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Good Thursday Morning. Here’s the rundown of this week’s Sports Business Playbook:

• 📰 This Week’s Topic: The NBA is launching its new In-Season Tournament this weekend. What is it, why is the league doing it, and will it work?

• 🍸️ Impress Your Friends at Cocktail Party: Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? Hit the “Impress Your Friends at Cocktail Party” section at the bottom for a CliffsNotes of this week’s topic

• 🤯 “Whoa of the Week”: Volleyball continues to put up big numbers

• 💪 Weekly Reminders that Sports are Awesome: Sports and Halloween!

Hey team,

The NBA launches its new in-season tournament this weekend, and it’s piqued a lot of fans and sports business enthusiasts’ interest.

Taking inspiration from the European soccer leagues, the league is creating a month-long tournament within the framework of the current regular season schedule, with the goal to create something new and exciting for players and fans.

Unlike the European competitions, though, the tournament is not adding outside teams/leagues or creating major new incentives. All games will be played by the same 30 teams, and there will be standard monetary prizes for the winners.

That being said, in addition to MLS’ League Cup (MLS vs. Liga MX) that was implemented this season, the In-Season Tournament is one of the bigger swings that an American professional sports league has taken to try to innovate during regular season competition in a long time.

This week, we talk further about what the In-Season Tournament is, why the NBA is doing it, and whether it will work.

Bracketology

Here’s how the tournament is set up.

All 30 teams are split into six teams of five — three from the Western Conference and three from the Eastern Conference. Beginning November 3rd and continuing each Tuesday and Friday through November 28th, there will be four designated Group Play games on “Tournament Nights” — meaning, the teams play against each opponent in their respective groups, with two games at home and two on the road. All other games played during that time will just be “regular” regular season games.

The teams that win these groups plus two “wild cards” — the team from each conference with the best record in Group Play games that finished second in its respective group — will advance to the Knockout Rounds. The Knockout Rounds will all be single elimination games, with the Semifinals and Finals taking place in Las Vegas in early December.

All games with the exception of the Final will count as one of the 82 regular season games, and stats accrued during these games will be considered regular season.

While the league is not going with the most exciting name in the book (apparently that is intentional and backed by data 🤷), the NBA is doing everything it can to differentiate the tournament games and generate buzz, including flashy advertising/branding, alternate jerseys/courts, and prizes including both a new trophy (“the NBA Cup”) and a $500,000 bonus for all players on the winning team.

Why are they doing this?

The NBA’s Playbook

There are two main reasons the league is implementing this tournament.

Bring attention and hype to regular season games

The NBA playoffs are a marquee series of events that typically drive massive viewership each season.

The regular season, particularly before Christmas, is another story, though. The games are not overly meaningful in viewers’ eyes, and there is a ton of competing interest with both the NFL and college football seasons still going. This disparity plays out to the tune of nearly 250% more viewers consuming playoff basketball — 5.47 million in 2022/23 — than regular season — 1.59 million.

Part of the issue also stems from the hot topic of the past 10 or so years — “load management.” This practice involves having star players get the day off and sit out multiple regular season games throughout the season for purely rest-based reasons. The goal is that the players will be ready for the stretch run of the regular season and then the playoffs. Whether right or wrong, the concept contributes to the stigma around the lower priority of regular season games for the players, which then impacts the fans/viewers’ experiences and propensity to engage.

The NBA has wrestled with how best to manage the load management issue for years. They’ve implemented new rules this year to try to change the narrative, and the In-Season Tournament is a further attempt to create buzz, ensure the stars play, and get people to tune back in.

As Evan Wasch, the NBA’s executive vice president of basketball strategy and analytics, said, they want the tournament to be “something that could grow over time to become that true second championship that serves as a legacy-building opportunity for players—and, ultimately, just further enhances the quality of NBA competition.”

Split out this inventory for new revenue opportunities — specifically sponsorship and media rights

The NBA is a tier 1 sports media property. The league brings strong viewership, a majority young, tech savvy audience, and a ton of inventory that helps the media companies fill programming slots.

When you have desirable assets like this, you want to create as many 1+1 = 3 scenarios as possible.

The NBA’s hope is that it can generate enough interest with the In-Season Tournament so that it can sell net new sponsorship assets — i.e., naming rights for the tournament — and already existing digital and in-person assets that can be split out and sold in their own standalone packages by the teams and the leagues.

The same goes for media rights. The NBA’s current 9-year, $24 billion deal with ESPN/ABC and TNT is the second largest US media rights deal after the NFL. The current contract is up after the 2024-25 season, and there are expectations that this next deal could double or even triple to an astronomical $75 billion in total value.

How?

In addition to raising the prices on the current companies, the league is expected to bring in additional media partners — read: Amazon and/or Apple — to create a series of segmented deals that will cumulatively add up to a larger overall sum.

The two tech giants covet unique, carved out game packages that can create habitual viewership, and they have both delivered stellar results with their other sports deals — i.e., Amazon’s Thursday Night Football has had viewership numbers well above 10 million each week of this NFL season, and Apple has intrigued sports properties with its MLS and MLB deals despite disclosing little information about performance.

