Expansion, Realignment, and the Future NBA Schedule

Adam Silver recently made headlines by acknowledging that the league is looking more closely at the possibility of expansion.  This increased interest is likely fueled by the owners’ financial losses from the pandemic and the continued rise in team valuations, now exceeding $2 billion on average according to Forbes, creating the opportunity to quickly recoup those losses via franchise fees. 

A franchise fee is the amount that an ownership group pays the league for the privilege of obtaining a new team.  Unlike most other league revenues, franchise fees are explicitly carved out of the Basketball Related Income that needs to be shared roughly evenly with the players under the Collective Bargaining Agreement, meaning that the existing owners retain all of it [CBA Article VII, Section 1(a)(2)(iii)]. 

When the NBA expanded into Canada in the mid-90s, the fee required of those new ownership groups was $125 million – up from $32.5 million a handful of years prior.  In the 2000s, Charlotte got a new team for $300-350 million.  Now the league is optimistic that it can obtain more than $1 billion in awarding a new franchise.

By adding two franchises for $1 billion each, every one of the 30 existing ownership groups could receive nearly $70 million.  Bump that franchise fee up to $1.5 billion, and it’s $100 million per owner. That would go a long way toward offsetting any losses incurred in the 2019-20 and 2020-21 seasons. 

As for which cities would become the proud new homes of an NBA team, it is well-known that Seattle is at the top of the list.  Seattle has a long and successful history as an NBA market, and also is the largest US metropolitan area to not currently have a team in its vicinity, by both population and GDP.

The second market is up for debate, with many options floated at various times: Anaheim, Austin, Columbus, Kansas City, Las Vegas, Louisville, Mexico City, Montreal, Nashville, San Diego, San Jose, St. Louis, Vancouver, and Virginia Beach among them.   

A few of those options likely aren’t viable because existing owners would object, given their proximity.  The Lakers and Clippers wouldn’t want a team in Anaheim, and the same goes for the Warriors with San Jose and the Spurs with Austin.

Another concern is travel.  Over time it has become more apparent how increased travel has a negative impact on player health and the quality of play.  Ideally the new team will fit well within the geography of the league and its realignment, reducing rather than increasing in-season travel.  With that in mind – all else being equal – where’s the best location for the other expansion team, and what might the new conference and division structure look like?

Realignment

Here is a map of the current franchises sorted by division, courtesy of Maps on the Web:

There are a few ways in which it’s suboptimal.  Most glaringly, the Northwest Division is literally all over the map.  Portland is in the same division as Minnesota and Oklahoma City despite being roughly 1500 miles and two time zones away from either.  Further, Minnesota makes no sense in the Western Conference.  It is closer to EVERY team in the East’s Central Division than it is to ANY team in the West.  As a lesser concern, the Washington Wizards are in the same division as both Florida teams, which are the 2 most distant teams from Washington in the East.

For the purposes of expansion, the biggest takeaway from this map is that both expansion teams should be in the West.  That would enable Minnesota to move to the East, where it logically belongs. 

Following expansion, the NBA can adopt the NFL’s model of eight 4-team divisions and perhaps a somewhat less balanced schedule to reduce travel.  As you can see in the map below, the East could become very tightly organized from a divisional perspective, with almost every divisional opponent located within a few hundred miles of each other.  The single longest trip from one divisional opponent to another is Charlotte to Miami, which is roughly 650 miles and under a 2-hour flight each way.

Based on the map, Kansas City would be an ideal second expansion city.  It sits between Denver and Memphis and is also quite close to Oklahoma City (200 miles), effectively closing the loop on the least obvious division to sort out.  St. Louis or Nashville could occupy that same spot or be grouped with New Orleans and Houston in addition to Memphis.  In that scenario, Denver, OKC, Dallas, and San Antonio would be in the same division, and all divisional opponents would remain within 900 miles of each other.   

Las Vegas would also fit reasonably well as the second expansion team.  Vegas could join a division with the LA teams and most likely Phoenix, with Utah exiting that division to join Denver, OKC, and Dallas. 

