TBT Finds Success with Regional Sites, Expected to Reach Profitability in ‘20
Carmen’s Crew (a collective of former Ohio State University basketball players) beat Golden Eagles (Marquette University basketball’s alumni team) in the championship game of The Basketball Tournament (TBT) on Tuesday night. As champions of the 64-team, single elimination, winner-take-all tournament, the OSU squad will split a $2 million prize. The game concluded the 6th edition of TBT. While the tournament has yet to turn a profit, six straight summers of year over year growth and a shrewd decision to hyper-regionalize game sites has it on the precipice of profitability. Founder and CEO Jon Mugar said that he’s fully expecting TBT to be in the black come 2020.
Howie Long-Short: TBT generates its revenues “as one would expect” a professional basketball tournament would. Sponsorship sales are the “biggest line” (+80% YoY). Ticketing revenues “are growing” (+ 350% YoY to $875K through semi-finals) and there is a “small” merchandising component (+80% YoY) to the business. While Mugar would not share details of TBT’s broadcast deal with ESPN, he did say the tournament’s media rights are “a revenue line.”
Ticketing sales figures have consistently climbed as TBT has massaged its model. In 2014, the entire tournament was played in Philadelphia. From there, it expanded to four sites in major metropolitan areas before really finding success this year with eight regional locations; with a small marketing budget and so much competition for the sports fans’ dollar, TBT found it difficult to compete in the bigger cities. Of course, it shouldn’t be a surprise that fans in cities like Syracuse and Columbus would turn out in numbers – particularly in the middle of summer when there is no other game in town (save minor league baseball) – to support the home team’s stars of yesteryear.
TBT’s ability to find an organic marketing partner in each of the eight regional markets will go a long way towards ensuring its profitability. Of the regional destinations that hosted games in ’19, Wichita sold the most tickets. That’s not a coincidence. TBT’s partner was Wichita State University, which “marketed the games to their existing fan base like it was a college event.” A.D. Darron Boatright was wise to gamble on the start-up hoops property – the school grossed more than $400,000 over the course of a single weekend. Mugar deemed it “very reasonable” to believe that TBT will have other schools onboard as official partners next summer.
July and August are supposed to be the off-season, but with the WNBA, the NBA Summer League, TBT and BIG3 (plus Drew League and tours like HoopItUp) the summer-time basketball calendar has become crowded. Mugar believes each property appeals to a different segment of the greater basketball fan base leaving room for them all to succeed. That seems unlikely, but with a business model that is expected to turn a profit in 2020 and a deep pocketed owner, TBT looks like it will be a summer staple for years to come.
Fan Marino: Mugar understands that with limited history (and thus storylines) to draw on, that TBT needs to find another way to stoke fan emotions. He said that when selecting the 64 participants (from the pool of 100+ entrants) there’s “a focus on identifying the natural affinity group that will have interest in following the team.” If you look at this year’s bracket you’ll notice that 40% of the teams are alumni based, but there are some exceptions. DeMarcus Cousins and Chris Paul sponsored teams which allowed TBT to tap into their fan bases and “there was a team from Jackson, TN – with four long-haul truckers – that took that town by storm.”
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