Changing Times At The NBA

MGT 685Group Assignment 1

Team ArsenalFay Bozich, Julie Burks, Stephanie Meade,

Stephanie Savicki, and Karen Simmons

Oct 11, 2012

QuestionThough the NBA experienced substantial success and rapid growth from the 1980s through the mid-1990s, it experienced slower growth and a waning fan base in the late 1990s and early 2000s. With the changing landscape of the NBA related to player profiles, fan perception and internationalization of its product, what strategic decisions should the league make to improve the quality of its product in order to reverse the recent negative trends and strengthen the existing fan base, while expanding this fan base to new markets abroad?

Sub-QuestionsWhat factors in the external and internal environment have an influence on the league and how can the NBA capitalize on the opportunities and mitigate the risks of the threats?

How has the NBA evolved from the 1980s to the 2000s and, as of the 2004 season, what are the pertinent issues threatening the NBA’s future success?

What specifically has led to the decrease in fan base and overall popularity of the NBA?

Strategically, what does the NBA need to continue/change in the future in order to revitalize its fan base and to establish itself once again as a strong, sustainable brand that is beneficial for all stakeholders?

What factors in the external and internal environment have an influence on the league and how can the NBA capitalize on the opportunities and mitigate the risks of the threats?

NBA PEST Analysis Snapshot

• Technology• Socio-cultural

• Economic• Political/Legal

N/A- Stable economy- Globalization of

business operations

- Constant advances in technology

- People want constant connectivity

- Media coverage instantaneous

- Changing cultural norms

- Changing player demographics

= Opportunity

= Threat

PEST Analysis (2004)FACTOR Trend Evaluation (opportunity / threat ,

why?)IMPACT ON COMPANY (1 = low, 5 = high)

Political • N/A N/A

Economic • Strong US economy• Globalization in many industries to

decrease supply costs as well as to explore new markets

• Opportunity – people have more disposable income

• Opportunity – opens up new markets for businesses

2

4

Socio-cultural • Influx in international citizens entering the US workforce

• Urban culture influencing fashion and sports

• Opportunity / Threat – Could supply lower cost players, however, also causes player relation issues

• Opportunity / Threat – Makes young urban people more interested in these things, but could also isolate non-urban consumers

3

4

Technological • Advancements in technology making it easier for fans to stay connected

• Allow for the internationalization of TV broadcasting

• Better quality television broadcasts• Media can immediately release news

stories as they happen

• Opportunity – Consumers are more able to follow the news they care about

• Opportunity – Gives fans in other countries more opportunity to follow the league and watch the games

• Opportunity / Threat – People more likely to watch event on TV, but may be less likely to attend the events

• Opportunity / Threat – Good for those who want to keep up with the news ,but may be bad if these news stories are negative.

4

4

3

3

Finding: Amidst the decreasing attendance and revenues, it seems that there are not many external factors that are causing these trends. Several of the above items could be seen as opportunities or threats, depending on how they are analyzed, but none of them can be seen as a strong threat to the NBA’s success. It is apparent that there are crucial factors causing the NBA’s lack of success, but it can be inferred that these issues are mainly internal, as opposed to external.

NBA Industry Analysis (2004) For the Die-Hard FanFactor Evaluation

(Strong / Weak)

Analysis

Intensity of Rivalry

Weak With the salary cap implemented and the media revenue split evenly amongst the 30 teams, there are not many sustained rivalries between teams year after year. This hurts the NBA because the fans want to see strong rivalries between teams

Power of Buyers (fans)

Weak Consumers who love professional basketball have no choice but to support the NBA by either going to games or watching on TV. The main problem was CREATING these very loyal fans.

Power of Suppliers (players)

Strong, but getting weaker

With the dissatisfaction of their salaries, players used their Collective bargaining right more (1998, 2005), leading to lockouts and a worsening brand image, which in turn, has led to a decrease in loyal fan support. The large increase in players salaries and the large % of total costs that the players salaries represent also make this a stronger factor. However, will the pool of talented players getting bigger (more international players), this decreases the power of the players in the US, which will only decrease more and more in the future as the league continues to look to these international markets for talent.

