Bloomberg News

Lakers Are Ready for NBA Spotlight With Nash, $3 Billion TV Deal

October 30, 2012

The Los Angeles Lakers, pushed out of the National Basketball Association spotlight by LeBron James and the Miami Heat the past few seasons, are poised to return with a revamped roster and a television deal worth $3 billion.

The team that has won the most NBA games in history added point guard Steve Nash, a two-time league Most Valuable Player, and center Dwight Howard, a six-time All-Star. They join five- time champion Kobe Bryant, 34, who has scored more points than any other active player.

At the same time, a $3 billion deal with Time Warner Cable made the Lakers the centerpiece of two new sports networks. Nash and Howard fortified a brand that is as glamorous as its star- driven city. Team merchandise and ticket re-sales are among the league leaders.

“They’ve had a tremendous history of success on the court, and they’ve always been leaders in terms of innovations from a branding standpoint, positioning their product to be exciting while taking advantage of everything Hollywood has to offer,” Steve Mills, a former president at New York’s Madison Square Garden, said in a telephone interview.

The team starts the 2012-13 season today against the Dallas Mavericks as part of the NBA three-game opening night.

The Lakers’ 3,125 wins and 0.620 winning percentage are both best in NBA history. They’ve been to the league finals 31 times, 10 more than the next closest team, and have won 16 championships, one fewer than the Boston Celtics’ NBA-leading 17.

“Money-making gold mines,” former MVP Charles Barkley said of the Lakers and Celtics. Boston plays on the road tonight against the defending-champion Heat; the Cleveland Cavaliers host the Washington Wizards.

Same Model

Lakers Executive Vice President of Business Operations Jeanie Buss said the business model has remained the same since her father, Jerry Buss, bought the team in 1979.

“Our goal is to stay consistent and look at every opportunity to broaden our appeal to the rest of the world,” she said in an interview last week. “That starts with putting an exciting team on the floor.”

The Lakers traded for Nash, 38, and Howard, 26, one month apart this offseason, while keeping 7-foot forward Pau Gasol. The team has 11-4 odds to win its 17th title this season, second only to the Heat at 9-4, according to online sports book Bovada.lv.

A six-time NBA total assists leader, Nash will help run the team’s new offense, which emphasizes a balanced attack through ball movement. Howard, who becomes a free agent after this season, could be the face of the team after Bryant’s retirement, which the 14-time All-Star has indicated may come in two years.

Lakers Gear

The buzz around Nash and Howard, who are featured on Sports Illustrated’s cover this week, has translated off the court. The Lakers are the second highest-selling team this offseason behind the Heat, and the best-seller in October, according to online merchandise retailer Fanatics.com, which doesn’t release specific figures.

Seats at Lakers home games are listed for an NBA-high average of $361.97 this season, according to the ticket-price aggregator TiqIQ, $74 more than the next closest team, the New York Knicks. Last year their $246.08 average road price was also second, 21 cents behind the Heat.

The team’s reach extends even beyond opposing cities, according to Magic Johnson, who won five NBA titles in Los Angeles and was part of the group that bought baseball’s Los Angeles Dodgers for a record $2.15 billion.

“It’s around the world,” Johnson said in a conference call. “Everybody really is waiting to see what this team is going to do.”

TV Deal

Los Angeles residents will satisfy that curiosity on Time Warner Cable SportsNet and Spanish-language Deportes, launched this year. Time Warner paid $3 billion over 20 years for the team’s rights, according to the Los Angeles Times, and will carry 70 Lakers games this season.

David Rone, president of Time Warner Cable Sports, said the company’s goal was to build networks around the Lakers, the “crown jewel” of the Southern California sports television marketplace.

“They have this unbelievable heritage of 16 championships and always stepping up and making sure that team on the court befits their brand and their essence as a championship organization,” Rone said.

Time Warner Cable (TWC:US) Sports has ensured that anyone driving by, or walking into, its El Segundo, California, headquarters knows of its ties to the team, whose practice facility is on North Nash Street. A 16-foot satellite dish with the Lakers logo sits outside the TV office and the gold midcourt logo from Staples Center’s first 13 years is the office’s lobby floor.

TV Winner

The long-term contract and new networks benefit both sides, said Chris Bevilacqua, founder of Bevilacqua Media Co.

“Recognizable sports brands still generate incredible value in the fragmented television business,” he said in a telephone interview. “Here you have one of the most valuable live sports brands in the world in the second largest market in the country.”

Los Angeles, which trails only New York in television homes, welcomed the Pac-12 Network’s new local channel this year and the Dodgers are looking to negotiate a television deal that could be worth $225 million a year. Los Angeles-based Anschutz Entertainment Group, which owns, among other assets, Staples Center, hockey’s Los Angeles Kings and a minority share of the Lakers, is also for sale.

Star Power

Mills said the team’s brand is boosted by the star-studded city, where Lakers seats, frequented by celebrities such as actor Jack Nicholson and billionaire Patrick Soon-Shiong, have become a status symbol. The cheapest seats in Staples Center sell for $10 a game, while the priciest courtside tickets are $2,850, according to the team.

Shaquille O’Neal, who won titles alongside Bryant from 2000 to 2002, and Johnson each said the buzz and star power around this year’s Lakers rivals his time wearing purple and gold.

In O’Neal’s words: “L.A. is the basketball Mecca of the world.”

-- With assistance from Scott Soshnick and Mason Levinson in New York. Editors: Michael Sillup, Larry Siddons.

To contact the reporters on this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net


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