playoff series combined since 2014, and the Lakers’ 2021 first-round defeat was in front of a reduced crowd at the then Staples Center because of COVID-19 capacity restrictions (Los Angeles’ 2020 title was in the Orlando bubble).
In contrast, the Warriors have made the NBA Finals in six of the past eight years. Last year’s title run included 12 home playoff games and more than $100 million in gross revenue before the NBA took its cut of tickets. Their Finals opponent, the Boston Celtics, grossed more than $50 million from tickets. The 16 playoff teams generated roughly $300 million in playoff ticket revenue, by Sportico’s count.
Contrast that with the NFL. The Kansas City Chiefs and NFL MVP Patrick Mahomes are the closest thing the current NFL has to a dynasty. They have made a league-leading eight straight trips to the playoffs—including a pair of Super Bowl wins—with the Buffalo Bills’ four-year playoff run the next longest active streak. But the Chiefs’ on-field success produced little playoff revenue.
The NFL’s economic model spreads the wealth, with every team getting an equal share of its massive media contracts, which will total more than $120 billion, including YouTube, over 11 years for the agreements set to kick off this year. Teams also must contribute 40% of regular season ticket revenue to a pot that is split equally. The socialist model continues in the playoffs, with almost all of the revenue funneled directly to the league.
The NFL collects ticket revenue from playoff games and only provides a stipend for home and away teams that covers costs for travel and stadium operations. The home team generates concession and parking revenue, which typically ranges from $1 million to $2 million per game, but it is a rounding error for most teams with the average revenue per team closing in on $600 million. A Super Bowl run boosts merchandise sales for teams, but much of that revenue is shared equally, as well. Bonuses and other expenses can sometimes cause Super Bowl winners to lose money during the playoffs.
The NHL postseason begins Monday night with the Boston Bruins heavy favorites to lift the Stanley Cup after their record-breaking regular season. The NHL is the most gate-driven of the four biggest U.S. sports league by far, as it lacks the large TV deals the others possess. Its playoff revenue model is like the NBA’s, making a Cup run extremely lucrative.
Teams crank up ticket prices every round, while the league keeps 35% of the gate—the NHL allowed teams to keep 100% of ticket revenue during the playoffs for the COVID-impacted 2020-21 season. The New York Rangers lost in the Eastern Conference Finals last year but hosted 10 home games and generated $50 million in revenue, including concessions and merchandise. Gross playoff ticket revenues topped $200 million last season in the NHL. For small-market NHL teams, a good playoff run can often be the difference between posting an operating profit versus a loss for the season.
Baseball’s playoffs have teams contributing 60% of ticket revenue from the first two games of the Wild Card series, three games of the divisional round, and first four games of the championship series and World Series. This funds the postseason player pool, which reached $107.5 million in 2022, up 19%, thanks in part to the expanded playoff format. Houston Astros players each received $516,347 after winning the World Series.
Whether teams can capture revenue during the playoffs or not, winning is good for the long-term business of individual teams in every league. As Warriors CFO Josh Proctor said in a December interview, “The success of a deep playoff run, if we are fortunate enough to have one, creates momentum for future seasons as well.”
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