Companies operating in the sports industry are as well affected by environmental factors. In the professional sport, the success of NBA – the National Basketball Association – is one of the most commonly questioned issues because other leagues involved in the industry are less popular among professional sportsmen. Conducting an environmental analysis may be helpful for understanding the underlying factors contributing to the outstanding performance of the league as well as hinting at the most significant issues faced by it. In this case, it is vital to understand that the main issues are associated with hiring foreign players and integrating them into the American league. In addition, the organization of seasons and the cooperation with teams are the sources of other significant issues.
The economic environment of the league is characterized by a variety of different factors. The major one is the fact that the league is the union of 30 professional basketball teams – 29 from the United States and 1 from Canada. The coexistence of these teams within one league is a source of both economic benefits and challenges. From the perspective of prestige, it is a benefit due to the significant impact of the league on the industry as a whole. More than that, in some cases, it might benefit the whole towns, especially when their economies are sport-driven. One proper example is Oklahoma City, Oklahoma, benefitting from sport tourism – specifically those attending NBA games. On the other hand, the high ticket prices affect the economic condition of the league, especially during the times of economic recession when visitors choose to watch the online broadcasting instead of attending the live game. More than that, the high salaries of NBA professional players, as well as arrangements related to hiring foreign players, affect the economic environment in the sports industry. Here, the specific features of the taxation system are also critical because they affect the performance of the League and the way it treats potentially hired players.
Regardless of the supposed belief that the role of technology is not critical in the sports industry, it is not true. Currently, professional sports turned into the entertainment industry. That is why professional leagues, such as NBA, started to switch to technological advancements for turning games into shows. In particular, the technological environment of the sports industry is characterized by improving fan experience while watching games. Therefore, such novelties as using mobile phones to call the shots are used. However, in most cases, the focus is made on those, who do not attend live games. In this case, the use of high-resolution cameras, 360-degree imagery technologies, and even broadcasting games via Google Glass are also common. In other words, the risks emerge from the leagues that manage to provide the fans with a unique viewing experience – the feeling of watching the real-life game without leaving their homes. Currently, NBA is one of the most successful professional leagues and its viewing experiences are exceptional and stand out among the rivals so that it is a technological leader in the industry.
The impact of social environment in the sports industry is insignificant. The major challenge that might affect professional players or leagues is the difference in cultures of players with different backgrounds. Nevertheless, in NBA, the focus is made on the creation of the unique – basketball-driven – culture so that the impact of the social factors is diminished. One more potential issue is the connection between the social activities of the professional league and the target audience of the games. In other words, the challenges might emerge in response to ineffective marketing and arranging games in the places where people are not interested in attending basketball games or supporting basketball teams. However, due to the international popularity of the League, the latter is not a challenge for it.
The main issue is the difference between the internal regulations of the professional leagues. The challenge might emerge in the case of transferring players from one league to another. For instance, the problems commonly emerge when players from other leagues are hired by NBA and have to follow the new regulations. More than that, to be internationally competitive, NBA should comply with the regulations developed by FIBA (International Basketball Federation) and react to any changes. Some most critical aspects of regulations are injury time, substitutions, shot clock, restricted area, scoring lines, etc.
Political and Legal Environment
Issues related to the political and legal environment are the most influential ones. It is connected to the operation of the league on the international area but still being based in the United States. In this case, when hiring a foreign player, players under 19 years of age cannot be hired. More than that, political and diplomatic relations between states might affect entry requirements as well as the permits for staying in the United States for developing the professional sports career. For example, players from Albania, Serbia, and some African and Asian states are limited in their access to professional activities in the USA or face the issues of slow entry procedures. All in all, any changes in the political and legal environment affect all leagues operating in the sports industry, and none of them could avoid the related risks.
Significant impact of ticket prices on game attendance and taxation systems on hiring foreign players
Challenges connected to the transition from attending live games to online broadcasts
Main issues – the increased use of the newest technologies for creating a unique viewer experience by using high-resolution cameras, 360-degree imagery technologies
NBA is the technological leader in the professional basketball industry
Main concern – differences in cultural backgrounds of professional players
Ineffective marketing campaigns leading to drops in ticket sales – significant in the case of sports industry, poor impact on NBA due to international popularity
Main challenge – differences between internal regulations of professional leagues
For NBA – comply with FIBA (International Basketball Federation) regulations to remain internationally competitive
Political and Legal Environment
Laws and political and diplomatic relations predetermine entry requirements
Common example: legal prohibition of hiring players younger than 19 year old