SBJ/Jan. 17-23, 2011/Leagues and Governing Bodies

NBA: Refund + interest on any unplayed games

Marking the clearest signal to date that NBA teams are bracing for a lockout next season, the league is calling for all 30 clubs to offer a specific interest rate as part of their season-ticket refund policies for any games lost due to a work stoppage.

NBA teams are about to begin their season-ticket renewal efforts, with some teams hitting the market later this month. During the NBA’s 1998-99 lockout, NBA teams offered season-ticket holders full ticket refunds plus 6 percent interest.

The planned refund approach is a noted departure from other league lockout ticket policies, which typically have not carried leaguewide specific interest rates as part of the ticket refund. The NFL recently announced its refund policy to fans for any games lost to a lockout next season, and leaves the decision with the individual teams as to whether to offer interest to general season-ticket holders as part of the refund. The NHL did not have a uniform interest rate as part of its refund policy during the lockout that canceled the 2004-05 season.

The new NBA policy would work like this. If a fan buys a season-ticket package and games are lost because of a lockout, the team would pay a full refund plus interest on a monthly basis. The NBA will determine the interest rate to be paid along with the ticket refunds closer to a work stoppage, but it will reflect prevailing market rates, which currently range between 1 percent and 2 percent.

“What the league doesn’t want is the wild west, where teams offer a wide range of interest rates,” said one team ticket sales executive.

In addition to the league’s interest-payment policy, teams will be able to offer incentives to renewing season-ticket holders to counter any possibility of missed games. Like the NFL, NBA teams will be allowed to craft their own policies on premium inventory, such as luxury and club seats. The NFL’s refund policy to general season-ticket holders also allows the ticket buyer to exchange tickets of a canceled game for another game.

The strategy is to add financial incentives to season-ticket holders to keep their money with the teams in the event of a lockout. Teams want to maintain their season-ticket bases despite the labor uncertainty.

Last year, the NBA boasted an 80 percent season-ticket renewal rate, but the NBA and the union remain far apart on any new collective-bargaining agreement as teams head into their renewal sales efforts for next season.

“It is still cheaper to pay interest rates and keep the season-ticket holders than it is to find new customers,” said one source.

Some team-level incentives under consideration by clubs include offering season-ticket holders free tickets to other events in the market or discounts to future NBA games if season-ticket holders decline the refund option and leave their money with the team.

“You want to keep season-ticket holders on account and provide them with some options that mirror what you do,” said the team sales executive. “Whether it is for a concert or other sporting events, you want to maintain brand affinity, and everyone is searching for that answer.”

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