Fight Sports Revenue Erosion

“the game.” That’s the only selling going on, and it fails miserably. It also sets up a future scenario where the customer will routinely expect high-value gifts, heavily discounted or complimentary tickets, or something else intrinsic to the overall experience.

  Marketing departments love providing premium giveaway items as much as sales staffs hate them – similar to the scenario where heavily discounted or complimentary tickets have flooded the market. Why? Because once the franchise has decided that high-value gifts are a mainstay, so does the fan base. It essentially allows the marketing department to provide a solution toward sagging attendance which ends up selling out the sales staff in order to do it. The overall ticket market and value of the game drop locally, all for the desire to draw a few thousand more fans in those 10 of the last 35 home games of the season. The “quick-fix” marketing scheme of the premium gift item is an easy weapon to fire off, but it shoots down all of the non-giveaway games that sit around it on the schedule.

  Sports marketing departments gain a lot of traction with their fuzzy math on premium gift items. They can put $4,000 in that $9,000 budget for Bobbleheads or yellow towels, then take a $10,000 corporate sponsor’s logo to slap on as a piece of “fulfillment” and start generating a Wednesday promo giveaway night mid-way through the schedule. This seems to be a good thing, especially when designing a promotion schedule in winter for the next summer. After all, you have to have something that attracts fans on those off-nights.

  There are no other promotions beyond the typical in-game stuff to attract or entertain fans. It’s a Bobblehead night, so that should be enough, right? And while the marketing director starts chomping down on his figurative cigar, replete with the notion that the franchise is generating $6,000 off of the corporate sponsorship “fulfillment” as well as drawing 2,000 more fans on a Wednesday night game, he really shouldn’t be celebrating at all. It’s a ponzi-scheme of bad math that allows those sports marketer gear-heads to miss the obvious point that they aren’t generating money. In fact, they are losing money on the venture.

  Here’s where the problem of the pro-premium item giveaway agenda grows deeper: The franchise’s per cap gets wounded by the Bobblehead gifting scenario in the same way that heavily discounted or free ticket “helicopter drops” do. Enticing those folks looking for a deeply cut price point in their entertainment dollar is a cancer on your brand. They are committed to a “saving” mentality, a value of not spending more money than they have to, ever, and will justify other per cap items as “too expensive” to purchase. Bringing out every single possible customer, without understanding who can afford or wants to pay for your product, is the wrong methodology for the franchise’s per cap and is counter-productive.

  Ask a sports marketer this question: if premium item giveaways are the great silver bullet for teams, why not offer a premium item for every game on the schedule? They will say that it would deflate the idea that a Bobblehead is “special.” But that, in itself, shows the dire problem with premium item giveaways. If only “special” gift items draw out the masses, it changes the interaction between the game experience and the customer base to either “mundane” or “special” by comparison.

  The sports marketer and the franchise priority are fixated on the idea of attendance numbers equating revenue, even if the attendance number is not accurate to occupants in the building during the game. One core dirty secret of the sports industry is that attendance numbers, for the most part, are inflated. They are a marketing plan gimmick, based on the corrupt idea that inflated numbers will influence how the public feels about the sports brand. Again, this is a sports marketer gear-head belief that the passive fans pay attention to attendance numbers as closely as the diehards do.

  This gimmick supposes that if the actual venue is only has a 50 percent audience show-up rate (i.e. redemption), lying in the press release or box score afterward and claiming at 70-to-80 percent of the seats were filled will benefit the brand. This suggests that everyone who did not show up was still focused on or paid attention to the followings of the brand.

  The reality is that people did not show up because they did not see the value, nor likely were even aware of the event. They are not going to become hyper-aware as brand ambassadors. Promoters believe that inflating numbers and lying about the number of people in the building will entice more of the public to join in next time. This idea of “everyone will want to be part of a full house” suggests that the information will be leveraged into pulling people off of the couch and into the stands. Nothing could be further from the truth. Most of the public, even if they passively followed the franchise in question, prove the exact opposite.

  This attendance inflation damages the brand further. Now, those folks in the venue, the ones who have decided to show up and support the team, end up being lied to. As the number is shown or revealed to those fans who are hyper-aware of every point of messaging presented by the franchise, they are presented with attendance numbers that they know were false.

  The thing about optical space is that even when the venue is 80 percent full, it can look 60 percent full to the naked eye and every seat is never occupied all the time even when sold. There are no-shows from season ticket holders or groups, and there are concession stands, stadium bars, and bathrooms that are filled. Plus, some folks enjoy walking the concourse.

  Now, there are brand ambassadors who can poison a franchise even without meaning to. People text within the facility during the game, and chatter on social media. Folks at the stadium look around, and if they don’t feel the franchise was accurate on the attendance mark (and they never do), one social media post or tweet or photograph can make the crowd appear smaller than it may have actually been. The public attending the event or monitoring it on social or traditional media sees right through the nonsense. Inflating attendance numbers deflates the value of the ticket and the overall live experience, initiating the fan's questioning the price of her ticket when there's clearly far fewer in attendance that she is being told.

  Larger attendance to a sporting event does not matter. In fact, attendance is less important than how many people spend money on the product. Part of the issue with stadia is their seating capacity reaches, which are likely judging from watermarks that were established pre-Internet and cable television.

  Basketball arenas that sit half-filled at 18,000 seats should probably have considered only 11,500 seats. Everyone is so focused on building bigger, they forgot to build smarter. Would it be better to have an arena that is small enough that everyone can attend, or larger with more people? By judging on straight seating capacity alone, we miss the real issue, how much each patron is paying for seating.

  Not all seating in the stadia are the same: Luxury suites and premium seating generate far more and possess a higher rate of redemption than the $5 bucket seats in the rafters. Yet the $5 bucket seats are usually where the per cap ancillaries are fed the most. This creates an issue where the cheapest seats actually dictate some of the higher revenue streams in-game, while the larger-spend seats actually generate less. The question becomes whether it's worth it, from an optics stand-point, to have the cheapest seats remain simply because of the ancillaries and those five of forty games which are guaranteed to sell out all 18,000 seats.

  This is where the sports marketer gear-head fails to remove his personal emotions from the situation. Instead of understanding the rate at which seating is sold, or the revenue that it generates, they believe in heavily discounted or complimentary tickets, coupled with premium giveaway options as a salvageable solution to entice potential guests through the gates. The suggestion is that price point has become the larger factor, rather than urgency and demand for the product, thereby making pricing the only value point from which to judge the product’s merits. This, in turn, creates havoc with the in-game per cap issues that the franchise wanted to avoid entirely. The customers brought in will not spend or see value, since they did not see value in the ticket to begin with.

  These
mixed messages have created an insatiable search for more patrons and larger attendance. It's a fallacy to look at the number of heads in a building as a true statement of a marketing win or loss off the court. To make matters worst, a few months after those attendance numbers that were boosted are in the box score, they become fact rather than legend. This makes it impossible to truly know what was real in terms of what a franchise drew, since the basis of the information is likely inaccurate.

  This comes back to what a true measurement for a franchise should be. In reality, the main concern is how much revenue is being driven into the team’s coffers, feeding its per caps, for each game. Attendance numbers have little to do with revenue, which is why franchise market and sales departments tend to disagree fundamentally on the correct route toward building a true fan base.

  It starts with ticket sales, but cannot end there. Simply having patrons purchase tickets does not equate to being fully invested in the product. Redemption of that ticket matters,