SBJ/June 20 - 26, 2005/Other News

Spurs build themselves into local powerhouse

It’s 10 a.m. before Game 1 of the NBA Finals, and Russ Bookbinder is so relaxed in his office it may as well be a mid-August offseason morning for the San Antonio Spurs’ executive vice president of business operations.

The serenity is bred out of familiarity. The Spurs have been in the NBA Finals three times since 1999, twice in the past three seasons. Their success both on and off the court has made the team a model for other pro sports franchises: The winning and the profits result even though San Antonio is the league’s third-smallest market by population, lacks a large corporate base and ranks No. 186 nationwide among markets in per capita income ($27,380).

The Spurs didn’t lead the league in attendance this season, sold out just 29 of their 41 regular-season home games, and, despite having one of the league’s best records, weren’t near the top of the list for NBA merchandise sales. Yet the Spurs are considered one of the league’s strongest local brands with a full-season-ticket base of 12,000 (among the league’s highest), a renewal rate of about 87 percent and no turnover for its 60 luxury suites even though the team has raised ticket prices between 6 percent and 8 percent each year since moving into the 18,797-seat SBC Center in 2002.

“We’ve been profitable since we’ve moved into the SBC Center,” Bookbinder said, though he declined to disclose amounts. “We are a consistent franchise and we are the only game in town, but that can be a double-edged sword because we get all the attention.”

Under the straight-ahead style of Bookbinder and owner Peter Holt, the Spurs have tied themselves closely to the local community, smartly using choirboy players like Tim Duncan and the retired David Robinson to burnish the team’s image. Even Spurs coach Gregg Popovich seems tailor-made for San Antonio, a no-nonsense Air Force Academy graduate plying his trade in a city that’s home to five military bases.

“We aggressively market to the military, and it’s a major part of what we are about,” said Bruce Guthrie, Spurs vice president of marketing. “We have programs that sell group tickets at all the bases, and we have a program with the Air Force that brings [in] trainees who come to the city from all over the country.”

That military connection is just one of the reasons Robinson, a graduate of the U.S. Naval Academy, was so embraced during his 14-season career with the Spurs before retiring in 2003.

Other players were not as well received.

“The biggest mistake we’ve made as a franchise was bringing in Dennis Rodman,” Bookbinder said while arranging seat locations for various VIPs due in for the first game.

Rodman arrived in San Antonio for the 1993-94 season, and what became a tumultuous stint in Texas ended in 1995, when he was traded to Chicago. That started the Bulls’ run to three more NBA titles, but also marked a transition for the Spurs.

Holt, who joined the team’s ownership group in 1996 and was named chairman later that same year, witnessed a 3-15 start to the 1996-97 season that led to the December firing of coach Bob Hill and the naming of then-general manager Popovich as his successor. The coaching change couldn’t head off what became an injury-riddled season. The Spurs finished the year with a 20-62 record, though that did position them well for the 1997 draft lottery.

Good timing. The Spurs’ number came up first, giving San Antonio claim to use the draft’s top pick on Tim Duncan. An instant star, Duncan gave San Antonio its successor to Robinson as the face of the franchise.

Who the fans are
A look at the fan base of the Spurs and that of their NBA Finals competitor, Detroit, according to data compiled by Scarborough Research in polling between February 2004 and January 2005.
Spurs fans
Pistons fans
Gender
Men
54.0%
53.1%
Women
46.0%
46.9%
Age
18-34
31.7%
32.7%
35-54
39.9%
42.0%
55+
28.3%
25.3%
Ethnicity
Hispanic origin
49.3%
3.4%
African-American
9.1%
25.8%
Annual HH income
Less than $35,000
35.6%
18.9%
$35,000-$50,000
23.8%
19.1%
$50,000+
40.6%
62.1%
Market value of owned home
$200K+
9.2%
31.2%
Note: Statistical anomalies due to rounding
Source: Scarborough Research 2005
From there, the Spurs drafted Argentinean star Manu Ginobili in 1999 followed by French superstar Tony Parker in 2001, tapping into what the NBA more openly in recent years has been touting for the entire league: basketball as a global sport.

While the Spurs were stocking their roster with today’s talent, they did so keeping an eye on the bottom line. Their payroll consistently has been in the middle of the league. This season’s $56 million outlay is about the same as their Finals competitor, Detroit.

Holt, meanwhile, began working to secure a new arena for the Spurs almost immediately after being named chairman. A years-long effort got its final push in June 1999 when the franchise won its first NBA title. Five months later, voters approved a referendum enabling construction of what’s become SBC Center.

San Antonio is home to just five Fortune 500 companies, so Spurs officials were forced to give careful consideration to the nature of the city’s corporate base in planning the team’s move from the massive, sterile Alamodome. The result: The Spurs built smaller, more-affordable loge boxes for the new arena.

The Spurs also adjusted their marketing to fans when they made their facility change. San Antonio is the ninth-biggest city in the country but ranks only No. 37 for the size of its demographic market area. That means the number of potential fans the Spurs can reach in their immediate market area is less than the base available to other teams, who have larger DMAs.

When the franchise played in the Alamodome, which could seat up to 36,000 fans, the team sold itself heavily on a regional basis, opening a sales office in Austin (90 miles north of San Antonio) and marketing the team throughout South Texas. When the team moved into the smaller SBC Center, it closed the Austin office.

“We just don’t have the inventory,” Guthrie said.

According to Guthrie, only 10 percent of the team’s fan base now comes from outside the San Antonio area. That’s half of what it was when the Spurs played in the Alamodome.

How the team markets to its fans in San Antonio’s heavily Hispanic market is notable, too. There are few giveaways and promotions courting the Hispanic market.

“For us, every night is ‘Fiesta Night,’” Guthrie said. “We don’t want to insult our fan base. It goes back to being good citizens.”

Together, the business elements provide a template for other small-market teams.

“Every team has three-year plans and five-year plans, and then they change them every five minutes, but the Spurs are consistent in what they do,” said Andy Dolich, Memphis Grizzlies president of business operations. “To show what is possible in our market, it’s great to have a poster child like San Antonio.”

“It flows from ownership, and Holt gets it,” said New Orleans Hornets President Paul Mott, who was assigned to the Spurs when he previously worked for the league’s team-marketing department. “They integrate well across all departments.”

Before the Spurs moved into the SBC Center, the franchise posted operating losses in the mid-1990s between $3 million and $4 million annually, losses that Holt publicly paraded to build support for a new arena.

“But we never leveraged it,” Bookbinder said. “We never said we’d move if we didn’t get a new arena, and that built loyalty.”

A half-hour hour before tip-off of Game 1, the good-citizen Spurs executives walked the arena floor, greeting longtime fans and former investors like Red McCombs and his family like long-lost cousins. Soon, the NBA’s hype machine would take over, with a pregame performance by Will Smith and singing of the national anthem by Canadian-born pop star Alanis Morissette.

If anything was going to worry Bookbinder on this day, it was that.

“You wouldn’t believe the phone calls and e-mails I get if we screw it up,” Bookbinder said, alluding to the military-inspired patriotism of San Antonio fans. “We’re kind of like the Green Bay Packers in a way: People here take a real stake in the franchise.”

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