In the NBA's evolution, David Stern and Michael Jordan stand out as pivotal figures, driving the league's global influence and financial growth. Stern's tenure as commissioner saw the NBA embrace technology, international markets, and player empowerment, leading to a massive increase in revenue and fan engagement. Jordan, beyond his on-court dominance, secured a lucrative deal with Nike, resulting in the billion-dollar Jordan Brand. The NBA's strategy of highlighting player personalities, especially through social media, has positioned it as a forward-thinking league with a young, global audience. Despite challenges like the China-Hong Kong controversy, the league's focus on youth, international expansion, and leveraging technology suggests a promising future, though current valuations may already reflect this optimism.
"Welcome to season seven, episode four of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder of Pioneer Square Labs, a startup studio and venture firm in Seattle." "And I'm David Rosenthal, and I am an independent angel investor and startup advisor based in San Francisco."
The quote introduces the hosts and sets the stage for the episode's focus on the NBA, highlighting their respective backgrounds and the podcast's usual tech angle.
"And it has done so using a playbook that is very much in the acquired wheelhouse."
The quote summarizes the NBA's impressive rise from an underdog to a global sports powerhouse, suggesting that its strategies align with the themes typically explored in the Acquired podcast.
"The average team valuation has grown a staggering six x in the last decade, which talk about an amazing investment return just on its own."
This quote emphasizes the significant financial growth of NBA teams, with the implication that such an increase represents an exceptional investment opportunity.
"During the long march, the Red Army's storied, yearlong retreat in the 1930s to evade the nationalist army, communist soldiers and officers played basketball to lift their spirits and solidarity."
The quote illustrates the widespread adoption and cultural significance of basketball, even during historical events like the Long March in China.
"The owners of a bunch of ice hockey arenas in the northeastern and midwestern United States and Canada who wanted to make more money from their arenas on the nights when there weren't hockey games happening."
The quote explains the pragmatic and financially driven origins of the BAA, which would evolve into today's NBA.
"These players, kind of led by Chamberlain and Russell, they're not super happy with how they're being treated. They really want a pension plan from the league for the players after they retire."
The quote captures the early efforts of NBA players to secure their financial futures, highlighting a pivotal moment in the shift towards player empowerment and fair compensation.
"The athletes themselves were self-evidently proud and they liked nothing better than to beat their opponents, particularly on national television."
This quote reflects the growing prominence of NBA players and their impact on the league's popularity, as well as the role of television in showcasing their talents and competitiveness.
"Remember, it was just like that same year that Wilt got a $250,000 a year deal, which was crazy." "The ABA's rules let them sign college undergrads, which is actually how they get Dr. J or Julius Irving." "The ABA is actually the league that first invents and implements the three-point line and perimeter shooting and fast breaks."
These quotes highlight the competitive environment between the ABA and NBA, showcasing the ABA's willingness to innovate and challenge NBA's dominance by offering better contracts to players and introducing new game elements that would later become staples in professional basketball.
"After four years, they declare truce. They stopped the war. But remember the NBA Players association and the power of the players and the union and that they had gotten in a surprise move." "So St. Louis had a team in the ABA. The owners strike this deal where instead know, they were in dire financial straits like some of these other ABA teams. Instead of having to pony up more money to keep the team afloat and join the NBA, they fold the franchise in exchange for the draft." "The Nets have to pay the New York Knicks 4.8 million in indemnity as compensation for invading their territory."
These quotes describe the complex dynamics of the NBA and ABA merger, the legal challenges from the players' union, and the unique financial arrangements that some team owners made, which had long-lasting financial implications.
"In March of 83, by the way, this story so far, his background is identical to the Major League Baseball commissioner." "So Stern's in house, and then in March of 83, while he's general counsel, the league signs a new collective bargaining agreement with the players association." "Stern internationalizes not just basketball, but the NBA."
These quotes underscore David Stern's strategic moves as NBA commissioner, which included signing a new collective bargaining agreement, international expansion, and creating the WNBA, all contributing to the NBA's growth and global appeal.