Threat of Substitutes

Weak Consumers who love professional basketball have no choice but to support the NBA by either going to games or watching on TV. The main problem was CREATING these very loyal fans.

Threat of New Entrants (new clubs)

Weak Though there are other basketball leagues throughout the world, there is none quite like the NBA. The leagues in these other regions are more fragmented, and focus on smaller geographical areas. These leagues often have talented players come play for the NBA, which may show that the NBA is seen as a higher tiered basketball league.

Finding: The NBA has multiple stakeholders, the player salaries are their largest cost, without fans buying tickets and watching the game their revenue would suffer significantly. Knowing this where should the NBA focus their efforts? Stakeholder analysis is needed to evaluate each impact.

Factor Evaluation (strong / weak)

Analysis

Intensity of Rivalry Strong There are many options for entertainment. This creates intense rivalry between the NBA and other entertainment sources, such as other professional sports, movies, theatre, concerts, etc…

Power of Buyers (fans/consumers)

Weak To the NBA, the die-hard are much more valuable than the casual fans just looking for some entertainment. In looking at the revenue streams for the league (TV contracts, gate receipts, merchandise sales) the die hard fans are much more powerful than the casual fans.

Power of Suppliers Weak No matter how attractive the entertainment option assumes itself to be the consumer ultimately decides to support the option.

Threat of Substitutes

Strong Consumers have multiple entertainment options. Therefore, their dollar is strong. The consumer will chose the most attractive option. If the NBA does not present itself as attractive, the consumer will go elsewhere.

Threat of New Entrants

Weak The Entertainment Industry is a fairly well-developed and established market. While there are new entrants, most can be distributed into an existing entertainment category.

NBA Industry Analysis (2004) For the Casual Fan

Finding: The NBA is in an industry that is strongly influenced by the consumer dollar and consumer choice. If the NBA does not present itself as the most attractive option, the consumer has the ability to go elsewhere to find entertainment. The NBA must focus on what the consumer finds to be attractive.

Target Market Segmentation Analysis80s/90s fan profile 2004 fan profile

Age Middle aged and young people Young people (especially under 35)

Race No clear division between White and African American

Mainly African American fans

Loyalty Grew to love college players and continued to follow them into the NBA.

Fans of teams were fans for many years.

Cheer for teams they know and who are more established.

Like the young players that they can relate to

Don’t know early entry players until they join the NBA

More likely to switch teams they cheer for, depending on what players are on the teams or if the teams are doing well or not.

Geographical location

N. America only Mostly N. America, though present in over 200 countries worldwide. Though present in many countries, the strongest fan base for NBA is the US, as other countries have their own basketball leagues.

Critical factors

Want a high quality of play

Enjoy strong rivalries between familiar teams

Like the sport for its entertainment value beyond just the game itself – the player’s off the court personalities, their apparel, and the related social aspects(what’s trendy/fashionable/cool)

Finding: The main takeaway here is that the loyalty of the fans is centered on the players, not the teams. This is further evidence that the league MUST focus on developing their players. The league must create respectable, mature players that the fans want to cheer for. Also, with the league continuing to seek talent internationally, this will help to establish fan bases in these other countries.

Directional Policy Matrix – NBA League in the US

NBA League Ops

NBA Entertainment

NBA International (N/A)

National Basketball Development League

WNBA (N/A)

Finding: Though the NBA is average in providing its fans with a good product and decent entertainment, its current struggles prove that it needs to invest more heavily in their product (their players) and in providing their fans with a better experience. In looking at the NBDL, the NBA either needs to use it more effectively or divest, as this is currently not adding much value to the organization.

Under-Utilized Program

National Basketball Developm

ent League

NBA Player

Development

Programs

• Training ground for staff, officials, and players.

• Minimum 20 year age requirement

• As of 2001, located in NC, SC, GA, AL, and VA.

