Techies Are Trying to Turn the NBA Into the World’s Biggest Sports League
In 2014, the Los Angeles Clippers were just getting used to being a good basketball team. After more than three decades of irrelevance—and only four winning seasons—they’d finally found that magic mix of talent and cohesion and had become a division-winning powerhouse practically overnight. But then they hit another roadblock: TMZ published a recording of the team’s owner, Donald Sterling, making racist comments.
The scandal spread. Rumors began to swirl that the league would force Sterling to sell the team. Basketball in LA has long been associated with celebrity, and the names of A-list prospective buyers flew: Billy Crystal, Oprah Winfrey. Even boxer Floyd Mayweather reportedly expressed interest.
And then, in May, Steve Ballmer, former CEO of Microsoft, put $2 billion on the table.
The sports business world greeted the news with something between befuddlement and shock. “I’m completely hornswaggled—if that isn’t a word, it should be—by the going price,” Michael Leeds, an economics professor at Temple University, said at the time. It was the second-highest price ever paid for a North American sports franchise (the record was for baseball’s Los Angeles Dodgers, which sold for $2.15 billion in 2012). It was nearly four times the previous National Basketball Association record, set just months before when the Milwaukee Bucks sold for what now seemed to be the bargain price of $550 million.
Ballmer thought it was worth it. He’s a hoops junkie who spent years playing in a regular pickup game at Microsoft, even after he took over as CEO. “I’ve never been a good basketball player,” Ballmer says, “but I did stats for my college team, tracking rebounds and assists. I just liked the game.” He had flirted with buying franchises for years, looking at teams in Detroit, Sacramento, and Milwaukee. “I knew I was bidding more than the second bidder, maybe even 10 percent more,” he says of the Clippers. “But if I could get a 2 to 4 percent yield from the franchise and have it appreciate like an S&P index fund, that’s pretty good.”
When Steve Ballmer went all in on the Clippers, he wasn’t estimating what the team was worth on the day he bought it. He was looking at its future value. This happens every day in the technology sector—it’s hard to imagine that Uber, say, is currently worth the $51 billion valuation private equity investors have given it. In the sports world, though, this kind of thinking is rare.
At least, it used to be. But a new generation of owners like Ballmer, with fortunes made in technology, private equity, and venture capital, are accustomed to being intimately involved with their investments. They’re not just looking to win championships and trophies. They’re looking to build a great business.
More than that, these tech-enabled owners have helped turn the NBA into North America’s most forward-thinking sports league. Other leagues struggle with aging fans and restrictive views on intellectual property; the NBA has the youngest TV audience of any US league and lets its content flow through the wilds of the Internet. While the other US leagues struggle to build international interest in their games, the NBA has leveraged social media and new technology to build a huge global following. If the league has its way, the Golden State Warriors’ three-point-shooting machine Stephen Curry won’t be merely an ambassador for America’s most exportable sport. He’ll be the biggest star of the biggest league on the planet.
Not everyone thought Ballmer was crazy to write that big check. “He got a bargain,” says Dallas Mavericks owner Mark Cuban, the first majority NBA owner who made his fortune in the dotcom boom. (Microsoft’s Paul Allen bought the Portland Trailblazers in 1988.) When Cuban bought the downtrodden Mavericks in 2000 for $285 million, he was merely a speculator, but he became a go-to resource for other owners who were looking toward the future. “The league was always open-minded toward tech but hadn’t really implemented much,” Cuban says. “I got all the questions.”
One of those questions came from Adam Silver. Today he’s the commissioner of the NBA, but in 2000 Silver was the president of NBA Entertainment, in charge of the league’s production arm. The All-Star Game that year was in Oakland; Silver wanted Cuban to participate in a tech summit that would connect people from the league with people in the Bay Area’s burgeoning technology sector. “In retrospect,” Silver says now, “it was the height of the Internet bubble, but it didn’t feel like it at the moment.”
The list of companies that attended reads like an obituary for the first Internet boom: Red Herring, Scient, UrbanMagic, Quokka Sports, Gateway. But the day was a hit, and a new All-Star weekend tradition was born.
In the decade and a half after Cuban entered the league, the Mavericks have gone from one of the worst franchises in the NBA to a top team, winning its first-ever title in 2011. “I’ve invested in countless tech companies that impact the Mavs,” Cuban says. He ticks them off: Synergy Sports, a web-based analytics platform; Catapult, an Australian company that makes motion-tracking devices for elite athletes; and Axon Sports, a cognitive training tool. “I try to leverage my tech background to gain any advantage we can.”
