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League expects lower revenue as renewals dip
Published October 26, 2009
The NBA is bracing for an expected dip in gate revenue as it opens the 2009-10 season with a drop in season-ticket renewals and with all but two of the league’s 30 teams holding or cutting ticket prices.
Last year, NBA teams had an overall season-ticket renewal rate of 80 percent; this year’s renewal rate stands to be a few percentage points lower.
“We will be in the mid-to-high 70 percent rate, which is down a bit, but our teams are working much harder,” said NBA Commissioner David Stern. “We will have decent attendance but a decrease in revenue.”
League officials said teams used aggressive offseason sales efforts and implemented new strategies to ward off erosion of the overall season-ticket base.
“We are not coming into the season with a big hole by any stretch,” said Chris Granger, senior vice president of team marketing and business operations for the NBA. “People have been delaying buying right up to the season and I think we still have some juice left in the system. Sales during the past six weeks this year are outpacing sales from the same period last year so we are closing much stronger.”
Sales of new full-season tickets are matching last year’s pace as fans in some markets who weren’t able to buy tickets due to limited inventory are now taking advantage of the lower-priced season tickets now available from previous ticket holders who did not renew.
“We have sold as many or even a little more in new fulls at this point this year as we did last year,” Granger said. “All the little tricks are working as our teams spent the course of the summer creating different packages to create more value.”
Last season the NBA had an average attendance of 17,520 fans per game and drew 21.5 million fans overall.
League executives are hesitant to put a specific figure on the expected gate revenue decline this season, particularly because ticket sales to individual games will be affected by the expected increase in the number of teams implementing a variable ticket pricing strategy to drive sales.
The Miami Heat and Portland Trail Blazers already have announced variable pricing plans that set ticket prices to the day of the game and the quality of the opponent. Other teams are expected to follow suit.
“Teams will be so aggressive around pricing so [total gate revenue] is a big question mark,” Granger said.
Winning teams like the Los Angeles Lakers, Cleveland Cavaliers and Boston Celtics rank at the top of the league, with renewal rates of 90 percent or higher. League leaders in new sales include the Orlando Magic, who have been leveraging their trip to the NBA Finals and the opening of a new arena in the 2010 season to sell more than 4,500 new full-season tickets.
All NBA teams have boosted customer service while adding value for season-ticket holders, a strategy that began last year and has become increasingly vital in retaining customers.
“First and foremost we’re focusing on providing excellent value and service to our existing season-ticket holders, corporate partners, suite holders and group leaders,” said Steve Schanwald, executive vice president of business operations for the Chicago Bulls. “For example, we sent all of our season-ticket holders a thank you letter with a Derrick Rose jersey early in the summer, and we continue to provide them with an array of great benefits. Additionally, we’re using e-marketing, social networking and other resources to aggressively market individual game tickets and groups.”
Despite the stepped-up customer service and added benefits, the No. 1 driver of season-ticket sales is team performance. “If fans feel that the future of the team is better than the present, then they will renew,” Granger said.
Teams also have implemented new strategies, including the creation of season-ticket partnering programs, and new business-to-business programs that bring corporate season-ticket accounts together.
The Denver Nuggets have created the Nuggets Business Alliance that brings corporate season-ticket holders and sponsors together. The New Jersey Nets have created a similar program where the team will introduce a new season-ticket buyer to eight to 10 other season-ticket holders or sponsors of their choosing.
The Magic this offseason played host to six business-to-business networking events segmented by industry category. Each category featured an industry expert speaker and helped facilitate the networking of corporate season-ticket buyers.
“The big departure this year is that teams are focusing much more on business accounts than ever,” Granger said. “Companies want to be able to use their tickets to attract and retain their clients and keep their valued employees, and these plans are new and unique.”