Economics Theories Implied in NBA Playoffs (原创评论)

In this curtate season, NBA teams and sponsors need players to play more matches and attract more fans to watch matches than previous seasons in order to redeem the loss due to NBA lockout in 2011. Today I want to talk about two main economics theories implied in NBA playoffs.

First, according to the 2012 NBA playoff format provided by http://www.betinf.com/nba_playoffs.htm.

"All rounds of the NBA Playoffs are best-of-7 games. This means, the team that is the first to win four games out of seven is the winner of that round. The First Round, the Conference Semifinals and the Conference Finals are played in a 2-2-1-1-1 format. The NBA Finals are played on a 2-3-2 basis. Teams with the better record during the regular season gained home-court advantage."

The 2-3-2 playoff format is better for the team who has four home matches named "A" than the other team named "B" in the series. There are two cases. One case is that if team A could win first two home matches and lose all of three away matches in the series, then it would still gain an advantage to play the final two matches at home. The other case is that if team A could win first two home matches and one away match in the series, then it would gain a huge advantage to play the final two matches at home since it only needed to win one of two final matches to win the series.

Why do I emphasize home matches? The reason is I observed that most of teams have higher chances to win home matches than away matches in this year's playoffs. In addition, Simth & Turcotte (2012) stated that "Fans are most interested in games where the home team wins 60-70% of the time." Of course, if a home team could win the match at home, then it would attract more fans to watch its future home games. The league sponsors would want to see more matches played to earn as many profits as possible throughout the playoffs.

Additionally, although both formats should be good for team A, the 2-2-1-1-1 format probably bring smaller advantages than the 2-3-2 format to team A. The reason is that team A would still have three home matches and two away matches in the first five games, but it would have to play one away match and one home match in the final two games. The costs of more frequent flights between home and away courts are not large compared to the profits earned from holding on games, but all of costs would be beared by NBA teams. With the 2-2-1-1-1 format, even if team B lost three away matches in the first five games, it still had higher chance to beat team A at its home court than at team A's court in Game 6. Then the final match would be brought to team A's home court.

On the other hand, with the 2-3-2 format, suppose both team A and B won their home matches in the first five games, team B would play two possible away matches at team A's home court. Therefore, team B must be inspired to play very hard to win Game 6 to end the series. If team B won Game 6, then sponsors would earn fewer profits than two teams played all of seven games in the series. Nevertheless, if both teams were good at winning home matches, then 2-2-1-1-1 would be a format to remain competitive balance between two teams and bring the suspense of the series winner to Game 7.
(Note: Team A and B I mentioned above should be competitive teams that means one team cannot beat the other team on a 4:0 or a 4:1 basis.)

All of the above excepts quoted statements are just my opinions, but the real cases should be analyzed and proved by using true data from NBA officials.

Moreover, Simth & Turcotte (2012) created a model to analyze factors that determine the championship. You can read his model in the 15th slide of the Power Point Presentation at http://www.slideshare.net/AndrewSmith53/nba-competitve-balance.  I do not have any data available to analyze their models, so I will stop the discussion of my first main point here.


I have done my lunch break. Let's continue on the discussion of the second main point that I want to stress which is the NBA's small market ratings problem. You guys should read this article at http://sbronars.wordpress.com/tag/nba-playoffs/ prior to read and analyze my comments.  

According to Bronars (2012)'s comments, "The Thunder and Spurs are clearly the best teams in the West; the problem is they don’t have many fans." Fewer fans watch NBA games mean fewer profits to the league sponsors and NBA teams because of advertisements, the number of admission tickets, and other factors. The original article was written on May 23rd, 2012; Now it's June 10th, 2012. Oklahoma City Thunder (OCT) has beaten San Antonio Spurs and won the championship of Western Conference. However, the basketball market in OCT is smaller than some NBA teams, such as Los Angeles Lakers, Clippers.

In addition, Bronar (2012) indicated that "There are fewer television households in Oklahoma City and San Antonio combined than there are in Minneapolis, alone." Fewer possible fans watch NBA playoffs mean fewer people would watch advertisements on NBA match lives. Thus, some advertisers were not attracted to pay a lot of fees to advise their products on NBA playoffs. Consequently, the advertisement income would be reduced as well. From a market perspective, I would recommend Boston Celtics beats Miami Heat in Game 7 of Eastern Conference Finals tonight since the market size of Boston is larger than Miami's. More prospective fans watch NBA finals would bring more profits from various resources to the league sponsors and NBA teams. Next year the investors and managers of the NBA league could use the profits earned this year to expand the schedule length of the NBA league and provide more competitive and higher quality games than this year's games for our basketball fans.


Thanks for reading my comments. Now all of you are welcome to continue the discussion below.