• Life Skills Training• Counseling and

Assistance• Education and Career

Transition• Rookie Transition

Program• Pre-Draft Player

Information Program

The NBA should use the NBDL as a true minor league program. By merging the NBDL and select

Player Development Programs, the NBA can educate and develop

players that will attract fans, and positively represent the league’s

mission.

SWOT Analysis: The NBA in 2004

Strengths- Large pool of resources/capital- Minor league function to develop players-Established organization with developed teams-International offices/relationships (China, Europe, Canada, Germany, France, Japan, Mexico, Spain, Taiwan)-The NBA is a desirable basketball opportunity. Domestic players train to be drafted, and International players want to enter the NBA.

Weaknesses- Poor player relations- Deteriorating brand image of some players- Little/no control of the players off of the court- Goal of creating a ‘fair’ playing field among all teams has led to too much regulation- Few superstars to draw fan attention/loyalty

Opportunities- Untapped market segments in the US – Caucasians, middle aged people, Urban culture- No other real substitutes for professional basketball- Pool of international players-Can appeal to international citizens entering the US workforce-Ability to explore new markets-Emerging technology to engage the fans (TV, Media, smartphones, etc.)

Threats-Focus on urban culture could isolate non-urban consumers-Emerging technology allows fans to watch event on TV, but could make fans less likely to attend the event- Real-time media allows for quick dissemination of negative news stories

How has the NBA evolved from the 1980s to the 2000s and as of the 2004 season, what are the pertinent issues threatening the NBA’s future success?

Finding: The NBA has morphed into a different entity than it was in years past. In 2004, the league is drastically different than it was prior to the mid-1990s. The league had a much stronger fan base in the 1980s and 1990s, so the NBA needs to focus on what made them successful.

Past State(1980s – mid 1990s)

Current State(2004)

Popularity -Attendance was up-Revenues were up-Fans want to cheer for teams who they know will be SUCCESSFUL

-Attendance down-Revenues down-Each year, there are different teams that are successful – less predictability in which teams will be superior

Regulation -Less regulation in trying to keep all teams on a level playing field-No Salary cap-Strongly discouraged players from entering until 4 years after HS

-More regulation to try to keep the competition ‘fair’

-Salary cap -Media revenue evenly distributed among teams

Presence of Superstars

-High-Many times there were several on the same team

-Low-Teams not able to afford several superstars on the same team

Team Profile -Fewer teams (17 in 1970)-Cost less to buy/manage a team

-Prices relatively consistent among different teams

-30 different teams -Very expensive to buy/own teams (hundreds of millions of dollars)-Teams in markets where there is not loyal fan base – kept alive by even distribution of media revenue

Rivalries -High-The same few teams were successful year after year

-Low-Teams are not always good year after year.

Geographical Presence

-Focus was only on the US operations -New focus on internationalization. NBA has operations in several foreign countries (China, Canada, Germany, France, Japan, Mexico, Spain, Taiwan)

League Evolution

Player Profile1980s – mid-1990s

1990s – 2000s

Effect on the game Positive / Negative

Source College players only

College players

More players coming straight out of High School

Effect on the game is two-fold:1. Younger players are entering the NBA without the

experience and maturity that the college players have. This is seen negatively by fans who see their immaturity both on an off the court, which in turn, leads to the perception of a loss of quality in the game. If the NBA continues to take players straight from high school, they must invest in their development.

2. When these players attend college, they establish a solid fan base with the college fans. The fans know these players and follow them accordingly throughout their NBA careers. When players skip college and go into the NBA straight from high school, they lack this established fan base.

Negative

Origin Almost all American

More international players (Japan, France, China)

Larger pool of talent should increase the quality of play. Expands fan base because international players have fans from their home country – more global interest in the game – higher TV ratings/revenues.

Positive

Superstars Numerous (Michael Jordan, Magic Johnson)

Not as many, the ones that are superstars, come from other countries (Tony Parker, Yao Ming)

American fans enjoyed having superstars from America. They wanted to go watch them play. Superstars now are from all over the globe, which attracts more global fans, but possibly decreases the American fan base.

