SBJ/July 14-20, 2014/OpinionPrint All
A young man recently left his part-time role at SportsBusiness Daily to chase his dream: selling tickets for a professional sports team. He is in his early 20s, and it was all he was focused on. I made some introductions to help him get insight on what he would face along his path. It got me thinking of the many people in the business who started in the boiler room or the bullpen, making call after call, hearing rejection after rejection, before closing big business and moving up and moving on. That list of successful executives who started dialing for dollars is long and includes names like Howard Nuchow and Paul Danforth of CAA Sports, Chad Estis of Legends and IMG’s David Abrutyn. Those were just a handful of examples I shared with my former colleague. I cautioned him that the young men and women who make up a team’s ticket-sales department are the ones grinding it out day in and day out. It’s a tough gig.
So the subject was on my mind when I sat in on a discussion recently led by my friend, Bill Sutton, with top team sales leaders who discussed how they prepare today’s young reps. Afterward, I followed up with them individually about what they look for in new talent and how they temper expectations and manage for the future.
> PASSIONATE FAN OR SELLER?: First, hiring. One question was whether managers would rather bring on a sports fanatic who knew everything about the team, players and league but had little knowledge of or passion for sales — or, would they rather target someone who had a sales DNA and less passion for sports? Remember, these reps are on the front lines with fans; their conversations with customers are some of the best sports talk radio in the country that never gets heard. So how much does that sports knowledge and fandom matter?
Opinion was mixed. “I’d rather have a fanatic who knows little about sales,” said Cleveland Cavaliers Chief Revenue Officer Brad Sims. “We invest significantly in sales training, and our managers spend a ton of one-on-one time with our new reps on development. We would rather teach and groom reps to sell our way from day one. If that fanatic has a strong work ethic, a dedication to succeed and a positive attitude, we can teach them the rest.”
Others seek some sales background. “I really look for someone who is passionate about a career in sales,” said Ben Milsom, chief ticketing officer for the Tampa Bay Buccaneers. “The team knowledge is very important because we do speak to passionate fans and they expect us to be the experts, but passion for sales and the career is vital.” Jake Reynolds, vice president of ticket sales and service for the Philadelphia 76ers, agreed. “Entry-level sales positions are high intensity, and we often find people burning out after a few months,” he said. “It’s vital to find someone who has a passion for sales. If someone is entering the job solely based on their love of sports, the grind will often wear on them quickly.”
Brian Basloe, senior vice president of suite and ticket sales for the Brooklyn Nets, focuses more on work ethic. “Our preference would be someone without extensive sales training but with a track record of very hard work and competitiveness,” he said. “We like to train new sellers in our own style and with what we deem as good sales habits. Being a sports fanatic is nice to have but less of a priority.”
> UP TO THE CHALLENGE: Like most jobs, the first days are the hardest days so managing expectations and preparing these young sales reps for the ups and downs and challenges that they will face is vital. Basloe didn’t sugarcoat it. “We tell them their first year will be the most challenging and frustrating of their careers, and because of that, their eventual success will be that much more fulfilling,” he said. The team focuses much of its interview and orientation process on assessing “mental toughness” and “resiliency” for the amount of rejection, he said. “Top sellers connect with five to 10 out of 100 people a day, and only sell one or two of them,” he added.
Both Sims and Mike Ondrejko, COO of Legends Global Sales, stressed the high rate of failure. “A major challenge is overcoming objections and dealing with rejection,” Sims said. “They are going to hear ‘No’ an awful lot.” Ondrejko called the entry-level position the “toughest job” of one’s career and said he focuses on “creating that environment where they can recognize their day-to-day development, which is not always reflected in sales numbers.” The key, he said, is to “focus on the process, allowing them to remain confident, which will lead to some early success.”
Reynolds said his management team focuses on educating new staffers “how to ride the highs and manage the lows while still continuing to grow and develop. Every salesperson goes through a sales slump, but it’s how you bounce back and learn from your experience that will separate you,” he said. Milsom agreed that it’s a process, adding that “we train the reps to not worry so much about what they cannot control.” Instead, his group focuses on time management. “It really takes focus and determination to make the calls and go on the appointments required for success,” he said. “If we can map that out for them early and focus on constant reinforcement of the process, we can usually win. At the end of the day, the highest point is that first big sale. Once a rep gains that confidence, they can really be unstoppable.”
