Fight Sports Revenue Erosion
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lest the patron choose never to buy again, remembering the desk drawer full of unused tickets from the last three years. And once they have redeemed the ticket, sat in the seat, the true franchise promotion needs to happen. The investment is not in providing them with a gift, but in developing a relationship beyond the gift or the game. Recruiting true believers is harder than recruiting athletes.
Phoenix, Arizona, has been notorious in the entertainment world as a “paper city,” even more so than the obvious Las Vegas. Phoenix is where all Canadian snowbirds either flock for the winter or go to retire, along with former Los Angeles or Chicago residents. Phoenix is where “no one’s from here.” It is not a place that keeps and builds its home-grown residents. Blame it on the heat, desert or the urban sprawl, but Phoenix doesn’t have a lot of established lifers in its city.
Phoenix and its greater metropolitan area is the home to Major League Baseball’s Spring Training for 16 teams. It also has several major league teams from all major sports and NASCAR, but Phoenix had an interesting reputation built in the 1990s that lasted until the mid-2000s. If anyone paid full price for a ticket, or really, any price at all, to enter a sports facility, they were essentially a sucker.
Spring Training teams have flooded the market with complimentary tickets since the 1980s, because prior to the mid-1990s, the MLB Cactus League was not viewed as a large enterprise as it is today. Cactus League games were seen in the 1980s as a way to fill hotel rooms, restaurants and bars during the months of February and March, when the temperatures were in the mid-70s and it was sunny with a breeze.
The Phoenix ticket market was awash with complimentary or heavily discounted tickets throughout the 1980s, even as major league franchises entered the market place. The NFL’s Arizona Cardinals played in half-empty stadiums. The NBA’s Phoenix Suns won often enough to protect their price point through demand, but the reputation didn’t help the area. In 1996, the NHL’s Winnipeg Jets moved to Phoenix, rebranding as the Phoenix Coyotes.
Within two years, the Coyotes’ owner offered the franchise up for sale, because the hockey ticket price point had dropped with the area’s “paper city” reputation. Phoenix was awarded an MLB team in 1998, but the local minor league baseball teams struggled with attendance and finances, especially when matched against the free ticket flooding of Spring Training games. It’s hard to sell a product that everyone else is giving away. All of this created a perfect vortex: No franchise in the area was making any money. Even the Phoenix Suns weren’t bulletproof, as their new era of regular season losses erased playoff runs.
Something had to be done. Each of the franchises in the area reduced their heavily discounted or complimentary tickets. The Coyotes cut the majority of their complimentary tickets down to the bare minimum. Each team began to regain their price point, by eliminating the idea that heavily discounted or complimentary tickets were needed to attract people to their games. What those heavily discounted and complimentary tickets did do was harm the season ticket base. After all, who wants to pay full price with a full season commitment while everyone else enters for free for the game of their choice?
Branding happens in many different ways in sports. There is branding that franchises want their public constituents to see, but there is also the branding by the public of the franchise, whether that perception is what the franchise wants. Actions speak louder than words, especially when it comes to brand. The second type of brand is harder to control as well. Branding happens in different forms, whether the team believes it has control of the brand or not.
This is the case with heavily discounted or complimentary tickets. When an audience perceives that a product can be achieved without paying full price, they will never pay the asking price. In fact, they will likely try to achieve it below even the heavily discounted price, assuming that the value of the product is less. It creates a terrible trend where the product is thought to be valueless, because the franchise has presented it in that form.
Sports marketers think like drug addicts when it comes to free tickets: They’ll just do it this one time, get their fix, and everything will return to normal, because they believe their world, their “news” of that world, is what every patron pays attention to. Patrons have busy lives, and beyond the heavily discounted or complimentary ticket promotion, they rarely view the franchise with as much consistency as the sports marketer believes that they do.
By offering something at a heavily discounted or complimentary price point, the sports marketer is changing the relationship between the franchise and the patron, who now only understands the product can be achieved at a lower rate, even if that’s not the case. Even if that promotion is 4-to-5 years old, it might have been the last time that the patron considered purchasing a ticket to the product. This creates a scenario where they now see the product as “gouging” because it is now be charged at the original asking price.
Imagine a sports marketer gear-head decides to offer a 50 percent off discount to a threshold-marketing 40,000 patron list, for one night only. But only one of every 10 patrons take the offer. That means that out of 40,000 prospective patrons, only 4,000 actual patrons have bought at the discounted price. But now 36,000 prospective patrons have witnessed the discount, which is now where they evaluate the price point of what the franchise truly believes that the product is worth.
Now imagine that’s one out of 100 off of a list of 400,000 where only 4,000 purchase the tickets. Or worst yet, its only 400 people who decide to buy into the deal after that 400,000 person list (at a one in 1,000 buy rate). That means 400,000 people in the area have now been conditioned to expect the franchise’s price point for a ticket at a heavily discounted rate, and now believe that the possibility exists to achieve that heavily discounted rate that at any other time.
What is lost in this scenario is the potential prospects – now they have been offered a chance to experience your product at a heavily discounted rate and have turned it down. Meaning that your sales staff didn’t even have an opportunity to engage with them, because it was more convenient to distribute an e-mail blast. This is now, for 396,000 potential fans, a branding of the franchise’s product as a devalued price point.
Threshold marketing groups (Groupon/Gold Star) have the ability to accomplish reach for available prospects. But that isn’t always a good thing. A mass e-mail to over 400,000 customers showcases your price at a heavily discounted rate. It illustrates that a deal can be had and that the original price point for the ticket price is not the value that the prospective customer should ever have been seeking.
Since it was performed on such a massive scale, the prospect now views the actual, original price point of the ticket as over-inflated and unjust and will now be resistant to the original price point regardless of circumstance. They will believe that a discounted price will be offered somewhere else down the line and they will wait for it, or even demand it.
The brand is the most important aspect to any product. It lends credibility to the purchasing decision by the buyer. Without a solid, credible brand, the buyer not know what he is being asked to buy and will not purchase the item. Sports marketers typically have a dim notion of what brand they are putting out into the market place.
They believe in simplistic branding concepts; pushing out messaging which they believe should be parroted back to them by true believers. But we've already shown the diehards make up less than 10-15 percent of any sports audience. We can guess that the public actually receives and consumes entirely different brand messaging than the franchise wants to distribute. Hence, the discounted message creates a poisoned brand.
Sports marketers should examine their product as though they were dispassionate potential consumers. What would drive someone with a passive interest to purchase that product at full price? The focus should be on determining how to drive not fans of the product, but dispassionate or passive consumers toward a purchasing decision. Sports marketers need to understand what push factors they have in their corner. What drives or
pushes a person who would not normally attend a sporting event to purchase and continue purchasing a game ticket as well as the per cap ancillaries inside the stadia?
Audience push factors are never viewed as more than marginal segmentation of franchise revenue analytics. However, push factors are one of the keys to revenue growth and exposure in the marketplace. Sports marketers make little if any effort to understand push factors, and they tend to discredit them. The push factor is a cause-focused enticement to make a purchasing decision. It must be made by a consumer, driven not by the normal value which may be achieved by the product, but the added value intrinsic to the product’s lifetime uses.
This forces a prospective buyer into viewing the event beyond a simple entertainment option. Instead, it creates of a vortex where the prospective buyer sees the product as a sense of their overall ecosystem; they cannot live without the product continually being in their life. It may not mean that the prospective buyer will always use the product (or attend the