National Basketball Association

Background

The National Basketball Association is the highest-level professional basketball league in North America and the youngest pro sports league in the US. The NBA is the third-wealthiest pro league by revenue in the world.

The league is made up of 30 teams in two conferences, with each team playing 82 games from mid-October to mid-April. Conference champions meet in the NBA Finals in late May or June each year to crown a league champion.

History

Basketball was invented in 1891 by Dr. James Naismith, who hung two peach baskets at either end of a YMCA gym and developed 13 rules that emphasized skill and teamwork over physical contact.

The game instantly became a hit, and by 1895, the new American sport was on college campuses. Basketball became so popular, it was added as an Olympic sport in 1936.

Early professional leagues started and folded throughout the early 1900s. The Basketball Association of America formed in 1946 and merged with the National Basketball League in 1949, creating today’s NBA.

The early years of the league were dominated by the Boston Celtics, who captured 11 championships in 13 years, including eight in a row from 1959 to 1966.

In 1967, the American Basketball Association was formed, featuring a flashier style of offense. The competition caused player salaries to rise in both leagues.

The NBA’s image was in serious decline during the 1970s due to drug use and fighting, which prevented networks from airing games live.

In 1971, the NBA debuted a new logo, modeled after the new Major League Baseball logo. The branding efforts, along with ABA teams folding, helped seal a merger of the leagues in 1976.

David Stern

Rising player salaries and limited TV revenue were financially straining NBA teams in the early 1980s. Then-Executive Vice President David Stern helped develop the first salary cap in North American sports history, a revenue-sharing model later copied by other pro sports leagues.

Stern was made NBA Commissioner in 1984. After watching teams deliberately lose games for higher draft picks, he started the Draft Lottery in 1985, which gave nonplayoff teams equal chances at draft picks.

Stern’s focus on superstar players instead of teams helped brand the NBA and secure lucrative TV deals that helped grow the league. When Los Angeles Lakers star Magic Johnson revealed he contracted HIV in 1991, Stern brought global awareness to a highly misunderstood disease.

After the US Women’s Basketball Team won gold at the 1996 Atlanta Olympics, Stern helped launch the Women’s National Basketball Association (read story). With support from the NBA, the WNBA has grown to become the longest-lasting women’s pro sports league in the US.

Under Stern’s leadership, the NBA grew from $165M in revenue to over $5B when he retired in 2014. Today, every NBA franchise is worth at least $1B. Players salaries grew from an average of around $250K per year in 1984 to over $9M today.

Global Expansion

From Stern’s early years as commissioner, he pushed for the NBA’s expansion outside of North America. In his first year, he sold broadcast rights in Argentina for $2K a year.

In 1987, he started shipping VHS tapes of games to state-run TV stations in China, and opened an NBA office there by 1992. Today, China is the league’s second largest market.

When the Olympics allowed professional basketball players for the 1992 Games, Stern used the opportunity to showcase the NBA to the world (see impact). The 1992 “Dream Team” won gold and is considered the greatest team ever assembled. The US has won gold in all but one Olympics since.