In fact, the overall composition of NBA ownership groups has radically changed. Today roughly half of NBA teams have controlling owners with backgrounds in tech and investment management. Vivek Ranadivé, founder of Tibco, owns the Sacramento Kings. Rock Ventures founder Dan Gilbert owns the Cleveland Cavaliers. Warriors co-owner Joe Lacob spent over 20 years at the legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, overseeing investments in companies like Autotrader.com and Sportsline. But he always had another goal. “I wanted to own a sports franchise long before I wanted to be in technology,” Lacob says.
Today that KPCB experience is directly relevant to running the hottest franchise in the league. “When you’re in venture capital, if everybody knows about it, it’s too late,” Lacob says. “My best investments were companies that people said to me, ‘That will never work’ or ‘There’s no data to support that.’ So now, with the Warriors, I want to try every technology, as long as we think there’s a rationale for it. Let’s open it up and see what works, because that’s the only way you’re ever going to be on the cutting edge.”
These owners don’t talk to each other about on-the-court matters, but they’re all in touch regularly on issues of how to run their businesses and reach fans. “I certainly talk with Mark Cuban, with Vivek Ranadivé, with Dan Gilbert in Cleveland, with Joe Lacob,” Ballmer says. “I’m the newbie, so I’m mostly listening and learning. But a rising tide floats all boats.”
Ballmer is counting on that tide. Not only was he imagining the Clippers’ future worth when he bought the team, but he felt that he would be able to compound that growth by bringing technology to the franchise—especially when it came to the distribution of the team’s games. Take the Clippers’ local TV contract, which expires at the end of this season. The Clippers have been locked in contentious negotiations with Fox Sports’ Prime Ticket, which under the old contract paid the team approximately $25 million a year for broadcast rights. Reportedly, the team turned down an offer of $60 million per year and is setting out to deliver games directly to fans through a streaming service.
Ballmer says the NBA has supported his drive to experiment. Another league, like the National Football League—the $13 billion behemoth that dominates the American sports landscape—might not have. “There’s no local broadcast for the NFL, so how do you experiment?” Ballmer says. “They’re in very good shape, but because everything is national, they have to think about tests and experimentation differently. Baseball has many games and local TV, but most baseball viewers are over 55. That’s maybe not the crowd you want to experiment with.”
The crowd you do want to experiment with, however, is leaving cable behind—or at the very least supplementing it with Vine and Instagram and Facebook and Twitter. They’re watching highlights and big moments wherever they can and reacting to them in real time.
Take one of this season’s marquee games, a highly anticipated February showdown between the Warriors and the Oklahoma City Thunder. Airing on ABC on a Saturday night, it drew the highest ratings for a non-Christmas regular-season NBA game in over three years. The hard-fought battle went into overtime and ended with Curry draining a running 32-foot shot with less than a second remaining to give the Warriors the win.
The moment led to a social media frenzy. On Facebook, there were more than 60 million views of the highlights from the game, and on Twitter, superstars both present and past nearly ran out of exclamation points:
@StephenCurry30 needs to stop it man!! He’s ridiculous man! Never before seen someone like him in the history of ball!
— LeBron James (@KingJames) February 28, 2016
Curry is UNREAL!!!!
— DWade (@DwyaneWade) February 28, 2016
If @StephenCurry30‘s game winning 3-pointer doesn’t prove he’s the greatest shooter we’ve ever seen, I don’t know what will!
— Earvin Magic Johnson (@MagicJohnson) February 28, 2016
“The first thing that players do when they walk off the floor and head for the locker room,” Twitter COO Adam Bain says, “before jumping in the shower or anything, is grab their phones and fire up Twitter to see all of the public reaction and conversations about how they performed that night.”
Sports and social media are a perfect fit for each other, combining a massive, opinionated audience with conversational technology—and no other North American sports league compares to the NBA on social. This winter, the league proclaimed that it had over 1 billion followers for league, team, and player accounts across the largest US platforms and on Tencent and Sina in China. Just counting official league accounts, the NBA has over 66 million followers, almost twice as many as the NFL. Major League Baseball has only 15 million. The National Hockey League has 11 million—half as many as Stephen Curry.
That’s no accident. “The game itself is way more intimate than the other three sports,” says Gilbert, the Cavs’ owner. “It’s the only one where the players aren’t wearing a helmet or hat that’s a barrier to knowing them as a person. The closer you feel to the players, the more willing you are to further that connection.”
