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SBJ/September 29 - October 5, 2003/Facilities
Celts’ pricing worries arena
Published September 29, 2003
FleetCenter is calling some ticket-price increases by the Boston Celtics excessive, including a 47 percent hike in club-seat prices for the coming NBA season.
The move has affected arena marketing efforts for its Premium Club, a primary revenue stream for the facility, said FleetCenter CEO Rich Krezwick.
All luxury suite and club-seat holders at FleetCenter are required to pay membership fees for the Premium Club over and above the price they pay for game tickets. Krezwick said those fees average $3,000 a patron and help pay off the debt for the $180 million, privately-financed venue, which opened in 1995. Delaware North owns FleetCenter; the Boston Bruins, the arena's other primary tenant; and concessionaire Sportservice.
The Premium Club features in-arena amenities such as right of first refusal on tickets for other FleetCenter events and "outside-the-building" offers such as the right to buy tickets for the Red Sox and Patriots, play golf at various country clubs and take cruises to the Bahamas with Celtics and Bruins alumni.
"We refined our club-seat program three to four years ago and rebranded it as the Premium Club and added more amenities," Krezwick said. "What we offer is unique. From my research, we offer much more than most facilities."
With the Celtics raising ticket prices for the majority of club seats by nearly 50 percent, however, FleetCenter officials have experienced hesitancy on the part of premium seat holders to continue buying those tickets, which in turn hurts Premium Club memberships.
Krezwick said, "We are struggling desperately to handle renewals successfully and to appease our clients with current leases. We're moving forward in a cooperative spirit to take a look at the Celtics' needs. We want to address this issue accordingly to make sure it does not occur again. We are trying to protect our customers that are seemingly caught in the middle of the transaction."
Under terms of the lease between the Celtics and Delaware North in effect through 2011, the Celtics play rent free and pay no expenses while retaining 100 percent of NBA ticket revenue. The team establishes its ticket prices. FleetCenter controls ticket inventory for suites and club seats, including non-NBA events, remitting the cost of those tickets to the Celtics.
The Celtics raised prices on about 60 percent of the 2,400 club seats in the building from $95 to $140. The rest of the club seats, which are behind the basket, increased from $95 to $100, which Krezwick said the Celtics did as a compromise against the significant increase in the price of clubs seats.
Prices for some tickets without amenities also increased more than 40 percent, said Krezwick, as $95 seats were raised to $125, $140 and $225. But John Brody, Celtics executive vice president of marketing, noted that the team increased the number of $10 tickets available in the upper level by more than 10 percent, to about 1,600,
The top ticket price for 88 leather courtside chairs went from $550 to $700. Those seats include amenities created and controlled by the Celtics. Brody said there is still a waiting list for the high-end seats.
Normal premium seat price increases are 5 percent to 10 percent, said Bill Dorsey, executive director of the Association of Luxury Suite Directors. "I don't think it's the price increase of the tickets as much as the percentage of increase," he said. "That's a very, very big increase, and it disturbs me. It implies that people with deep pockets have a bottomless pit." Krezwick thinks the problem boils down to the fact that the language in the lease between the Celtics and Delaware North, written before FleetCenter opened and terms of which were tied into arena financing, does not clearly define ticket price escalators. When building management found out about the club-seat price increase, Krezwick said that he offered the Celtics a one-time $1 million fee and requested that the team keep all its increases in the 5 percent range, but that it turned down the offer. "Discussions went on for several months," he said.
Brody and Vice President of Operations Daryl Morey declined to comment. But Morey said the team "carefully benchmarked its ticket prices around the league" when initiating the changes to offset $22 million the team has invested in basketball operations since a group led by Wycliffe Grousbeck bought the franchise last year for an NBA-record $360 million.
Brody added, "We're not raising ticket prices to put more money in the pockets of the owners. This money is going directly to improving the product on the court. It's an investment toward bringing a championship back to Boston."