Beyond the Arc: Investigating the Impact of 3-Point Shots on NBA Revenue: An Empirical Analysis

Beyond the Arc: Investigating the Impact of 3-Point Shots

on NBA Revenue: An Empirical Analysis

Cameron Bolduc

Abstract:

This paper investigates the impact of Stephen Curry’s revolution of the three-point shot and its

impact on NBA’s revenues. The study will incorporate the five years prior to Stephen Curry’s

back-to-back MVP’s and the five years after those MVP’s. The model will examine three-point

makes and percentage per game, along with a player’s effective field goal percentage, as well as

playoff wins and attendance in home games. The study’s results showed that in the five years

after Stephen Curry changed the game and won his MVPs, the three-point shot was a big driver

in a team’s revenue. These results do not align with previous paper’s work and should encourage

further studies on the topic. The results in this study indicate that the play style of a player must

include the three-point shot as the NBA is a business at the end of the day, and being able to

shoot threes gives a team more chances of success, along with more money.

JEL Classification: L83, Z23

Keywords: 3-Point Shot, NBA Revenues

Department of Economics, Bryant University, 1150 Douglas Pike, Smithfield, RI 02917. Email:

[email protected].

1.0 INTRODUCTION

Stephen Curry changed the way that the game of basketball has been played because of

his ability to shoot three-point shots better than arguably any other player in NBA history.

Throughout different eras, the game of basketball has seen different players revolutionize and

bring about new fans to the game because of their play style. Two easy examples of this are

Michael Jordan and Allen Iverson. Jordan was a name known across the world, and his skillset

was so great that he was the main driver behind the surge of NBA basketball. Prior to Jordan

being drafted in 1984, the league was trending downwards, but afterwards, the TV viewership

for the NBA reached levels previously unknown. Alongside that, rather than teams being

disbanded as was planned prior, teams were added to the league (Reynolds, 2022). As far as

Allen Iverson, his idol was none other than Michael Jordan. He led a cultural revolution in the

NBA as he did not change his persona at any point to please anybody (Gordon, 2016). Not only

that, but he was also a player that many shorter basketball players with professional aspirations

looked up to, as despite being only six feet, he managed to win a Most Valuable Player Award

(MVP).

I will investigate what the impact Stephen Curry had on the NBA is by looking at the five

years prior to his back-to-back MVPs, otherwise known as his first five seasons in the NBA, and

the five seasons after those MVPs. This study is important because while other studies have

looked at the determinants of NBA revenue, none have considered whether Stephen Curry is

another example of a player that has revolutionized basketball in the way that a Michael Jordan

or Allen Iverson have. I was someone who grew up during this period and played in many

different basketball leagues. In doing this, I was a part of the revolution to shoot more three-

pointers and witnessed many of my friends or other players purchase Stephen Curry jerseys,

shoes, etc. Another aspect to consider is that often in my early childhood, when someone would

throw a piece of trash into the garbage, they may have yelled, “Kobe!”. As I began to grow up, I

started hearing a shift from, “Kobe!”, into “Curry!”. As seen in Figure 2, since Stephen Curry

was drafted in 2009, the three-point shot has become more and more utilized, aside from years

pointed out where it makes sense that a decrease in three-pointers was seen.

Over this same period, the NBA has seen increases in revenue (see Figure 1) in all, but

the same seasons as previously mentioned. Prior studies have examined the increases in NBA

revenue, but neglected to focus on the value that Stephen Curry may have brought to the NBA.

Another area that shows that Curry was extremely valuable to generating revenue for the league

is the fact that he is consistently near the top or at the top of NBA jersey sales. Since 2001,

Stephen Curry has been the leader in jersey sales three different seasons, behind only Kobe

Bryant and LeBron James who have done it six and seven times, respectively (Pimentel, 2023).

Curry is also trending towards being the number one jersey seller of the 2023-24 season

(Release, 2024)

The rest of the paper is organized as follows: Section 2 explores the trend surrounding the

topic. Section 3 dives into the literature review of previous studies in this general topic area. The

data and empirical methodology of the study are shown and explained in Section 4. The results

are shown and explained in Section 5. Lastly, there is a conclusion that wraps up the paper in

Section 6.

