Sports and entertainment marketing and sales managers are essentially charged with generating and maximizing revenue. In practical terms this means more eyeballs viewing the team's media and more butts-in-seats. To that end, so to speak, the New Yankee Stadium increased seat width from 18-22 inches to 19-24 inches, as have many other new facilities. Of course, the question remains as to how to sell more tickets for those wider seats.
With respect to selling tickets, much attention is given to "best practices" in selling tickets and sponsorships. But, who really knows if these are truly best? A practice might be great in one context and a failure in another. The answer lies in evaluating marketing practices on the basis of sound research. The chapters in this section rely upon original research we've conducted or extant research we have gathered. Failing that, we'll just go with our own opinion.
Chapter 3: Customer Relationship Management
Marketers segment markets on the basis of demographic, geographic, psychographic, and behavioral variables. Individual customers with similar attributes and needs are grouped into segments. The firm targets those segments that best match the firm’s objectives and resources given the competitive environment, typically investing resources in mass media such as newspapers, magazines, radio or television.
While marketers of sports and entertainment work under these same basic principles, the process has shifted from relatively static marketing planning models (year-to-year plans) to include more dynamic customer relationship management (CRM) models that quickly adapt to changing customer states and behaviors that can result in day-to-day or even second-by-second adjustments. As teams understand that they can precisely tailor the marketing mix to meet the needs of the different target markets through interactive network programs, they can creatively produce more profitable results.
Ideally, online campaigns targeting individual fans become viral in nature. Venture capitalist Steve Jurvetson first referred to viral marketing as “network-enhanced word-of-mouth.” If individuals receive electronic communications with obvious personal benefits, they will spontaneously pass the information on to others. The benefits of viral marketing may be economic, social, or emotional in nature. Combining all three provides excellent motivation to pass the message on to others. Attractive offers, for instance, often provide a price deal (economic) to enjoy a sporting event (emotional) with another person (social).
Chapter 4: Data Analytics
Warning: This chapter contains many statistical methods.
In the context of sports marketing, data analytics is the science of examining data using statistical methods and models to confirm, explain, or predict attitudes and behaviors of fans. Sports marketers are typically interested in predicting which fans are most likely to buy season tickets, attend games, consume media, support sponsors, and buy team-related merchandise.
Chapter 5: Selling Season Tickets
Season ticket sales are the financial foundation of any sports team. Gate receipts account for roughly one-third of total revenue for Major League Baseball and National Basketball Association teams, with media revenue and venue revenue making up the remainder. The UK’s Premier League and the NFL rely less on ticket sales (approximately 25% of total revenue) due to its media revenue—and the fact that these teams routinely sell-out, contributing to the high demand for media coverage. Although the recent economic downturn has affected all sporting events, average attendance in the NFL in 2009 was still 65,043, with only three teams (Jacksonville, Detroit, and Oakland) managing to attract less than 50,000 fans a game. A team or league without a loyal fan base does not have the clout to generate attractive media contracts. Basically, the relationship is the higher the average attendance, the higher the revenue that can be generated from media and sponsorship sources. That brings us back to the point that season ticket sales are the financial foundation of any sports team.
Chapter 6: Foundations for Setting Ticket Prices
Sports organizations engage in pricing on at least five levels:
- Concessions, merchandise, and parking
- Stadium advertising, signage, and experiences
- Naming rights of stadiums, webpages, jerseys, and events
- Broadcast rights to events and games
The first two generate revenues from spectators at the gate and the venue. The final three generate revenue through media and sponsors. Media revenue clearly dominates for NFL teams. This is not surprising, since the NFL has maintained the highest television ratings of all spectator sports, followed by NASCAR. Interestingly, the average gate revenue for teams in each of these four major sports leagues is relatively similar. In fact, the average gate revenue per team for the NHL, MLB, and NBA are not significantly different from each other. The NFL, which has far fewer games, generates a slightly lower level of gate revenues. This is, of course, offset by massive media revenues. Based on this fact, one might deduce that having fewer games (where each game’s outcome has relatively greater effects in league standings) helps maintain strong television ratings. Conversely, note the difficulty that MLB has had with TV ratings as televised games proliferated on super channels (WGN, TBS, etc.) and regional networks.