Negative / Positive

Finding: The internationalization of the sourcing of NBA players proves to help the league, in that it increases the quality of play, as well as broadening the fan base to now include fans from countries from all over the world. The main negative related to the current player profile seems to be the younger players coming straight from high school. This is an issue that the NBA needs to address immediately in order to improve the fan perception of these young players and of the quality of play in the NBA.

Transformation of the Recruitment ProcessYear Event Effect Pros Cons

1946Basketball Association of America League was formed to continue to display college basketball stars

Created a business in which the revenue stream was dependent on the quality of these basketball players and the game they were playing

Proved to be a very successful business model. People were willing to pay to see these college players play the game after they graduated college.

1971

Supreme Court ruled that players less than 4 years out of high school could make themselves available for the NBA draft

Allowed players to declare themselves available for the draft without waiting four years after high school.

The league could begin reaping the benefits from this pool of talent years before they could do so before.

Early draft players did not build fan base in college. Since they did not play in college, the fans did not know who they were.

These young players were still very immature on and off the court. The league did not invest in their development.

The NBA accelerated the rate of young players entering the league without properly aiding their transition and development.

1994

NCAA instituted a rule that allowed collegians to return to college basketball if they did not get drafted or did not like their draft position

College players were able to attempt to get drafted into the NBA. If it did not work out, they could still develop in the NCAA.

Allowed the NBA to select these college players before having to wait till they were graduated. The player themselves didn’t have to wait to graduate if they thought they were already good enough to play in the NBA.

1995

Kevin Garnett was drafted 5th by the Minnesota Timberwolves with a multi-million dollar contract right out of high school

More players were trying to gain early entry in the draft, missing out on the maturity and development gained from college basketball

Finding: While the league allowed early entry candidates into the league to financially gain from their talent, the league did NOT put any emphasis on their transition into the NBA, their maturation on/off the court or the development of their skills, both in the game of basketball and in their personal lives. If the NBA is promoting this trend, they need to then invest in these players so it doesn’t backfire on them in the way of hurting in the brand image.

NBA Facts: 1984 vs. 2003 Comparison

1983-84 season 2002-2003 season % change Comments

NBA retail sales $44 million $2.15 billion 4786%

The huge increases in sales, attendance and TV contracts are evidence that the NBA has yet to feel the dire financial impact of negative fan perception. At this point, the NBA can still salvage it’s deteriorating brand image, as it is not yet in true financial distress.

NBA attendance 10 million 21 million 110%

# teams 23 29 26%

Avg. player salary 250,000 4.1 million 1540%

TV contracts $5.5 mill/yr. (USA/ESPN)$23 mill (CBS)Total => $28.5 mill

$290 mill/yr. (TNT)$385 mill (ESPN/ABC)Total => $776 mill.

2623%

Avg. salary as a % of retail sales

0.57% 0.19% -66.44% With the substantial increases in retail sales, attendance, average player’s salary, and TV contracts, the % changes are most surprising. Given the amount of revenue these players are bringing in, this analysis shows that the players have a right to feel they are not being adequately compensated, given the salary cap regulations.

Avg. salary as % of T.V. contracts

0.88% 0.56% -39.77%

Finding: Since the last union lockout had very negative effects on the league, the NBA needs to work with players to ensure this doesn’t happen again, even if it means increasing their salaries or loosening the restrictions of the salary cap.

NBA Revenues and Expenses -2004

Revenues

42%

46%

12%Team gate receipts

TV contracts

other sources (Sponsorships, licensing part-nerships, con-cessions, pre-season pro-moter fees)

Costs

63%

37%

player salaries

operations, promo-tions, arena rentals, g&A

Finding: Player salaries are 63% of costs, while major revenue sources are TV and Gate receipts, signifying the financial importance of a strong supportive fan base. Out of these revenues and costs, which ones are fixed and which are variable? Can the NBA do anything to decrease the costs, while increasing revenues?