> ‘NOT JUST PHONE CALLS’: Once in, first-year reps must understand that the sales approach has changed from the traditional 100 phone calls a day. “The question is, What’s the new 100 calls?” said Drew Cloud, Pittsburgh Pirates executive vice president and chief sales and marketing officer. “Now there are so many more platforms, so sales reps can do some great presentations from LinkedIn, and have a presence on Twitter and Facebook, and so that’s a new role. It is not just phone calls.”
But the idea of seeing a sales rep on Twitter all day surely would give any manager pause, and Reynolds admitted as much. “With social selling, they may be on Twitter during the day at work,” he said. “And you’re asking yourself, ‘Are they really prospecting?’ There has to be a level of trust.”
> RESULTS THAT MATTER: Finally, it’s about results. First-year reps will make, on average, $35,000 to $40,000 a year, all in. A first-year sales rep will sell on average $150,000 in ticket inventory, while a second-year rep will average roughly $277,000. That’s one of the keys in keeping a sales staff intact. “There is a huge platform to keep those reps on for a second year,” said Reynolds, who added that for strong second-year sales reps, the team will give “a title bump, raise and added responsibility. It’s vital to retain them for a second year.” Sims agreed, saying, “Simply put, the second-year sales reps will generate significantly more revenue in year two than they did in year one. In many cases, we see it being twice as much.” He believes there is a three-year learning curve when taking a new job, he said. For a top sales person, a revenue growth curve “could be 100 percent increase from year one to year two, and an additional 50 percent increase from year two to year three. ”
Milsom called the difference between a sales rep in year one to year two “dramatic.” “The credibility they gain in the community and the network that they build is key,” he said. “If a sales rep can build their book of business and start to gain referrals, then they really take off. There is a big, big difference between a standard cold call and being able to call someone who was referred to you. The year two to year three gains can be more than double.”
The David Mamet classic “Glengarry Glen Ross” scared me away from sales — “The leads are weak? You’re weak!” I suggested my young friend watch the movie when I checked in with him last week. He had relocated and was still chasing his dream. I told him to keep his head up, ticket sales is a challenging path, but successful reps learn how to sell, how to close, how to build a long-term customer, and how to win back lost customers. There’s potential for high reward; all you have to do is look at the career paths of the leaders in the sports industry.
Abraham D. Madkour can be reached at email@example.com.
The O’Bannon case, which will be decided in the coming weeks by a federal judge in Oakland, is one of several pending antitrust lawsuits challenging NCAA rules that restrict the economic benefits intercollegiate athletes may receive for their sports participation. Although remedying the inherent problems of commercialized college sports (primarily Division I football and men’s basketball) is a laudable objective, a free-market solution mandated by antitrust law may have unintended adverse consequences.
Judicial invalidation of these rules may inhibit universities from providing many athletes with a college education they would not otherwise receive, by eliminating or reducing the value of scholarships for many players whose economic value is less than the cost of an education. A wholly “free market” for player talent will also severely limit universities’ ability to provide academic and athletic opportunities to thousands of women and men participating in nonrevenue sports, which are funded by surplus revenue from football and men’s basketball.
The NCAA Constitution expressly states that the NCAA’s objective is to “retain a clear line of demarcation between intercollegiate athletics and professional sports” and that “[s]tudent-athletes shall be amateurs,” meaning “their participation should be motivated primarily by education and by the physical, mental and social benefits to be derived.” Intercollegiate athletes “should be protected from exploitation by professional and commercial enterprises,” and university athletic programs should be operated with “prudent management and fiscal practices.”
