Study: Rockets among NBA leaders in lost fan revenues from COVID-19

Only the Lakers, Warriors, and Knicks lost more potential fan revenue than the Rockets ($35 million), according to a new report.

The Houston Rockets rank No. 4 among the 30 NBA teams in potential fan revenue lost due to the coronavirus (COVID-19) pandemic, according to a new study by business intelligence firm Team Marketing Report (TMR).

As broken down by Bill Shea of The Athletic, the Rockets lost an estimated $35 million from the nine remaining home games (with ticketed fans) at the time of the 2019-20 season’s suspension on March 11.

Only the Los Angeles Lakers ($52.7 million, 10 lost home games), New York Knicks ($45 million, eight games), and Golden State Warriors ($42.5 million, seven games) lost more in estimated revenues than the Rockets.

Overall, the NBA lost an estimated $694 million from a total of 258 canceled regular-season games. The average loss in fan-based income was $22.9 million per team, according to TMR data. The study did not measure potential losses from home playoff games, which would add to the millions in lost revenue for good teams, such as the Rockets.

Teams with the least potential revenue lost — between $10 million and $12 million, each — were the Memphis Grizzlies, Charlotte Hornets, Minnesota Timberwolves, Cleveland Cavaliers, and Phoenix Suns.

Here’s how The Athletic describes the formula used for those estimates:

TMR extrapolated the lost team income using a weighted formula, which it calls gross game day fan revenue, that accounts for each team’s Fan Cost Index (see below), premium versus regular ticket prices, and attendance. The math shows that in 2019-20, the Warriors generated the most income from fans at $6 million per game, followed by the Lakers at $5.6 million and the Knicks at $5.2 million. At the bottom are the Hornets, at $1.1 million per home game.

Commissioner Adam Silver has said that about 40% of the NBA’s revenue comes from ticket sales and other gameday fan spending.

By resuming the 2019-20 season without fans at a “bubble,”, the NBA and its teams were able to fulfill television contracts with both national and local partners — which spared them from further losses. However, revenues were well short of expectations from prior to the season.

That’s why a clear goal for the 2020-21 season is to hold games in home arenas (in front of fans), and thus try to recoup some of those usual revenue streams. It isn’t yet clear what percentage of traditional arena capacity will be targeted to meet physical distancing recommendations.

As for the Rockets, owner Tilman Fertitta said in May that the team hadn’t had any layoffs or pay cuts due to the pandemic. However, like many NBA owners, he’s certainly feeling financial pain this offseason from revenues that came in far short of earlier expectations.

[lawrence-related id=38577,29291]