Chapter 7: Setting Prices for Sports & Entertainment
Why are fans willing to pay more for sports and entertainment tickets? Fans are buying experiences, not tickets. Sure, it’s an experience to sit in the south end zone of the Georgia Dome with over 45,000 other fans to watch Michael Jordan play a basketball game in the north end zone on his farewell tour. But, a much better NBA experience is sitting close to the court with friends or family and hearing the players share their thoughts regarding the last call with the referees. And, with a little luck, you can actually say something the referees hear—not that it has any more effect than when delivered from the rafters. But, you feel better.
When selling experiences we emphasize the four Fs of sports and entertainment consumption: fantasies, feelings, fun, and friends. Feel free to substitute or add family as another “F” in the equation, dependent upon whether you think of them as friendly or another category. In addition to the “F’s,” my friend Morris Holbrook explains that we should think of experiential marketing in terms of the four Es: Experience, Entertainment, Exhibitionism, and Evangelizing.
Chapter 8: Promotional Incentives
Organizations operating at or near attendance capacity may possess a fan base that recognizes the value of the experience offered. In other cases, fans may suffer from entertainment inertia or otherwise be unaware of the experiential benefits of the feelings, fantasy, and fun with friends available to them. When fans lack the proper motivation to have a good time, we must find ways to incent action.
Sales promotions were invented when the Romans distributed ceramic gladiator bobbleheads to the first 20,000 fans at the Coliseum in 264 BC. Corporate sponsors such as Pepsi quickly commercialized these events, offering the first post-game concert. Archival footage is provided here. Since that time, promoters have continued to search for the next big promotional idea. However, bobbleheads continue to be the most effective incentive to build single-game attendance. Seriously.
Chapter 9: Managing the Sportscape
Proper management of facilities and services at the home field can provide a competitive advantage by attracting fans so that the team plays in front of a good home crowd. However, management sometimes has difficulty getting consistently good play from their employees and keeping the place in proper shape. A new stadium or arena can make things better in the short term, but it won’t save bad management and a bad team in the long run. Managing sports venues can be difficult for at least three reasons.
Chapter 10: Moving Merchandise
In terms of generating global licensing revenue, Disney continues to dominate the world with over $30 billion. Three other entertainment companies (Warner Brothers, Marvel Entertainment, Nickelodeon/ Viacom) are in the top five before we get to Major League Baseball in sixth place, which brings in over $5 billion in licensing revenue on a global basis. MLB has been innovative in its merchandise sales, offering old Shea Stadium seats, recycled patches of sod from Yankee Stadium ($7.50/5 sq. ft.) at Home Depot, team-branded Father’s Day Mr. Potato Head, team-logoed M&Ms, and MLB team caskets or tasteful urns (from Eternal Image). Coming in at ninth place in global licensing sales is the Collegiate Licensing Company, where the fastest growing categories have been in women’s, children’s, and housewares. Other hot areas include vintage-inspired apparel and non-apparel items focusing on the history and tradition of teams.
Chapter 11: Technology and Online Retailing
Populous, the global leader in sports architecture and event design, is incorporating radio frequency identification (RFID) inlays into event tickets, passes, and credentials that will allow individuals to pass through gates without assistance. RFID allows properties to analyze visitors’ movements and traffic flow, authenticate credentials and eliminate fraudulent tickets, as well as use in making purchases.
Chapter 12: Building Community
In our concept of community, properties and fans form an open partnership where fans feel a sense of belonging to the organization. Building community is important to sports teams. Being part of a community gives fans a feeling of belonging with other fans with similar interests. Joining a community breeds an interdependence of giving and doing for others and produces a feeling that you are part of a dependable and stable social structure where you feel safe. Of course, it doesn’t hurt to remember that repeat customers generate over twice as much gross income as new customers.