The enormous popularity and public demand for college football and basketball games (particularly among ACC, Big Ten, Big 12, Pac-12 and SEC universities) collectively generate substantial revenue. Universities’ use of sports as an entertainment product and marketing tool is a rational response to marketplace realities in an increasingly competitive higher-education environment. However, this rampant commercialization often trumps, rather than serves, the broader goals of higher education, which are marginalized. For example, financial resources are often misallocated from academics to athletics. Each year, relatively few Division I athletic departments (approximately 20 to 25) generate net revenues, and university subsidies to balance their budgets are prevalent.
Commercialization economically exploits Division I basketball and football players in particular.
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Commercialization economically exploits elite Division I football and men’s basketball players. The value of their athletic scholarships is less than the full cost of attendance at their respective universities, and their graduation rates are lower than those playing other sports. Because of the extensive time demands of playing football or basketball, their lifestyle during the season generally is less than their classmates, alumni and fans. Although they receive high-quality coaching and training, only about 1 percent of them will ever play professionally in the NFL or NBA. Virtually none will earn enough from playing professionally to achieve lifetime financial security.
These realities are inconsistent with the NCAA’s constitutional objectives. Big-time football and basketball is not played by “amateurs,” and the “clear line of demarcation between intercollegiate athletics and professional sports” is blurred. Prudent management and fiscal practices also are lacking because so few Division I athletic programs generate net revenue.
But professionalizing college sports through antitrust litigation and unionization is not a good solution.
As an alternative, we propose an open and transparent system of federal regulation combined with antitrust immunity for reforms voluntarily adopted by the NCAA. To better promote the educational values and economic sustainability of intercollegiate athletics, our proposed congressional intercollegiate athletics reform legislation would have three mandatory requirements:
■ At least a four-year athletic scholarship with limited university termination rights.
■ Medical care or health insurance for all sports-related injuries and scholarship extensions for injuries.
■ Elimination of the NCAA requirement that Division I universities operate at least 14 intercollegiate sports.
It would create an independent commission to propose nonbinding intercollegiate athletics regulations. NCAA and athletic conference conduct that complies with these regulations would receive antitrust immunity.
We suggest that the commission adopt rules to increase graduation rates for Division I football and men’s basketball players, such as requiring universities to offer a graduation bonus and scholarship aid to those who leave school in good academic standing and later seek to complete their college education. We also suggest rules defining a “full athletic scholarship” to include modest stipends beyond tuition, fees, books, and room and board to enable college athletes to have a lifestyle consistent with many of their non-athlete classmates. In addition, athletic department financial self-sufficiency rules, which would give each Division I university the flexibility to determine which mix of sports to offer and invest in to achieve its individualized academic and intercollegiate athletics mission consistent with Title IX, should be considered.
This federal regulatory commission would have the authority to establish rules that enhance the academic integrity of intercollegiate athletics, maintain the distinction between intercollegiate and professional sports, and require university athletic departments to operate with fiscal responsibility. The “carrot” of antitrust immunity would provide the NCAA, athletic conferences and their member institutions with a significant incentive to adopt and comply with its rules to achieve these objectives, which would be the product of an open and transparent process in which the views of student athletes and members of the public would be considered.
Matt Mitten (firstname.lastname@example.org) is professor of law and director of the National Sports Law Institute at Marquette University. Stephen Ross (email@example.com) is Lewis H. Vovakis Faculty Scholar, professor of law, and director of the Institute for Sports Law, Policy and Research at Penn State University.
During last month’s SportsBusiness Journal ticketing and facilities conference, the discussion on a panel I moderated raised a number of issues and even more questions. I took some of these issues to some of the most respected leaders in the team ticketing space and asked them to respond.
■ A number of teams have been adding to their ticket sales staff and the number of people in these ticket sales departments is now often more than 50 and in once case approaching 100. What is the ideal number of ticket sellers to employ?
SCOTT O’NEIL, CEO, Philadelphia 76ers and New Jersey Devils: The math is simple; the direction the data points you is even simpler. Adding more ticket sellers makes good financial sense for all teams with empty seats and/or those comping more than [1,000] seats per game.
The ROI on ticket sellers is something we track weekly. Our average ROI is 5.1:1 for the year (meaning our reps bring in $5 in revenue for every $1 we spend on salary, commission, benefits and overhead) and 14.3:1 if you take into account renewal percentages over a five-year tail. We have and continue to build large ticket sales staffs and will continue to do so until we are selling out our games.