"It was 2.5 million upfront or something like that. And then a percentage of, I believe the profits from the Jordan brand over time." "Jordan as of today has made over one and a half billion dollars personally from the deal."
These quotes highlight Michael Jordan's significant financial success through his endorsement deal with Nike and the lasting impact of the Jordan brand on the sports shoe market, as well as his continued earnings from the deal long after his retirement from professional basketball.
"NBA players and alumni are one the highest paid athletes in the world as a group." "The current and former NBA athletes have wealth at a level and have become entrepreneurs and business people at a level that just is completely eclipsed any other sport period in the world."
These quotes emphasize the entrepreneurial success and wealth accumulation among NBA players and alumni, showcasing their ability to leverage their basketball careers into significant business ventures and influence.
"He bought the team that Bubble Wallace drives for." "Well, he had a nice little return here on buying the Hornets because in 2010, he bought majority control of the club, and I think it went for 175,000,000, and he just sold 20% of it. That valued the company at one and a half billion."
These quotes highlight Michael Jordan's successful investment in the Hornets and his expansion into NASCAR ownership.
"And there was this narrative, which a lot of people believed, but frankly, was really wrong and also crappy and kind of racist, that the league was just filled with thugs." "Stern institutes what he terms, these are his words, a liberal and easygoing dress code that mandates that players wear business casual attire when participating in team or league activities."
The quotes discuss the negative stereotypes that emerged post-Jordan era and Stern's controversial dress code, seen as a misguided attempt to address the league's image issues.
"They embraced, and they're like, all right, great. You say we got to dress up. We're going to dress to the nines."
This quote illustrates how NBA players took the dress code and used it as an opportunity to express their fashion sense and individuality.
"So he brought, of course, China to the NBA. But even more important, he brought the NBA to China."
This quote emphasizes Yao Ming's role in expanding the NBA's presence in China and its broader global impact.
"They have all sorts of other content too. So they're basically recreating everything ESPN does in terms of content, highlights, features, behind the know, NBA insider, all these things, plus games that you can stream on any device in any format in any country in the world with a direct to customer over the top relationship."
This quote highlights the NBA's comprehensive approach to providing content and games to its audience through various platforms and formats.
"LeBron is the NBA player with by far the most social media followers. He has 119,000,000 followers across Twitter and Instagram."
This quote highlights the massive social media influence of NBA players like LeBron James and the league's strategic use of this influence for marketing and social impact.
"So the situation is, well, how do I maximize my own personal wealth? And over the years, they've decided that the way to do that is by creating the most competitive situation possible across the whole league and by doing this really unbelievably large revenue share, like the fact that half of all of their basketball related income revenue goes to be re spread around to everyone else."
The quote highlights the rationale behind the revenue sharing strategy, which is to create a competitive balance and thereby increase the overall value of the league and individual teams.
"So that leaves the local tv rights for any given team, which I think there's about 1000 games across all the teams that are not sold as part of the national package. 82 games."
The quote explains the breakdown of TV rights and the significant revenue generated from both national and local TV contracts.
"So another thing that we know for sure is that a little over a billion dollars a year is made from licensing and merchandising."
This quote emphasizes the substantial revenue the NBA makes from licensing and merchandising deals, which is shared among all teams.
"This jersey patch program brings in anywhere from ten to $30 million per team per year."
This quote highlights the financial impact of the jersey patch program, which provides additional revenue streams for NBA teams.
"That, of course, leaves one more huge pillar, which is tickets that our best estimates are one to $2 billion a year."
The quote outlines the importance of ticket sales in the NBA's revenue structure, which, despite challenges, remains a major source of income.
"There exists an asset called professional basketball, or called the game of basketball. Like, it's a product with product market fit with fans because it's a thing that's fun to watch and they seem to have a monopoly on it."
The quote explains the NBA's monopoly on professional basketball as a product with a strong market fit, giving the league a significant competitive advantage.
"The NBA franchises have managed to attract a younger and much more sort of tech and business savvy group of owners."
This quote reflects on the type of owners in the NBA and their willingness to be experimental, which has contributed to the league's growth and innovative strategies.