The Toronto Raptors are about to fill their pockets thanks to their berth in the NBA Finals. What does that mean for the team and their future plans?
The Toronto Raptors will be competing in their first ever NBA Finals. With that comes great fanfare and admiration. Media presence and attention will be at an all-time high and players and fans will forge lasting memories. It also means that the teams involved will be receiving a substantial cash windfall.
There are significant dollars that change hands at this stage of the playoffs. The City of Toronto will reap the rewards of increased tourism. Local bars and restaurants will see a monetary spike on game nights and so too will the Raptors and their ownership group, Maple Leaf Sports and Entertainment Ltd. (MLSE).
According to Forbes, the Raptors are the 11th most financially valuable team. That is ahead one spot from their 2018 placement. They are evaluated at $1.67 billion while generating $275 million in revenue. Now that the team is in the finals, their gains will likely increase next year.
The Raptors opponent, the Golden State Warriors, have become a staple of the championship series are now the third-ranked team. They are evaluated at $3.5 billion with a generated revenue of $401 million. The Warriors value spiked 13-percent from 2018. The Raptors berth in the finals will surely mean even greater financial growth.
A lot of factors contribute to those gains. Merchandise is one driver. The deeper a team gets into the playoffs, the more they benefit from their logo apparel flying off shelves.
According to Adobe Analytics, just qualifying for the postseason will lift merchandise sales by 24-percent. Conversely, teams who don’t make the cut, see negative gains of 87-percent. Game 1 of the NBA Finals was the largest single-day sale of Raptors Merchandise at Scotiabank Arena, breaking the previous record by 27-percent.
The Raptors will be collecting on ticket and concession sales as well. The price to watch a game at Scotiabank Arena exponentially rises each round, allowing the team to cash in at the gate.
Toronto Raptors NBA Finals ticket prices are the most expensive of all-time, and while the team won’t benefit from the secondary market, they’ve done a fine job of increasing original ticket prices all by themselves.
Another one of the largest beneficiaries of the NBA Finals is the broadcast networks. Their ad-buy rates soar for the series. In last year’s finals, an ad for Game 1 had the high-cost of $829,577 and a low rate of $690,909.
It happens that MLSE is owned by the same companies who own TSN and Sportsnet, the sole broadcasters of the series in Canada. That puts these businesses in line to be cashing some hefty advertising checks, especially since it’s the Raptors, Canada’s only team, who will be playing.
All that additional revenue begs the question, “how will that help the team?” The Golden State Warriors have used the funds they’ve accrued by being a mainstay in the finals by pouring it back into their roster.
Golden State has the largest total cap cost in the league. This year’s group costs owners Joseph S. Lacob and Peter Gruber more than $145 million in salaries and $54 million in luxury taxes. A combined $200 million isn’t easy to swallow; making multiple finals births helps.
The Raptors are themselves in the position of paying more than $160 million for this year’s team. More importantly, they are already slated to go over the cap next season, causing them to once again pay luxury taxes. This should not be something they fear, but rather be a welcome price to doing business.
With the primary focus this offseason sure to be bringing back Kawhi Leonard, Masai Ujiri should be working with ownership to gain permission to break the bank. His goal remains the same every year, win the Larry O’Brien Championship Trophy. Now that MLSE has seen their bottom line inflate, hopefully, they are willing to dig deep in their pockets next season.
One thing is sure, this playoff run has been a lot of fun for the fans. Apart from the teams who have already been eliminated, the only people who won’t be jovial throughout the finals are the Raptors accountants who are about to get extremely busy.