It’s hard not to feel that closeness when basketball flouts the conventions of stodgier sports. In baseball, “playing the game the right way” means that players rarely celebrate or demonstrate emotion on the field; to do so might result in being hit by a pitch later. In the NBA, part of the draw is emotion, the way that players react to their successes and failures. And indeed, some of the game’s most popular players are its most emotive; Warriors forward Draymond Green celebrates exceptional plays with a bicep flex that’s straight out of pro wrestling.
You probably know the move I’m talking about, even if you don’t follow the sport. You’ve seen it scrolling by in your Instagram or Twitter feed hashtagged #💪, or you’ve seen a six-second Vine loop of it. Six seconds, by the way, also happens to be the perfect length to capture a breakaway dunk or a screen that frees a shooter for a long-range three-pointer. The high points of basketball are eminently shareable, and the NBA has allowed that sharing ecosystem to blossom—in contrast to other leagues. Last October, for instance, the NFL sent over a dozen takedown notices to Twitter, asking the service to remove GIFs and videos of game action posted by Deadspin, Gawker Media’s sports blog. Twitter responded by not only removing the material but also temporarily suspending the account. Similarly, MLB issues takedown notices when game highlights are posted. While both leagues are within their legal rights, the question is whether that’s smart business.
To the NBA, it’s not. “Adam Silver realized early on that people would tape things off the TV set and upload it to YouTube,” says David Levy, president of Turner, which airs NBA games and comanages NBA.com for the league. “He understood Instagram. He understood Snapchat. He gets the fact that fans are fans, and you need to fish where the fish are.”
Data backs up that instinct. “It’s almost like a free commercial,” Gilbert says. “To me, it’s all great for the league, enhances the league, promotes the league, and I think the NBA has got it right on.” Facebook commissioned a Nielsen study to quantify the effect of social media conversation around nine NFL games and found that each additional share of a Facebook post about a game in the 15 minutes before it started correlated with an extra 1,000 viewers for the first minute of the broadcast. That’s not a threat to traditional broadcast; it’s a lifeline.
And if you think 1,000 new viewers per share sounds like a lot, consider how many billions of people are out there. Basketball has long had a worldwide footprint, but the 1992 Barcelona Olympics made global icons out of the NBA players on the US “Dream Team”—Magic Johnson, Michael Jordan, Larry Bird, Charles Barkley—and jump-started a generation of international player development. The NBA began this past season with 100 players from 37 countries and territories, 22 percent of the league. That adds up to a huge international audience. The NFL announced that it will stream 10 Thursday Night Football games for free on Twitter this season, a distribution move that could grow their international audience. But it still has a long way to go before it catches up with the NBA’s global footprint.
The international advantage is one that the NBA hopes to leverage, especially when it looks at the other football. “Soccer is much bigger than basketball on a global basis,” says NBA commissioner Silver. “We look at the delta between basketball and soccer and see an enormous upside.” After all, unlike soccer, where several domestic leagues in Europe can claim to be the world’s best, the NBA is clearly the best basketball league on the planet, drawing not just the top players in the world, but worldwide attention as well.
All that attention, though, can’t change the fact that most fans don’t live anywhere near the arenas where all the action actually takes place. That’s why the league was so excited about a demonstration on the opening night of the NBA season at Oracle Arena in Oakland: the first ever VR livestream of a professional sporting event. A crowd of tech-company execs gathered in a windowless room in the bowels of the arena to slip on a Samsung Gear VR headset and be dropped right into a seat that most of us will never be able to afford, on the floor at center court. “I always like to tell people sitting next to me, ‘You’re about to have the greatest sporting experience of your life,’” Warriors co-owner Lacob says of his courtside seats. “I don’t care where you sit in a baseball stadium or football stadium, it’s just not the same.”
An NFL game is best on television. The camera can follow and zoom in on the complex action and help make sense of what’s happening on the field. Putting a VR camera at the 50-yard line—no matter how good the technology is—might not yield a more compelling product than the current broadcast. But putting a camera in that courtside seat that Lacob loves so much could give fans a VR experience that far surpasses the current broadcast, drawing them tighter into the league’s web.
In actual reality, the virtual version of the game shown that night was more of a try than a triumph. While the sense of space and depth was there, some of the visceral nature of the game—sneakers squeaking against wood, grunts of exertion—was missing. It was exactly good enough that you could imagine how good it can be, once the technology improves.