Mexico City could work from a divisional perspective, grouped with San Antonio, Houston, and New Orleans; however, putting a team in Mexico City would present some strain on league travel as a whole compared to the other options above.  Situated approximately 700 miles south of San Antonio, Mexico City is 1500+ miles away from about 2/3 of the league and not particularly close to any existing team.

The Future Schedule

Adding two teams means changing the schedule.  I consider this an opportunity to take a fresh look at a regular season that’s remained largely the same for decades. 

No matter how you look at it, I think you reach the inescapable conclusion that there should be fewer regular season games.  Right now, star players often miss 5-10 games a year even when healthy, for what’s become known as “load management.”  And even when everyone plays, it is well chronicled that teams playing in back-to-back games, particularly with travel in between, perform notably worse than they do otherwise.  Each of these related issues has a negative effect on the product being sold, as fans can’t rely on seeing a team’s best performance when attending or watching a game.

Entering the bubble last season, there was some concern that the level of play would be poor following the long layoff and with the playoff spots largely determined.  Yet by consensus we saw the opposite – a higher level of play overall, with more movement and better shooting.  There are several theories for why this occurred, though I think the lack of back-to-back games and lack of travel certainly played a part.

So what does the optimal future schedule look like, taking into account quality of play, fairness, and the obvious desire to make as much money as possible?  Here are my suggestions:

Prioritize the calendar over the number of games

I have some reservations about the current season schedule.  I think the league and players were right to make every effort to start by Christmas, which is a huge date on the traditional league (TV) calendar, but wrong to try to squeeze as many games in as possible.  Particularly given the lack of fans this year, what matters most from a financial perspective is satisfying national TV contracts, not hosting games.  Cramming more games into the calendar following the minimal training camp and preseason, and absence of summer league, plainly will hurt the quality of play.  A week into the season, star players like Kevin Durant and Kyrie Irving already are taking games off, and we are seeing far more non-competitive games than usual. 

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Of course, unlike expansion, scheduling is subject to collective bargaining and requires the agreement of both the owners and the players.  It may be difficult to get either side, let alone both, to agree that reducing the number of games is in their interests, but I firmly believe that the resulting superior product (with enhanced marketing opportunities) would enhance long-term profitability.  The NFL has the fewest games of any major sports league, yet it also produces the highest annual revenues and most valuable teams.

(a) Push Everything Back 5-6 Weeks on the Calendar

In recent years the NBA regular season + playoffs have run from mid- to late October through mid-June.  I think a late November or early December start and late July or early August finish would be more desirable.  Why?  Because the July sports calendar is much less active than October and November.  October is associated with playoff baseball, and November is peak football season, including the college football rivalry games.  In contrast, July is regularly the most boring month for sports fans.  Apart from baseball which lasts all summer, July has almost nothing.  It’s when sports programming is most scarce.

This pandemic has demonstrated the importance of scarcity to viewership and interest.  “The Last Dance,” the ESPN documentary on the Jordan-era Bulls that aired when all live sports were paused, achieved ratings that dwarfed every prior ESPN documentary.  Those ratings were comparable to the 2020 NBA Finals, World Series, and final round of The Masters, each of which aired when the market for sports content had become saturated with just about every league returning to action in the late summer and fall. 

Therefore, I propose starting the regular season the Tuesday after Thanksgiving, which is usually within a couple days of December 1.  The college football season typically wraps up the prior weekend, pending bowl games that don’t generate much excitement until New Year’s Day.  That also gives the league a few weeks to ramp up the level of play and enthusiasm before the slate of Christmas games.

(b) Reduce the Number of Games by 10+

More precisely, reduce the number of games as much as necessary to eliminate back-to-back sets (B2Bs).  As a rule of thumb, you can take one B2B off each team’s schedule by (i) removing one game or (ii) adding two calendar days.  The league has managed to significantly reduce B2Bs prior to this season (from around 20 to 12 annually per team) by shortening preseason to start the regular season a week earlier and by prioritizing B2B reduction in the scheduling algorithm.  However, as teams have similarly become more cognizant of the downsides of B2Bs, fostering more “load management” days and lesser-quality games, I think the time has come to get rid of them altogether.