2.0 3-POINTERS AND REVENUE, 2009 THROUGH 2021

Figure 1 shows that from 2009 to 2021, excluding the shortened season (2011-12) and the

season where the Covid-19 pandemic arose (2019-20) and the following season (2020-21), the

NBA’s revenue increased. In 2011-12, the NBA season for each team was shortened from

eighty-two games to sixty-six games (Beck, 2011). This was nearly a twenty percent decrease

from the regular eighty-two game season. As for the 2019-20 season, the world was brought to a

halt in March of 2020, and the season was again shortened, even after the NBA Bubble in

Florida was played out. Not every team qualified for the NBA Bubble and the range of regular

season games played ranged from sixty-four games to seventy-five games (2019-20 NBA

Standings, 2020). With that, there were no full arenas for the last eight regular season games

played for the teams invited to the bubble, nor with the playoff games. Lastly, the 2020-21

season was again shortened, and arenas were again not filled. The season was seventy-two

games, ten less than a standard season and for the majority, if not the entire season, many teams

were in limited capacity arenas (NBA.com Staff, 2021). The two years with black outlines are

the two years excluded from the study, being both of Stephen Curry’s back-to-back Most

Valuable Player seasons.

Figure 1: NBA Total Revenue by Season

Source: Statista

Figure 2 depicts the yearly three-point attempts on average league wide, overlayed with

the three-point makes each year meeting the same criteria. The number of three-point attempts in

the NBA has increased every year since the 2010-11 season. The decrease from 2009-10 to

2010-11 was only by one tenth of an attempt per season, otherwise known as a fraction of a

percent decrease. Similarly, the three-pointers made also increased in all but one season. The

decrease in three-pointers made was from the 2010-11 season to the 2011-12 season, and it was

again by one tenth of a shot, or a roughly one and a half percent decrease. Diving deeper into the

numbers, the average percentage of these years was 35.7 percent (NBA League Averages – Per

Game, 2024). Out of the twelve seasons in Figure 2, five of the seasons had three-point

percentages that were less than the average (three-pointers made over three-pointers attempted).

It is important to note, two of those seasons were the two seasons excluded from the study. The

largest negative difference however was in the 2011-12 lockout shortened season. On the flip

side, the largest positive difference was in the Covid-19 shortened season of 2020-21.

Figure 2: NBA 3-Point Attempts vs 3-Point Makes

Source: Basketball Reference

3.0 LITERATURE REVIEW

In the 2009 NBA draft, Stephen Curry was drafted by the Golden State Warriors. Since

then, the NBA’s revenue has increased each season aside from the 2011-12, 2019-20, and 2020-

21 seasons (National Basketball Association Total League Revenue from 2001/02 to 2022/03).

All three can be deemed outliers as the former was the shortened season, and the latter two were

the pandemic seasons. This is where the NBA finished its season in a bubble with no fans, and

the following season saw zero to a fraction of the fans allowed in the arenas. There are many

drivers behind the NBA revenue increases.

Reilly et al. (2023) attributed somewhere between $15 and $20 million lost each season

because of star players missing games (load management), something that the league has worked

to remove during this season (Reilly et al. 2023). Star players missing games obviously have an

impact on how many viewers the game gets, as people are more likely to tune in when the best

players are playing. Likewise, when fans buy tickets for games and those star players decide to

sit out for load management, those fans get upset, and would be less likely to then buy another

ticket. Reilly et al. determined that stars would miss games for five reasons: letting injury heal

sufficiently, in the second game of back-to-back days with a game, against the bottom-feeder

teams, when the game is of lesser importance for their playoff hopes, and lastly, when the game

is less likely to affect revenues such as an away game (Reilly et al. 2023).

The three-point shot was brought into the league in 1979, and Harrison (2019) examined

the effects of many factors, including this, on NBA revenue increases. His study’s purpose was

to see how play style affects revenue in the league. As this study took place five years ago,

Harrison found that the total number of three’s attempted grew nearly seven percent on average

from 2012-13 to 2017-18, while revenues grew over fifteen percent on average during that same

period (Harrison, 2019). It is no secret that the three-point shot has become more popular in the

past decade, but some other factors that Harrison looked at were arena age, all-star votes, playoff

wins, and city population (Harrison, 2019). The study concluded that the three-point shot

resulted in lower revenues at a statistically significant level. This occurred while playoff wins,

all-star votes, and population were not statistically significant, but all showed positive impact on

revenue.

In his assessment of different sports leagues, Bradbury contested that the better a team

played (the more success that team had) the more revenue that individual team made. Not only

did Bradbury find this in the NBA, but he found it in every league besides, surprisingly, the NFL

(Bradbury, 2019). More specifically, how a team performs in the playoffs determines a

difference of about seven million dollars in revenue. Another aspect of this revenue boost is

when a new stadium gets erected. With a new stadium, teams saw an increase in attendance of

fans, again, except for the NFL. Something else that Bradbury looked at was teams with another

team in that same market. In the NBA, this meant the Los Angeles Clippers and Lakers, the New

York Knicks and New Jersey, then Brooklyn Nets. There was no negative effect on either the

Lakers or Knicks, which Bradbury attributed to the fact that these teams are top revenue

generating teams in the NBA (Bradbury, 2019). Lastly, Bradbury’s study claimed that population

increased a team’s revenue.