Analysis of Major Revenues/Expenses% of total Revenues / Expenses

Controllable? Explanation

REVENUES

Team Gate Receipts

42% Yes Owners could increase gate receipts to get more revenue; however, fans already think ticket prices are high. Would increasing prices help the NBA’s cause? If arenas are already 90% full, they could also expand arena capacity to get more receipt revenue; however, this may not be financially feasible. Another option to increase this revenue would be to expand the league internationally. The NBA already has offices in several countries overseas. Lastly, the league could expand the season with more games to increase this revenue stream, but this will also increase expenses related to arena rentals, arena operations, player salaries, etc.

TV contracts 46% No, but can influence

The NBA cannot directly control the revenue offered from TV contracts; however, if they make their product more valuable to fans in the US and abroad, these TV contract will become more valuable. If the TV ratings for the NBA are strong in the US and in other countries, the revenue from the TV contracts will be much higher.

COSTS

Player salaries 63% Yes, but steep price to pay

The NBA can cut the players salaries; however, with the players’ union, their hands are tied so to speak. If they try to cut players salaries, another lockout could ensure, which could be even more detrimental to the league’s reputation and fan perception.

Operations, promotions, arena rentals, etc.

37% Yes / No The NBA can control the costs associated with operations and promotions. They could try to cut costs associated with the league, but this will not help the fan perception that has been waning as of recent years. The league cannot control the cost of the arena rentals, and with these type of arenas being in short supply, this would not a feasible way to cut costs.

Finding: It seems that the only truly controllable revenue stream for the league at this point is the gate receipts. With fans perceiving current ticket prices as being too high and the product as lacking in quality, will this really bring more fans to the games? It would be cheaper for fans to go, but will they want to? Would international fans view the product differently than the fans in the US? TV contracts represent the largest source of revenue, and it appears that the NBA could strategically increase this revenue stream by increasing the quality of their product and continuing to broaden their fan base internationally. Common denominator to increase these revenues = INCREASE THE QUALITY OF THE PRODUCT!

Significant League EventsEvent Effects Comment

1998A dispute during the collective bargaining period over harder salary caps resulted in the longest NBA lock-out.

Players lost $500 million in salaries

Teams/ owners suffered large financial losses as a result of cutting the regular season from 82 to 50 games

The league suffered considerable financial losses and brand damage.

The lockout was a disaster to the league, the players and the fans. The NBA needs to ensure that another lockout does not happen in the future.

1998

A Sports Illustrated article revealed significant number of paternity suits and out-of-wedlock births among professional athletes

Tarnished player reputation, which hurt the reputation of the league as a whole

This began to erode the fan base, as the fans saw that the players were immature and they were not respectable people. This lowered the fans interest and enthusiasm in the league.

2001The National Basketball Development League became the official training ground for staff, officials, and players

Opportunity to play in a minor league if they were not in the major league

The league finally realized that it needed to invest in the development of the younger players. However, this league was not used as a true minor league for development purposes, as it was seen as being just for the players who were not good enough to play in the NBA.

2003NBA draft set a new record with 20 international players drafted in the first 2 rounds

Gave the league a larger pool of talent to pull from. These players were more mature/developed and did not much controversy among the league offices.

These players were already accustom to life on the road, playing against grown men, and playing in front of hostile crowds. Although most of them were unknown to American fans, they had very strong fan bases in their home countries. American fans also appreciated that they were more mature and clean reputations.

Success Factor EvaluationFACTOR REALITY What can be done? Priority

Public perception of our product

Player lockout, player indiscretions and immature players have all aided in the negative reputation of the league as it is in 2004. The younger players also do not have an established fan base from the collegiate level.

League needs to address this issue and prioritize the development of its players. The focus of the league should be to repair its image, and to regain the faith lost by the fans. The NBA also needs to evaluate the early entry candidates to determine if this is still a viable strategy, and, if so, how they can make it more effective.

If the NBA insists on continuing to recruit these early entry candidates, they need to focus on their development and make it priority, not just see it as a nice gesture.

1

Image of players on and off the court

Many players are in conflict with other players or coaches, or find themselves with legal issues.

Expertise of the athletes

New players coming just out of high school with less developed talents. Fans thinks this has decreased the quality of the game.

Existence of “Superstars”

No emerging superstars to replace the likes of Michael Jordan, Larry Bird, or Magic Johnson.

