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SBJ/20100614/This Week's News
Season-ticket revenue ahead of '09
Published June 14, 2010
The NBA says next year’s season-ticket revenue is pacing about 5 percent higher to date than this time last year as teams head deep into the summer sales season. The projected increase comes after a season in which the league said it expects to lose $400 million and as it begins collective bargaining with the National Basketball Players Association.
“We are significantly ahead of last year,” said NBA Deputy Commissioner Adam Silver. “Driving it is the improved economy, improved performance on the floor and fresh excitement for a lot of clubs who are looking at the potential to acquire star players through free agency.”
The league’s renewal rate last year stood at 75 percent. So far this year, the renewal rate is running about 80 percent.
“There are a lot of good stories out in the market right now,” said Chris Granger, the league’s senior vice president of team marketing and business operations.
One notable turnaround team is the Charlotte Bobcats, a team Granger said has a current full-season-ticket renewal rate of about 84 percent. Granger wouldn’t say exactly how much the Bobcats have increased their renewal rate, but a confidential ticket sales report dated July 6, 2009, showed that the Bobcats had a full-season-ticket renewal rate of 59 percent last year at this time, giving the franchise a whopping 25 percentage point increase in its renewal rate. The Bobcats also have sold more than 1,000 new full-season tickets to date.
Other teams with strong sales are the Oklahoma City Thunder, with 1,700 new full-season tickets sold; the Chicago Bulls, with more than 1,500 new full-season tickets sold; and the New Jersey Nets, now owned by Russian billionaire Mikhail Prokhorov, with 1,400 new full-season tickets sold.
And should LeBron James decide to spurn his hometown Cleveland Cavaliers via free agency, the Cavaliers would have at least one year of cushion at the gate given that the team, which began its season-ticket renewal efforts in January, now has more than 13,000 full-season tickets sold and a 90 percent renewal rate banked for next season.
While all but a handful of teams held or cut ticket prices last year, Granger said the biggest pricing trend in the league for next season will be the increased adoption of variable ticket pricing systems. About two-thirds of the NBA’s 30 teams are expected to use variable ticket pricing strategies for the 2010-11 season compared with less than one-third for the 2009-10 season.
“One of the biggest changes more teams will be doing is some aspect of variable pricing, where there will be higher prices for higher-demand games and lower prices for lower-demand games,” Granger said. “The beauty is that you can do that up until game time and, in theory, if a team goes on a hot streak or makes a hot trade, or has a hot team coming in, you can price it that way. It is about teams being better informed about the run up of the particular game and what is happening within the secondary ticketing market.”
Deals Up: With some of its NBA’s biggest partners up for renewal, including Anheuser-Busch, Kia, Coca-Cola and Cisco, Mark Tatum, NBA executive vice president of marketing partnerships, will have a busy summer. The league is also trying to lock down four to five new deals as part of a revamped sponsorship portfolio of USA Basketball.
“It is all about defining value,” said Tatum during a sponsor reception before Game 1 of the Finals in Los Angeles. “Companies are looking to get more measurables, and that is something we have been doing for a long time.”
The NBA added Bacardi and State Farm Insurance as new league partners this year, but landing new business was a major challenge last year.
“The market basically shut down for six months to a year, but now there is a lot of new interest,” Tatum said.
The NBA, which markets USA Basketball, is planning a new set of marketing initiatives beginning this summer to boost the value of sponsorships that in the past were mainly built around an Olympic year.
While there has been talk that the Cavaliers’ James will skip the World Championship games set for this summer in Turkey, Tatum said the potential absence of the superstar, who captained the gold-medal winning “Redeem Team” in Beijing, is having no effect on partnership deals.
“It is not about one player,” Tatum said “Sponsors are buying into the team.”
Leveraging Success: The Los Angeles Lakers this season saw a 33 percent increase in team sponsorship business as they leveraged last year’s NBA championship into a partnership bonanza. The team recently renewed its biggest sponsor, Toyota, with a new five-year deal.
The Lakers also welcomed additional partners to ride on the playoff success of this year’s team, provided that the interested companies sign on for at least a full deal for next season.
“No cherry picking,” said Tim Harris, the team’s senior vice president of business operations.
L.E.D. Leaders: The last time the Lakers and Boston Celtics met in the Finals, in 2008, the Celtics unveiled a reconfigured scorer’s table featuring extended LED signs on the corners of each team’s bench to maximize television exposure for partners buying into courtside advertising.
It remains the only courtside configuration of its kind in the NBA, and the Celtics have no plans to scrap the unique design.
“The biggest issue for us was that we had to relocate some [longtime season-ticket holders], and that wasn’t easy,” said Shawn Sullivan, chief marketing officer for the Celtics. “But our partners are happy and it has worked out well.”
New Additions: The Philadelphia 76ers have hired Joe Ondrejko as vice president of ticket sales, and the Oklahoma City Thunder has added Scott Loft as a vice president of ticket sales, retention and database operations.
Ondrejko comes to the Sixers from the Columbus Blue Jackets. He will report to Lara Price, senior vice president of business operations.
Loft moves to Oklahoma City from the Miami Dolphins, where he held a similar position. He reports to Brian Byrnes, senior vice president of sales and marketing.
“It is a new position, rolling up ticket sales, database and retention departments,” Byrnes said. “Previously, I managed those departments as well as marketing, event presentation, etc., so now I will have Scott reporting to me on ticket sales, operations and retention strategies.”
New Blood: The latest team to officially hit the market is the Detroit Pistons, and Silver said he expects any new owner to keep the team in Motown.
“There is no concern [of a relocation],” Silver said. “All the discussions we are aware of contemplate the Pistons staying in Detroit.”
Silver will travel to Russia in July to meet with the Nets’ new owner, Prokhorov, as the league forges ahead with plans to open an office in Moscow.
“We are in the process of hiring a managing director [for an NBA office in Russia],” Silver said.
Silver would not comment on any expected price or potential ownership bids for the Golden State Warriors. A sale agreement for the Warriors could come by the end of the month. Owner Chris Cohan is hoping to top the current sales record of $401 million, set in 2004 when Robert Sarver bought the Phoenix Suns.
“[The Warriors] have not disclosed any bids to us, but there is healthy competition for the team,” Silver said.
Network Satisfaction: This year marks the third Finals broadcast on ABC under ESPN’s eight-year deal signed in June 2007, and network officials are finally happy with their NBA television talent.
“What I am happy about is that we are stable now that we have Jeff Van Gundy, Mike Breen and Mark Jackson,” said John Skipper, executive vice president of content for ESPN. “We have a set lineup now, and that’s good news because we struggled for a few years to get the right team together. … I thought we had an excellent year.”
Skipper and ESPN President George Bodenheimer attended Commissioner David Stern’s Game 1 pregame press conference in Los Angeles. The network guaranteed advertisers a 9.0 average national rating for the series.