By Terence Lam
The Economics of Jeremy Lin- A brief overview and analysis of the economic effects a young rising star has and will have on the Knicks and the NBA as a whole.
So by now we are all now very well aware of Jeremy Lin, the Harvard graduate and current New York Knicks point guard who has taken the world by storm in a stunning fashion. Almost overnight, this Taiwanese sensation has captivated fans all over the world with his spectacular play as “Linsanity” averaged 24.3 points and 9.5 assists while leading the Knicks to six straight wins in his first 6 games. Justifiably so, this has put him in the same sentence with the likes of fellow NBA stars LeBron James and Kobe Bryant. While this is certainly one of the feel-good stories of the year, as an Economics major I want to take a look beyond the NBA and also consider the economics of Linsanity.
Because Lin is playing in one of the largest markets of the world (New York), anything he does will be magnified that much more. Let’s say he plays for a team like the Charlotte Bobcats, a relatively unknown team that dwells in the bottom of the NBA. While people would recognize and appreciate his efforts, I can guarantee you the effect he has had thus far would not be what it is today.
All the buzz created by Mr. Lin is nothing but good news for the New York Knicks. According to Patrick Rische, a writer for Forbes.com, this season alone, Jeremy Lin has the potential to boost the Knicks’ revenue by $10-20 million above what it would’ve been this year without Lin’s emergence. This number, based on the typical four sources of income for a professional sports team (ticket revenue, media revenue, facility revenue, and ancillary revenue), will depend on whether or not the Knicks make the playoffs, as even more attention and sales revenue will be gained if they do.
In the short run, Lin can only affect the small-ticket items such as tickets and apparel, as big-ticket items such as TV contracts are already in place. Beyond the Knicks, Rische states that even shares of Madison Square Garden Co. have improved since the birth of Linsanity, while MSG Network has experienced a 70% increase in TV ratings.
In the longer run, if Lin remains on the Knicks, the team could reap immense benefits from a variety of media contracts, both domestic and foreign. Rische estimates that the Knicks’ revenue will increase by $25-50 million in the 2012-2013 season while boosting the NBA’s revenue by up to $80 million based on his foreign appeal. Without a doubt, the impacts this one man has had on the NBA and the overall economy has far exceeded what anyone could have ever imagined. All I can do is recommend that we all sit back, relax, put on our latest Lin gear, and watch the Taiwan phenom that is Jeremy Lin.
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