Quality of the games being played on the court

Fans want to see high scoring games, as they see this as quality entertainment. As of 2004, average scoring is down from its peak in 1999.

The low scoring could be due to several factors – less offensively talented players or more defensively talented players. If fans see the players as being high quality, they may not be so concerned with the actual score.

4

Level of competition between the teams

No true competition like days past. No real rivalries like the Celtics vs. Lakers. With more players to pick from and with a higher talent level than in years past, these players are more dispersed, rather than being on just a few select teams.

The NBA cannot directly affect this reality, but they can begin to promoting this as a good thing. This gives more fans the opportunity to have a winning team, rather than the same teams being good year after year.

3

Finding: The NBA knows the Critical Factors they need possess to be successful. Currently, they are lacking strong success factors; however, four of them have a very clear solution. The league needs to focus on these young players and their development in order to change the fan perception of their players and the quality of the league.

NBA’s Present Stakeholder Dissatisfaction

NBA

Players

Fans

Owners

Vendors

• Want higher salaries• Veterans mad about

international players and early entry candidates taking away from their salaries/playing time

• Dissatisfied with player off-court behavior

• Don’t like rising ticket costs

• Can’t identify with players

• Unhappy with eroding brand image

• Worried about dissatisfaction of players and how it may negatively affect their products

Finding: The NBA has multiple stakeholders, and in order for them to be successful again, we strongly recommend the NBA address each of these stakeholders needs and ensure that they are satisfied. Their success will be the direct result of the satisfaction of these stakeholders.

• Unhappy with eroding brand image

• Worried about dissatisfaction of players and how it may negatively affect their performance

• Have a lot of money on the line and frustrated with the decrease in attendance and revenues

Critical Issues facing the NBA in 2004

Issue Possible Causes

Perception of Player Dissatisfaction

•Union lockouts•Harsh feelings between veteran players and new players•Salary cap – Players think they should earn more, especially veterans•American players may feel resentful toward international players

Decrease in Revenues / Decrease in Attendance

•Decrease in long term loyal fan base•Fans don’t identify with players anymore

Negative Brand Image •Players off the court indiscretions very public•Players seen as greedy for wanting more money, even though making a lot•Lockouts prevent fans from watching the game and they become resentful

Negative impact of early entry candidates

•Young players are immature and their skills are not as refined as more experienced players•The NBA has not invested in their personal and professional development

Decrease in Superstars •Young players from high school who are not mature enough for the NBA•Early entry players have not built up good fan base via a college basketball career

What specifically has led to the decrease in fan base and overall popularity of the NBA?

Correlating Trends: What is the message?

1993 1996 20010

1

2

3

4

5

6

7

8

9

Early entry can-didates (in tens)

Attendance (in thousands)

TV ratings (Total NBA)

Finding: This graph proves that the NBA needs to focus on the largest revenue stream, which is TV contracts. If the TV ratings are negatively impacted by early entry candidates, this could have a negative impact on TV contracts as well. What does the NBA need to do to reverse the negative impact that early entry candidates have on overall fan perception and, ultimately, TV ratings.

Survey question Percent of interviewees who believe this is a problem

Players’ off court behavior 50%

Overpaid players 48%

Ticket prices 30%

Lack of effort from players 28%

Lack of teamwork 28%

Questionable calls 26%

Poor league management 20%

Lack of importance of regular season 20%

Style of play 15%

Low scoring games 11%

Yes Neither favor nor oppose No

Should the NBA draft high school players 30% 17% 47%

Finding: Results from an ESPN fan survey shows the main reasons fans are dissatisfied is directly related to the players themselves. By addressing these issues, the NBA may be able to rejuvenate their fan base, thereby increasing attendance and revenues.

Fan survey-Negative Fan Perception

Destructive Cycle of the NBAHigher regulation makes league more competitive (salary caps, media revenue evenly split).