Right around the time Stephen Curry began his seasons of three-point barrages,

Gannaway et al. (2014) explored how the pivot of the NBA into being more concerned with

scoring points impacted players and their productivity. Contrary to popular belief, the study

found that introducing the three-point line increases productivity for taller players as opposed to

smaller players. Likewise, taller players have been at a higher demand from NBA teams. After

the three-point line was created, centers saw their shot attempts increase by over three and a half

percent, while both forwards and guards saw their shot attempts decrease. This is interesting

because with a three-point line, it is generally the smaller players that are better at shooting than

centers. The researchers pinpoint this increase to the fact that the defenses became more spread

out after the invention of the three-point line, making defense closer to the basket more difficult

(Gannaway et al. 2014).

4.0 DATA AND EMPIRICAL METHODOLOGY

4.1 Data

The study examines time-series data from the years 2009-2014 and 2016-2021, looking at

variables that determine the revenue in the NBA. The data comes from a variety of sources. The

revenues for each team come from Statista.com and the attendance figures come from

ESPN.com. The remainder of the variables: points per game, three pointers made, three pointer

shooting percentage, efficient field goal percentage, regular season wins, and playoff wins, were

found on basketballreference.com. The summary statistics for the variables listed above can be

found in Table 1.

Table 1: Summary Statistics

4.2 Empirical Model

The model used in this study is a modified version of the model used in Harrison’s (2019)

study. The difference between Harrison’s study to this study is that it examines more of how the

three-point revolution and Stephen Curry impacted the revenue among the NBA. This differs

from Harrison’s study because he looked at five years including both years when Stephen Curry

won MVP. While Harrison’s study was evaluating the effect of play style on NBA revenue from

the 2013-2014 season to the 2017-18 season, this study assesses the impact of the three-point

shot. To do that, this study compares the seasons falling between 2009 and 2014 and then 2016-

2021. Furthermore, Harrison included more variables regarding the teams’ arenas and the cities

where the arenas are located. I added the effective field goal percentage as well to the study,

along with points per game.

The model used in this study is as follows:

Team Revenue = β0 + β1(PPG) + β2(3PM) + β3(3P%) + β4(eFG%) + β5(Reg. Season Wins)

+ β6(Playoff Wins) + β7(Home Attendance %) + ε

The dependent variable being team revenue is being studied to determine how the change

in play style of the NBA impacted the revenue versus other factors. Next, the independent

variables include four offensive metrics and three team-based metrics. The four offensive metrics

were found by taking the top ten players from each of the season studied in terms of three-

pointers attempted. Upon doing that, the same player’s points per game, three-pointers made per

game, three-point shooting percentage, and effective field goal percentage. The first two of those

are self-explanatory as to what they are, with three-pointers being from behind the three-point

line. The three-point shooting percentage is the percentage of three-pointers made of the

attempts. The effective field goal percentage is an adjusted field goal percentage that considers

that three-pointers are greater than two-pointers. Next, regular season wins, and playoff wins can

be a direct indicator of a team’s revenue as a more successful team is likely to bring in more fans

than a team that is not successful. The more successful a team is, the more tickets they will sell,

and those tickets may also be priced higher than a team struggling to fill its arena. Similarly,

home attendance percentage is along those same lines, and can drive a team’s revenue. As not

every team has the same capacity in their arena, percentage is a better indicator of how they are

filling the stadium.

5.0 EMPIRICAL RESULTS

The three tables below depict the regression results for the data, and then a comparison

amongst the 2009-14 and 2016-21 datasets. This comparison will demonstrate the effectiveness

of Stephen Curry in changing the game via the three-point shot and how much of an effect it

truly had on revenue. Table 4 accounted for the variation in revenue the best, explaining seventy-

two and a half percent, while Table 2 accounted for roughly sixty-four percent. The same cannot

be said for Table 3, which used the data from 2009-14, which can only account for a third of the

variation in the dependent variable of team revenue. The r-square value mentioned above is

highlighted in each of the three tables, as well as any variable that is significant at the one, five,

or ten percent levels.

Table 2: Regression results for years 2009-14 and 2016-21

The overall empirical estimation results are presented in Table 2. This regression used the

data from every year in the study to capture the effect that the three-point shot, and other

variables had in total. This model showed that four variables were statistically significant in

being a determinant of the team’s revenue. The number of three pointers made (3PM), three-

point percentage (3P%), and home attendance percentage were all found to be statistically

significant at the one percent level. A team’s number of playoff wins was also found to be

statistically significant, but at the five percent level. While three pointers made were found to

have a positive effect of over eighty-one million dollars, it is important and interesting to note

that an increase in a player’s three-point percentage decreases a team’s revenue according to this

model. Not surprisingly, the playoff wins of a team and home attendance percentage had a

positive effect on a team’s revenue. The former coincides with Harrison’s 2019 findings that

playoff wins have a positive impact on revenue in the NBA at a significant level. The other three

variables were not statistically significant at any level.