Lacob’s co-owner, entertainment executive Peter Guber, is so excited about the potential for VR that he’s invested (both personally and through his companies) in NextVR, the live-VR broadcasting startup that handled the opening-night demo. Other investors in the company’s $30.5 million Series A funding round include the venture arms of cable giants Comcast and Time Warner, as well as the Madison Square Garden Company, which owns the NBA’s New York Knicks as well as the New York Rangers in the NHL. “Only 18,000 people can go to the stadium,” Guber says, “and there’s 7.5 billion people on the planet. I mean, come on, just run the numbers. You’re not giving up a seat in the stadium—you’re making that seat 100, 200, 500, a million times more profitable.”
The biggest potential prize here is China. By some estimates, almost as many people play basketball in China as there are people in the United States—300 million. The NBA dreams of turning the massive Chinese market into the engine that propels the league into the global economic stratosphere. If you can drop those fans into a virtual courtside seat, that’s a pretty handy booster rocket.
NBA executives used to believe that the league needed franchises in Europe or Asia for a quantum leap. Nobody thinks that anymore. “Our future over the next decade will be defined by technology’s ability to come as close as we can to replicating that courtside experience,” Silver says. Why take basketball to fans when VR can bring fans to you?
The toughest ticket in town during the 2016 NBA All-Star weekend in Toronto wasn’t for the game itself, which over the years has devolved into an exhibition of spectacular shooting and fast breaks with absolutely no defense whatsoever. It wasn’t for the Slam Dunk contest, a battle between two mind-bendingly good second-year players—Zach LaVine and Aaron Gordon. (The contest was hailed as one of the best ever, and highlight videos drew more than 140 million views on Facebook, Twitter, Vine, Instagram, Snapchat, and YouTube.)
No, the hardest room to get into on that February weekend was a ballroom at the Fairmont Royal York Hotel, where NBA owners, tech folks, media members, and other sports leaders gathered to talk apps and analytics, data and dunks. It was the 17th annual NBA All-Star Technology Summit, carrying on the tradition that Silver started in the Bay Area in 2000. The names of the attendees have changed, but they’ve gotten no less important. One senior manager at an NBA team said to me, when I told him that I had scored a ticket, “You’ll have to tell me what happens. I can’t get in.”
The Summit is off the record, in order to encourage the panelists to freely discuss ideas, even to argue with one another. But what was perhaps the most futuristic moment of the day came right at the start, during the commissioner’s introduction to the proceedings. Silver was talking about the history of basketball, how the game’s inventor, James Naismith, was actually Canadian. As Silver spoke, images of Naismith were projected behind him, until the photo of Naismith actually interrupted Silver … and then stepped out of the screen as a stunning hologram. (Naturally, the NBA posted this moment on social media—the Vine loop of Naismith has been viewed over 12 million times.)
The hologram talked. “Thanks to the NBA’s embrace of mobile, social, and on-demand content platforms, today NBA basketball reaches more fans than ever before,” the Naismithbot said. “As the game grows and expands around the world, the league will continue to push the envelope with cutting-edge technologies like virtual reality, 4K ultra-high-def television … even holograms.” The holographic Naismith wasn’t just impressive, it was also relentlessly on-message.
More than 2,500 miles away, Steve Ballmer was still plotting new ways of building engagement and excitement for the LA Clippers. Part of that was a new mascot; two weeks after the Tech Summit, Ballmer took to the court during a game to introduce Chuck the Condor, to little acclaim. But the real stroke of genius was the follow-up: Ballmer announced that he would try to dunk off a trampoline. If he was successful, he said, every fan would get a pair of sneakers.
Ballmer—who is 60, mind you—sprinted down the court, leaped into the air, and bounced off the trampoline. His eyes and mouth wide open, Ballmer soared through the air and threw down the dunk, landing with a triumphant scream. Chuck the Condor was forgotten; Clippers players rushed over to high-five their team’s owner while the crowd went berserk. Vines and videos of the moment spread with alacrity—which was the whole point. The stunt itself could have happened in any number of sports, but its astounding afterlife was only possible in the NBA, a professional sports league that understands that its future is measured not only in gate receipts but also in shares and reposts.
Mark McClusky is head of product and business development at WIRED. He wrote about basketball and big data in issue 22.11.
The article appears in the June 2016 issue.
Reference photos: Getty Images
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