The NBA is a multi-billion dollar industry with the highest-paid union workers. Player’s unions work to ensure athletes receive fair and equal pay, some up to $40 million. Teams themselves average $2.1 billion, with the least valuable franchise still valued at $1.3 billion. Despite these large numbers, NBA team revenues still face , and the Detroit Pistons are the least profitable.
The Pistons’ poor performance
The Pistons have not found much success in recent years. In 2019, they played in the playoffs for only the second time since 2009 and lost in a landslide the first round. In 2011, Tom Gores bought the Pistons, hoping to turn the team around, but he has not been successful. The team has only had a positive record twice since Gores’s ownership.
The 2015-16 season started on shaky grounds for the Detroit Pistons, details MLive. The star, Reggie Jackson, was out indefinitely with a knee tendinitis injury. The Pistons struggled for much of the season, only have a neutral win-loss record.
The end of the season proved to be a rally for the struggling team, however. They won nine of their last 12 games, securing a spot in the playoffs. Unfortunately, the Pistons lost the first round of the playoffs to the Cavaliers.
Profit-sharing in the NBA
In 2017, almost half of the NBA’s teams operated at a loss. The Detroit Piston’s lost the most reporting $63.2 million in losses, according to ESPN. With player salaries being so high, and the disparity in team revenue being so large, the NBA implements revenue-sharing.
All NBA teams pool their revenue to meet the salary cap for that specific year. The Pistons received $17.6 million to offset their loss, but that still left them with a revenue deficit.
How NBA revenue is generated
Besides profit sharing, NBA franchises have three major sources of income. Market income includes broadcasting the biggest source of income. In the 2016-17 season, TNT and ESPN spent $24 billion on NBA television broadcasting, reports Investopedia.
Exposure leads to the sale of merchandise. Merchandise is a billion-dollar business in the NBA. Jersey sales alone average teams $9.3 million a year. Arenas themselves generate a significant source of income through ticket sales, concessions, merchandise, sponsorship, and more.
Little Caesars Arena, home of the Pistons
From 1988 to 2016, details CBS Sports, Detroit called The Palace of Auburn Hills their home. The location was in the suburbs of Detroit, 35 miles from the downtown area, creating a long commute long for fans.
Gores hoped to bring the team back to Downtown Detroit, a location that had not played at since 1978, in hopes of boosting revenue. To do so, the Pistons negotiated to move into the new arena that was in construction for the NHL Detroit Red Wings, Little Caesars Arena. The new arena includes one of the largest entertainment districts in the country along with state of the art construction and facilities.
A bright future
The 2019-20 season brought a lot of losses. There were multiple losing streaks while not even one winning streak of more than two games, as NBA.com reports. Despite the losses, Gores is optimistic for the future while stating he understands the need for change.
Frequent injuries among elite players crippled the team, and Gores sees the need for adjustment. In the coming months, Gores plans to have a lot of discussions to determine what steps will help the Pistons succeed in the coming seasons both in the standings and in revenue.
The Pistons have a long history with a supportive fan base. Although they are the least profitable team in the NBA, the future remains bright. Understanding how NBA profits incur, and developing a strategy, Gores hopes to have his team winning both on the court and in revenue.