Table 3: Regression results for 2009-14

The above regression in table 3 suggests that the model and variables I selected were not

at all a great representation of the drivers of revenue in the NBA during the 2009-14 seasons. Of

the three regressions, the variables were able to explain the smallest amount of variation in NBA

revenue with this model, at just near thirty-three percent. Playoff wins and home attendance as a

percentage of the stadium’s capacity were the only two statistically significant variables in this

model. Home attendance has a massive coefficient, meaning that on average, a one percent

increase in home attendance while holding other variables constant will increase revenue by

roughly two-hundred and sixty million dollars. It is interesting to note that playoff wins had a

negative impact on revenue in this model, but it was only statistically significant at the ten

percent level. This fact is what I attribute to the high coefficient for home attendance percentage,

that the only other statistically significant variable (playoff wins) was negative. It is also

interesting to note that the intercept was a negative number unlike the other two models.

Table 4: Regression results for 2016-21

In Table 4, the model explains more of the variance in a team’s revenue than either of the

models. This means that the variables I chose better explain the 2016-21 seasons as opposed to

the 2009-14 seasons, as expected. This is a demonstration of how Stephen Curry impacted the

game as variables related to his play style better determined revenue after his back-to-back

MVPs. Unlike the 2009-14 regression, three pointers made were a large positive driver in

revenue at a statistically significant level of one percent. The coefficient for 3PM means that on

average, holding other variables constant, one more three-pointer made will increase a team’s

revenue by over thirty-three million dollars. Something of importance is that this is a much

smaller figure than the model in Table 2 suggests. However, like Table 2, which tested the data

for all the years, playoff wins, and home attendance were statistically significant variables. In

this case, both variables were statistically significant at the one percent level. From 2016-21,

home attendance was a much larger driver than playoff wins. On average, a one percent increase

in home attendance, ceteris paribus, increases revenue by over sixty-million dollars, while one

playoff win, ceteris paribus, increases revenue by over six million dollars.

6.0 CONCLUSION

This paper examined the effect that Stephen Curry had on NBA revenue with his

change around how the game of basketball was played because of his usage of the three-point

shot. As it turns out, the three-point shot, and Curry did have a great effect on being a

determinant of a team’s revenue in the NBA. There are, however, limitations in this study. In the

first set of five years, there was a lockout meaning that the season was shortened, thus revenues

went down. Similarly, in the second set of five years, after Curry won back-to-back MVPs, there

was the COVID-19 pandemic which halted the entire world, never mind just the game of

basketball. The effect on the NBA was that the season where the pandemic first hit was

shortened and then finished without fans, in a bubble. The following season, states had differing

policies on the Coronavirus, and some teams were able to fill their stands more than others, but it

did not come close to pre-pandemic levels. Seeing as home attendance percentage was an

independent variable in this study, the results may have been skewed.

Two key drivers of an NBA team’s revenue are playoff wins and fan attendance. It is

important to consider that the three-point shot plays a large role in both playoff wins and fan

attendance. Stephen Curry, the all-time leader in three-pointers made in the NBA has won four

NBA championships, the first of which was in his first MVP season, the 2014-15 season. If a

team is looking to generate higher revenue, a great way of winning games and getting fans to

come watch is to utilize the three-point shot. This would mean that the traditional power forward

and center positions must adapt to survive. This is already being shown because many of the

taller players in the NBA have developed three-point shots. The players that have not adapted

this feature to their skill set are often not as valued as they were prior to the Stephen Curry

revolution.

Appendix A: Variable Description and Data Source

Acronym

Description

Data source

Team Revenue

Revenue of the team in the NBA

Statista

PPG

Points Per Game: the total number of a player’s

points divided by number of games played

Basketball Reference

3PM

3-Pointers Made: the total number of a player’s

made three-pointers divided by number of games

played

Basketball Reference

3P%

3-Point Percentage: the total number of three-

pointers made divided by number of three-pointers

attempted

Basketball Reference

eFG%

Effective Field Goal Percentage: an adjusted

statistical measure of a player’s field goal

percentage accounting for three-pointers being

worth more

Basketball Reference

Reg. Season

Wins

Regular Season Wins: a team’s number of wins in

the regular season

Basketball Reference

Playoff Wins

Playoff Wins: a team’s number of wins in the

postseason tournament

Basketball Reference

Home

Attendance %

Home Attendance Percentage: a calculated figure

using the number of average attendees over the

stadium’s capacity

Computed using ESPN

data

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