In the last five years, no team that has won the NBA lottery made the playoffs the following season. Winning the NBA lottery might not directly coincide with a playoff run, but there is a trend that suggests it has a positive impact on a team’s bottom line.
Winning at the Gate
Getting the No. 1 pick in the NBA draft gets fans excited. The pick signifies a turning point in the mind of fans. Their team now has a new identity and someone the team can build around for years to come. History suggests there might be one or two potential franchise players in each draft. For a fan base that probably had to sit through a season of tanking (or years of futility), winning the lottery, and thus the chance of acquiring that franchise player, is the highlight of the year.
In 2009, Blake Griffin was the consensus No. 1 pick. The Clippers won that year’s lottery and sold more season ticket packages in two months than they did the entire previous year. The next year, John Wall was picked by lottery winner Washington. The Wizards retained 80 percent of their season ticket holders and sold an additional 2,000 season tickets.
In 2011, the Clippers technically won the lottery again, but the pick, eventually guard Kyrie Irving, was sent to the Cavaliers as a result of an earlier trade. The Cavs got the boost at the box office by renewing over 75 percent of their season-ticket holders, which outpaced their initial projections.
Anthony Davis was the prize in the 2012 draft. When the ping pong balls came up for New Orleans, the Pelicans (formerly Hornets) saw a 500 percent increase in incoming calls resulting in 10,000 season tickets sold to fans anticipating the securing of the man affectionately nicknamed “the brow.” In 2013, the draft was light on talent and marquee names. Anthony Bennett was the No.1 pick, and well . . . it’s hard to increase ticket sales from the D-League. So it isn’t a guarantee that ticket sales will increase, but there is a pretty good chance the team will benefit financially from the No. 1 pick.
A large portion of non-revenue sharing income is generated from gate receipts. Teams rely on being contenders, having big name draws or the potential of success to market their tickets. The No. 1 pick provides that type of hope for the fan base. For example, if we simply take the 2,000 tickets the Wizards sold for winning the top pick and multiply it by the average weighted ticket price for an NBA game ($50.99), the lottery-winning team could see an increase of $4 million dollars in revenue (Back of the envelope $50.99 per ticket x 2,000 tickets x 41 home games). Thus winning the NBA draft lottery could be similar to winning the actual lottery.
Marketing and Partnerships
The No. 1 pick in the NBA draft also becomes an immediate household name. Generally, fans will have followed the player from the college level to the pros, thus providing the instant name recognition important for brands looking to attach themselves to a certain athlete.
Teams can actually leverage its players’ brand portfolio into greater relationships with the team. For example, Kyrie Irving has an endorsement deal with Pepsi. It just so happens the Cavaliers recently changed exclusive beverage providers in QuickenLoans arena to . . . you guessed it, Pepsi.
Before the Donald Sterling saga caused Kia Motors to pull its sponsorship from the Clippers, Kia was not only the official car partner of the team, but also endorsed by former No. 1 pick Blake Griffin.
It makes sense for brands to align with the teams its endorsers play for and vice versa. Getting the top pick could bring in new brands and partners because the brands are attached to a star player or are looking to be associated with a star player.
Tonight’s lottery could change the fortunes of the winning team on the court. It could also increase the fortunes of the teams and owners lucky enough to get the first overall pick.
Michael Colangelo is Assistant Director at the USC Sports Business Institute.