Teams cannot invest more money to acquire several superstars, therefore, they cannot maintain a successful team year after year, so there are LESS RIVALRIES

Players become unhappy with salaries – new CBAs, Lockouts

Fans see the unhappiness of players and their off the court antics, and public perception is that they are greedy and immature, which leads to less popularity

Decrease in attendance leads to decrease in revenues

Less revenues to spread to teams – Org. has less revenue and tries to implement more regulation to control costs and increase ticket prices

Finding: The NBA’s attempt to create a fair and balanced league has led to a litany of issues for them, ultimately deteriorating their brand image and creating a substantial loss in their fan base, which has led to decreased revenues and lower attendance. The NBA needs to focus less on creating a sense of equality among teams by implementing salary cap and more on their players, which are the main product. The fans want to cheer for players they respect and who they can related to, and they want to see games that include several superstars playing for both teams.

NBA

Strategically, what does the NBA need to continue/change in the future in order to regain the popularity it once enjoyed and establish itself once again as a strong, sustainable brand that is beneficial for all stakeholders?

Directional Policy Matrix – NBA League in the US

NBA League Ops

NBA Entertainment

National Basketball Development League

Finding: In investing more in the NBA players and enhancing the fan experience, our recommendations will help to increase the NBA’s competitive capabilities by satisfying all stakeholders, which will result in these divisions being leaders in the industry.

RecommendationsNeeds Actions Reasoning and Outcome Priority

More mature / respectable players that fans can respect and relate to

Force early entry candidates to develop professionally and personally by requiring: - college play

-minor league play

The players are the NBA’s most valuable asset, as the NBA players ARE THE NBA’S PRODUCT. Fans come to games to see the players. They want to cheer for players they respect, and want to see succeed. The NBA needs to invest in these players, not only by fairly compensating, but also in their personal development. There is no doubt that the dramatic increase in early entry candidates has negatively affected the fan base. - These players will develop their skills and establish a fan base. When they enter the NBA, these fans will follow them. - The NBA needs to use its development league more effectively to force these young players to develop not only their basketball skills but also their maturity level

1

Positive brand image

- Work with the players in a positive way to avoid union disputes and possible lockouts.

- Train and develop players early in their careers to deal with the fame of NBA play

-The labor disputes and NBA lockouts had a negative impact on the fan perception of the players and the league in general. The NBA needs to forge a mutually beneficial relationship with the players in order to show the fans that they are a stable organization, dedicated to providing fans with the best product possible. When fans see the league and players are unhappy, they become resentful and may abandon the NBA. By working cooperatively, personal frustrations are reduced and off the court indiscretions may be less as well.

- Players need to be able to handle the pressures of immediate fame at an early age. This doesn’t come naturally, so requiring this type of training and counseling only makes for more mature players able to cope with the pressures. Public media indiscretions can be handled better as well.

2

Recommendations – Players, Fans Needs Actions Reasoning and Outcome Priority

Increased international exposure

Capitalize on the international presence of current NBA offices to increase recruiting international players

If the NBA continues to recruit from international markets, this will have several positive effects on the league:- Larger pool of talent to pull from – increase the quality of play- These international players will have solid fan bases in their respective

countries, which will increase global TV ratings, the value of TV contracts, international merchandise sales, etc.

3

To connect better with fans

Invest more in mobile media and telecommunications

In using its Entertainment division, the NBA should explore enhanced options for keeping players better connected, both via traditional media (TV, radio), as well as new mediums, such as interactive computer platforms and mobile technology (phone text messages, etc.). This will help the die hard fans to follow their favorite teams/players with more ease, as well as satisfying the NBA’s other consumer segment with the enhanced entertainment value.

4

Players feeling respected by the league and appropriately compensated

Implement a policy that compensates players based on the amount of revenues they bring in – retail sales, TV contracts, etc.

Retail sales and TV contracts have increased by 4,786% and 2,623% respectively, yet player salaries have only increased by 1,540%. The players are the ones bringing in the revenues, therefore should be compensated as such. If the players recognize they are being fairly compensated, and if they know their salaries are partially determined by the league’s revenues, they will be more motivated to give the fans a better experience. This will also alleviate the risk for union disputes and lockouts, which will result in a more positive brand image.

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