I don’t see much more room to gain in terms of perfecting the algorithm or further shortening training camp or preseason, and I also don’t expect players to agree to a shorter offseason.  That leaves one option to eliminate B2Bs: reducing the number of games.

With 32 teams, here are a couple options I like:

1. 68-game schedule comprised of 4 games against divisional opponents (12) and 2 games against everyone else (56)
2. 64-game schedule comprised of 4 games against divisional opponents (12), 3 games against conference opponents (36), and 1 game against non-conference opponents (16)

More than other leagues, the NBA values fairness in scheduling such that every team in the conference plays a very similar set of opponents.  Either of the above options retains that sense of fairness, with only 5-10% of opponents determined by your division (6/68 or 3/64) as opposed to heavily skewing schedules like the NFL and MLB.  Option #1 also retains that scheduling similarity across conferences, with every team hosting every other team each year, whereas Option #2 would ease the travel burden to a greater extent, particularly for coastal teams.

By cutting 14-18 games from the schedule, the league should be able to eliminate B2Bs entirely, or if an odd B2B must be scheduled, it can be accomplished without travel in between.  That should significantly limit the need for stars to take games off and improve the consistency and overall quality of play.

Add Meaningful Games to the National TV Schedule

To counteract the loss of regular season games, the league can enhance its postseason offering.  By my calculations above, the league needed to cut approximately 12 games from the schedule to eliminate B2Bs, and my proposals cut 14-18.  That should give the league a week of wiggle room.  I therefore suggest that the NBA adopt one or both of the following:

• A single-elimination postseason tournament [“lottery tournament”] for teams that miss the playoffs.  Players on the winning team get a winner-take-all bonus similar to a playoff share, and the winning franchise gets a substantial draft benefit. 

To add the most intrigue, the winner could be awarded the #1 pick.  Many years this would result in a mediocre team (one that came reasonably close to making the playoffs), as opposed to a truly awful team, having the first pick in the draft. I consider that a positive rather than a negative, as evidenced by my other lottery reform proposals to discourage tanking.

However, there is likely a point at which the benefits of winning the tournament become too great, such that a fringe playoff team may prefer to miss the playoffs in favor of seeking to become the lottery tournament champ. Such perverse incentives should be avoided, so alternatively, the league could award the winning franchise a guarantee of no worse than the #3 pick in the draft, along with perhaps slightly improved odds of winning the lottery.  In either event, this tournament would keep fans of non-playoff teams more engaged rather than checking out by the end of the regular season. 

The entire tournament can be conducted in the span of a week or so following the regular season, while all or some subset of playoff teams get a week off to rest and prepare. 

• A play-in round somewhat beyond what’s being done this year.  Most likely, the top 6 teams in each conference are safe, and then #7/#10 and #8/#9 each play a best-of-3 series with the higher seed exclusively having home court.

The schedule could go like this:

The regular season ends on a Wednesday in mid- to late May.  The 12 teams that don’t make the playoffs/play-in meet at some predetermined location. 

Teams with the 4 worst records get a first-round bye, and teams 5-12 all play that Saturday.  You can have #5 v. #12 etc. or #5 v. #6 and #7 v. #8 etc. in the first round depending on your preference.  I prefer the latter arrangement in order to equalize the tournament odds a bit.

All the play-in teams face off that Sunday.  The lottery tournament and play-in tournament alternate days until the play-in games end on Thursday.  Then there’s a day off before the lottery tournament final on Saturday. 

Conventional playoffs start the following Sunday, the day after the lottery tournament ends.  By that point there’s been 10 days of build-up to the most compelling playoff matchups and analysis of each team’s title chances, with some meaningful games to watch in the interim.

I think that setup would generate more excitement and enthusiasm from a wider audience than the current postseason schedule, and with the playoffs then continuing through July, the NBA could dominate the summer sports calendar.