Thursday, February 2, 2012

Tickets for sports much is too much?

I took a class at Stanford last spring call Biz Ball, on sports as a business. It was taught by Andy Dolich, a top sports executive who currently runs his own consultancy firm. Andy previously worked in the front office for teams across professional sports including the Oakland A’s, Memphis Grizzlies, Washington Capitals, Philadelphia 76ers, San Francisco 49ers, and the Golden State Warriors.

One of the topics we discussed was where is the breaking point on ticket prices? How high can they go before fans stop going to games?
Unfortunately, we didn’t come up with the answer and as a fan and now a blogger this is a topic I can’t seem to stop thinking about.

Given that it is Super Bowl week and the San Francisco (SF) 49ers just announced the first phase of pricing for their new stadium, I think it’s a good time to focus on NFL ticket pricing.
Since I moved to the Bay Area about six years ago all I’ve heard about is a new stadium for the 49ers. The City of San Francisco offered certain parcels of land, but they could not reach an agreement. The 49ers decided to move to Santa Clara, where their headquarters and training facility are—an hour south of the City. After propositions on the ballot and fighting on both sides of the issue, the 49ers are set to break ground on the new stadium this spring and plan to play the 2014 season there. And, they just lined up the funding and all the land recently…after at least six years of trying.

Although, they still need a company to buy the naming rights on the stadium.
Funny, LA doesn’t have a team yet. They are building a new 100% privately-funded stadium. And, Farmers Insurance bought the naming rights for $700 million for 30 years.

It seems to me like the folks in LA know how to get things done. Maybe Jed York, CEO of the 49ers should ask them how they did it.
Here’s another thing Jed York and the 49ers don’t understand…their fans. Most of their fans and season ticket holders have been going to games for years. York was quoted as saying that he expects the stands to be filled with “working class families.”

Let’s see if working class families can afford these prices:
Between $3,250 and $3,750 for tickets each season…and a stadium builders license ranging from $20,000 to $80,000, with most being either $20,000 or $30,000. Oh, and the 49ers are offering a 10-year financing plan on the license fee, if you don’t pay it off by the time the stadium opens, in about three years, you get to pay interest fees of 8.5%.

Now, that’s a deal!
And, just to give you some perspective, 49er fans are currently paying $1,790 a season for a first row seat on the 49 yard line and of course, no license fee.

This past season the highest Fan Cost Index (cost of taking the average family of four to a game) was $628.90. This was to go to a NY Jets game. The second highest was in Dallas ($613.80) where parking costs $75.
With the advent of these new stadiums (the Dallas Cowboys opened in 2009) and the combined NY Jets/NY Giants stadium in 2010, ticket prices have soared. And, the 49ers are pushing it even higher. They are passing along the cost of these $1 billion stadiums to their fans.

They will be losing many long-time season holders. I’m not saying that they won’t sell these seats, but that working class family that Jed York thinks is going to be sitting in those seats isn’t coming back. He is helping to change the demographic of who is attending NFL games. And, I imagine this change has been going on for a while. This is just in my backyard this time.
Personally, I have not attended an NFL game in years. No, I have not ventured to the ‘Stick and sat through the winds. It hard for me to admit this as a Packers fan, but I think the last game I went to was a Bears game at Soldier Field. And, yes, that was cold and windy, as all games are there. Tickets got too expensive for me years ago. And, besides if I can’t be at Lambeau watching my beloved Packers, just not interested.

The SF Giants are the last professional team in the Bay Area to build a new stadium. And, unlike them, the 49ers did not keep their season-ticket holders in mind when developing this pricing strategy. As Russ Stanley, Giants VP Ticket Services and Client Relations told me for my post on dynamic pricing, the Giants “are always looking to make the season ticket experience better for their customer.”
For the 49ers it is obvious that it’s all about the bottom line. They are hoping that 49ers will become the new darlings in the South Bay and that Silicon Valley companies will buy up these seats.

When the SF Giants moved into the new ballpark, the licenses ranged from $1,500 to $7,500. They had very few at $7,500, just the first five rows between the bases.
So, let’s get this straight…

SF 49ers: $3,250-$3,750 per season and $20,000-$80,000 for the license. That’s for 8 home games, plus two playoff games…if they get there.
SF Giants: Last check $3,175 for lower box for the season. Less than $7,500 for the license. That’s for 81 home games.

Hmmm…which one seems like the better deal?
Hey Russ, how about two seats down the first base line…