The In-Season Tournament gives the NBA a juicy package to offer up to these streaming services, and the expected demand from both them and any other interested media companies — i.e., NBC — that want to get in on the action means the NBA should get a strong deal.

Hoop Dreams or Pipe Dreams?

The big question on the NBA (and every other league with long seasons who is watching this intently)’s minds: will this actually work?

We’ll know a lot more in a few weeks, but my prediction is a very business school, “consultanty” answer: it depends.

Pipe Dreams

Credit where credit is due to the NBA for trying to innovate, but this format is not really creating anything “new.”

It’s effectively just rebranding a series of ho hum regular season games and then creating a bit of additional excitement by having the players go to Vegas for a weekend (aka James Harden’s Super Bowl) if they make it to the final four.

You can call it whatever you want, but a Tuesday night Group Play game between the two bottom feeder teams is not exactly going to have people on the edge of their seats.

Plus, it’s hard, particularly in today’s day and age, to manufacture interest from an increasingly fickle consumer base.

The best sporting events and rivalries are organic and take years of excitement, emotion, and often bad blood to develop. Players spend their entire careers singularly focused on winning a championship.

Creating a manufactured, Impossible Burger version of these things often doesn’t end well. Remember UConn and the short-lived Civil ConFLiCT with UCF?

Once the kitsch wears off, what’s left?

Hoop Dreams

So, I’ve made my point on why I think the In-Season Tournament is the hardwood equivalent of Gretchen Wieners trying to make fetch happen, but here’s why it could work.

From a revenue perspective, as noted above, the NBA has the luxury of being able to take risks like this and split out specific games because they know that the demand from commercial partners — sponsors and media companies — will be there.

Even if the shtick wears off of the tournament after a few years, there will be media partners who still covet the ability to show NBA games of some meaning on their platform.

Plus, the NBA has the benefit of an incredibly talented marketing staff who understand how to connect with fans better than most leagues. There will be unique campaigns and promotions that try to drive interest to the games.

This first point ties into my second area of focus: player motivation.

Of the major professional sports, the NBA and its Players Association probably have the most pragmatic, growth-oriented relationship. These two entities are never going to be buddy buddy, but there is a recognition that both sides stand to make a ton of money if they find common ground and work together to grow the overall pie that they are splitting. And they usually do a good job of playing the long game.

So, is the “NBA Cup” or the $500,000 prize for the winning team of the In-Season Tournament going to motivate a bunch of players making millions of dollars a year and chasing a true championship ring? No.

What does move the needle for the players is a series of fat new media deals in two years that significantly raises the league salary cap.

This tournament is most likely going to be a coveted piece of media inventory that the NBA splits out, so a more interesting on-court product means more demand in the market, which means more revenue for the league, which means higher salary caps, which means higher player contracts.

Adam Silver knows this, and the players know this.

It would not surprise me at all if there have been conversations at the Players Association and team levels about the long-term positive impacts this tournament could have on the bottom line, which is more than enough motivation to get the players invested.

Ultimately, the effort they put in, combined with the marketing and storytelling firepower at the league level, are what could make this a success.

1+1 = 3.

🍸️ Impress Your Friends at a Cocktail Party

Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? This section is the CliffsNotes of this week’s topic

• Opener: Taking a page out of the European soccer leagues, the NBA is launching its new in-season tournament this weekend.

• Shot: The games are set up to take place on Tuesdays and Fridays in November, with the Semifinals and Finals in Las Vegas in early December. All “Tournament games” outside of the Finals will be considered regular season games so it is not adding games to the season. The league is marketing this as something much different than traditional regular season games, so there is a unique marketing campaign and the teams will have specific jerseys and court designs for these games.

• Chaser: Why is the NBA doing this? The league has a great product, but it often struggles to drive interest in the early months of the regular season due to the other sports still going on and the perception that the games don’t really matter since star players may not play some of these games due to “load management. This tournament hopefully generates interest from the players and the fans, and it also gives the league a standalone series of games to sell sponsorships and media deals against.

• Chaser: Why it may not work: this new tournament doesn’t really do anything new. There are no new games or teams involved. It’s just repurposed regular season games. It all feels like manufactured interest. In today’s environment, that could have an inverse effect.

• Chaser: Why it could work: the players and the league have a good understanding that they need to work together to grow the revenue pie together to both make more money. The league’s new media rights deal is coming up in two years, and this In-Season Tournament could be one of the key pieces of inventory that gets carved out for a media company to own. To maximize the revenue, though, the product needs to be compelling. The players and the league, therefore, will do whatever it takes to try to make the tournament feel special.

🤯 “Whoa” of the Week

Insane, mind-blowing things constantly happen in the sports business world. Here was my favorite of the past week.

1. Volleyball continues to churn out big numbers

💪 Weekly Reminder that Sports are Awesome

This newsletter is, of course, mostly centered on the business side of sports and the things that happen off the field. That being said, it’s important to remember why we fell in love with sports in the first place, though.

This section is meant to highlight the amazing things that happened in sports this week that serve as that reminder.

1. Bringing you an extra spooky edition featuring Halloween antics from around the sports world

Thanks for reading! Let me know what feedback you have.

Also, if you enjoyed this breakdown, please consider sharing it with your friends and network by clicking the social media icons at the top of the newsletter.

Until next time, sports fans!

-Alex