■ Is there a point where there are diminishing returns? In other words, while the ROI appears to be there, could the same sales results be achieved with a smaller staff possibly creating an even higher ROI with the same total revenue generated by a larger staff?
ROB SINE, vice president, ticketing, Pac-12 Conference: Yes, quality over quantity is the argument to be made here. Having a smaller, highly trained and effective sales staff can lead to larger ROI because often times to build a larger staff you have more [account executives] who don’t fit the exact bill you’re looking for when hiring and are often hired because they are “close” to what you want and you have a staff to build. However, in the long run, those AEs you deemed “close” when hiring can sabotage the rest of the staff if they do not develop at the rate you want, or produce the results you are looking for.
The Warriors have commission escalators for its sellers, providing motivation to maximize revenue.
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BRANDON SCHNEIDER, group vice president, ticket sales and services, Golden State Warriors: There is certainly a point of diminishing marginal returns, but very few teams (if any) have reached it. If you are hiring incremental salespeople who are largely making outbound calls, and they are driving more revenue than they are being compensated, then you have not reached that point. If your existing sales staff is not able to contact every “warm lead” in your database once a month, then you would likely benefit from hiring additional staff (assuming you have inventory to sell). One other factor to consider is that most teams typically only look at the revenue associated with the original sale. Keep in mind that a lot of these sales will result in additional revenue for years to come (lifetime value of the customer).
■ Retaining ticket sales team members, particularly given their higher expected productivity in terms of revenue generation in their second and third years of employment, is a priority in most organizations. What are some industry practices to retain qualified sellers in a ticket sales role, without promoting them to corporate or premium sales?
SCHNEIDER: We have found the key to be structuring our compensation plan to really benefit our top performers. We start with a standard commission rate and have installed three escalators so that each time a salesperson reaches a certain revenue threshold their commission rate increases. The final escalator puts their commission percentage at three times the starting rate. This motivates all of our sellers to maximize revenue as they understand the commission that is at stake, and allows our top performers a huge upside.
We provide our top performers a voice in helping our management group make decisions, so they feel like they are part of the process. We engage them in discussions and solicit their input covering important decisions such as partial-plan makeup and ticket pricing, and by providing them exposure to upper management.
MARC JACKSON, senior director, premium and season-ticket sales, Charlotte Hornets: Often compensation is the default in this argument. This could include but is not limited to increased base pay, heightened commission percentages, etc. Exposure to leadership responsibilities is also helpful with this. Opportunities such as recruiting initiatives, peer development, exposure to luxury/premium inventory, etc. can be messaged as career-advancement programs. Ultimately, restructuring and definitely defining advancement structure from entry-level sales to top of the food chain can alleviate this issue.
LEIGH CASTERGINE, senior vice president, ticket sales and services, New York Mets: Here at the Mets, we know making 60 to 80 calls a day can become mind-numbing. Therefore, we encourage our teams to create events and get more face-to-face appointments. We find the more time they spend building relationships with their prospective clients, the happier they are at their jobs as well as the more money they make both personally and for the organization. Also, we have incorporated leadership opportunities/mentorships for our representatives that have management aspirations. We want them to know that we are focused on their future.
■ Often times during the year I have vacancies in my sales department and have difficulty finding quality applicants to consider. Do you have some recruitment strategies to enable me to build an applicant pool?
JEFF IANELLO, vice president, team marketing and business operations, NBA: The most important asset that we have in a sales and service department are the sellers themselves. If “people” are most important, then the time spent on recruiting as well as training and development needs to reflect that. In recruiting, the hiring manager must ask him or herself a few questions: What do I believe in? What is unique and powerful about working for me and my organization? The answers to these questions will define the types of interview questions to ask a candidate as well as define the story that makes your program a desirable landing spot.
Bill Sutton (firstname.lastname@example.org) is the founding director of the sport and entertainment business management MBA at the University of South Florida and principal of Bill Sutton & Associates. Follow him on Twitter @Sutton_ImpactU.