If you are not an NBA basketball fan, you may have missed the news recently that the league's premier player, Lebron James, recently signed a blockbuster new contract with the Los Angeles Lakers worth -- hold onto your chairs -- $153 million over four years.
This contract is guaranteed through three years, which means James is guaranteed to earn a $38 million per year -- or roughly $10,000 per hour. James is 33 years old -- take a moment now to examine your life decisions.
Even if you are not a sports fan, you more than likely saw images of Lebron James anyplace with a television or on social media. Darren Rovell, ESPN Sports Business Reporter, reported on Twitter that the news of the signing generated over 55,000 tweets per minute -- more than five times the number of any other major NBA signing.
"Top Tweets Per Minute For NBA Free Agency
2016: July 4 @ 11:49AM -- Durant to Warriors -- 15,000 Tweets Per Minute
2017: June 30 @ 9:51PM -- Paul George to the Thunder -- 11,000 Tweets Per Minute
2018: July 1 @ 8:08PM -- LeBron to Lakers -- 56,000 Tweets Per Minute"
- Darren Rovell, 1 July 2018
Why is this significant?
The NBA season ended in June and does not start again until late October, yet we seem to be consumed by basketball news -- even while an exciting World Cup in Russia and the current MLB baseball season rages on.
Again, this is the NBA offseason.
So what can we learn? The NBA is a business, and like any other business, competing for customers is how it survives. Here are some takeaways.
Build on Brands
While the NBA is a brand, it depends on the independent personalities of its talented athletes. Many, in fact, have entire businesses built around them, such as James's sports agency, Klutch Sports Group, and Kevin Durant's venture capital endeavor, Durant Company.
The NBA embraces these different brands all while building on its own, because fans crave "relationships" with their favorite athletes -- not at all unlike how customers desire relationships with their most admired brands.
Businesses should think no differently. Brand loyalty is dying and is no longer a sustainable strategy, especially with younger generations being more fickle and having far more choices and information. In order for businesses to compete, they need to be able to have a connection with their customers, and while that may not mean personalized relationships with each one, they should at least keep a strong, unique and fresh image for consumers to follow.
Leverage Social Media
Television is still a significant strategy for sports teams, even offering a strategy for cable networks to combat cord cutters. The NBA, however, is looking to the future.
Social media has allowed the league to leverage its most adored athletes, encouraging them to become their own social media influencers. This has allowed the NBA to expand the league's reach and influence overall. NBA athletes understand this, which is why they constantly work on building their personal brand through social media engagement.
Moreover, the NBA is embracing social media itself. According to Business Insider, NBA Commissioner Adam Silver has been leveraging social media far more than other sports leagues to provide game highlights to fans, saying that he believes "greater fan engagement through social media helps drive television ratings."
While it is no secret that digital marketing and advertising is the future for businesses, businesses need to understand that a well-planned digital strategy involves consistent and genuine engagement with its customers.
Focus on Younger Audiences
According to the Sports Business Journal, NBA attracts the second youngest audience, with an average age of 42, second only to MLS soccer. Other leagues, such as NHL hockey (49), NFL football (50) and MLB (57) all cater toward older demographics, many of whom are not considered digital natives.
While we cannot ignore older generations -- I include myself with this, please do not ignore me -- businesses cannot ignore the fact that Millennials and generations that follow are the future. These generations have incredible buying power, are growing up in a quickly evolving culture, and are expecting to be reached on their terms and level.
Encouraging and capitalizing on the influence of its athletes and pursuing a strategy that looks to the future in terms of media trends and demographics, the NBA is becoming a year-round entertainment industry. So whether you are rooting for your own team or simply enjoying a game at the arena, make sure not to overlook the valuable business lessons being tossed around.
What do you think? How else are sports entertainment industries leading business strategies? Please share your thoughts in the comments below.