The goal of any business is to grow. Constant growth can only be maintained by tapping into new markets. Once a business has saturated a market, it must create a new product, expand into new markets, or both. The issue with professional sports is that the product can’t be changed. It isn’t like the NBA produces much outside of its primary product, the game of basketball. Everything in the business ecosystem (apparel, sponsorships, etc.) is reliant on the product on the field of play. That means the major leagues in the USA must expand their global footprints, and each league has done so in a unique way.
The NBA held a game in Mexico City between the Timberwolves and Rockets on Wednesday, so it’s an opportune time to examine how the leagues have expanded internationally.
The NBA has been a leader in international competition. The NBA played its first international game in 1978 in Tel Aviv. Since then the NBA has played in 20 different countries and 43 different cities. Most games have been exhibitions against international competition, but the NBA has opened the season in foreign countries multiple times with seven regular-season games held abroad.
Along with the Dream Team, this type of consistent expansion has led the NBA to be one of the most diverse leagues in the world. Dirk Nowitzki, Anderson Varejao, Pau and Marc Gasol, Manu Ginobili, and Yao Ming are examples of how far the game has spread thanks to a concerted effort by the NBA.
(Note: We will use the post-merger NFL here)
The NFL is the only league that has had rumblings of moving a team outside North America. The league played its first international exhibition in Japan in 1976, and hosted American Bowl exhibitions from 1986-2005 in Japan, Mexico, Canada, and multiple European countries.
The NFL also tried to expand internationally through its developmental league, NFL Europe. NFL Europe is no longer active, but the hope was to educate European fans on football, and develop bottom of the roster talent at the same time. The NFL has continued holding games in Europe, specifically in London at Wembley Stadium. The NFL continues to expand the number of games in London, making it an often discussed location for a expansion team (or team that is moving).
Major League Baseball has a heavy international flavor with stars from Central and South America, the Caribbean Islands and Asia. However MLB hasn’t played many games internationally. An All-Star team has consistently traveled to Japan, but games between MLB teams have just started to become a trend, with regular-season openers held in Japan and Australia.
MLB has attempted to increase international interest through the World Baseball Classic, and rumors are flying that MLB may play a few games in Europe, where it has minimal popularity. Although baseball is popular in Central/South America and the Caribbean, those are undeveloped markets with little discretionary income. Expanding popularity may not lead to expanding revenues.
The NHL played its first international exhibition in 1938 when the Red Wings and the Canadiens toured England and France. With a built-in international audience in the Scandinavian countries and the former communist bloc, it should be a no-brainer that the NHL would hold games in Eastern Europe.
However, the league has not played internationally since 2011. This brings up questions as to why the league hasn’t done so. It is fairly obvious that the market is limited for the NHL. If the NHL couldn’t stay in Atlanta, it makes sense that hockey wouldn’t draw crowds in warm weather countries without dedicated fan bases.
Every league is trying to expand, and every league looks to China as a goal market. The NBA was able to make headway with Yao Ming. The NFL scheduled an international regular-season game with the Seahawks and Patriots, but it was cancelled and a return to China hasn’t materialized. The MLB played exhibitions in China ahead of the 2008 Beijing Olympics and launched a youth training program. China is the crown jewel: an enormous population with a wealthy class that can be targeted as a future revenue driver. Sports, like any business, will continually look to penetrate the Chinese market.
Other factors should be taken into account as well. Does a similar sport help or hurt the major leagues? Will the Brits, French or Australians flock to football, or is rugby similar enough that the NFL won’t penetrate those markets successfully? Should MLB focus on India because cricket is extremely popular? Does the fact that the NBA doesn’t have a similar international game help league expansion, or will a lot of time have to be focused on educating fans?
The goals of expansion aren’t going to change. It just depends which league plants its proverbial flag in the international markets.
Michael Colangelo is Assistant Director at the USC Sports Business Institute and Senior Editor of The Fields of Green.