The Cleveland Cavaliers have become the first NBA team to require all season-ticket holders to agree to an automatic renewal policy, essentially eliminating the need for the club to pursue season-ticket renewals annually.
“It changes the paradigm in terms of renewals,” said Brad Sims, chief revenue officer for the Cavaliers.
Previously, team officials had to make contact with season-ticket holders each spring and work to secure commitments from those buyers for the new season ahead. “[They’re] out until they are in again — and you throw the kitchen sink to get them to renew,” Sims said. “Now, like a gym or a country club, you are in until you want out. There is no chasing people down, and we can focus on engaging the fan.”
Under the new system, the team contacts its season-ticket holders via email, sending them a dues notification form outlining terms for the upcoming membership year. That notification requires all 14,000 Cavs season-ticket buyers to select an annual, quarterly or monthly payment plan for continuing as season-ticket holders for the season ahead. Those terms will then be automatically renewed next February, and each year going forward, unless the fan selects an “opt out” option. When that happens, it’s a signal to the team that it needs to start a concerted effort to retain the fan. But for the rest of the fans, no further sales action is needed; they continue on as season-ticket holders with their selected payment plans.
The Cavs require a bank draft or credit card to automatically take payment. For fans who select a monthly payment plan, that ticket payment is charged on the 15th of every month until the fan opts out — just as would be the case for a cable bill or a club membership.
This year, the Cavs’ auto-renewal notice, which was issued in January, also came with an average 15 percent season-ticket price increase for next season.
The changed renewal policy is the latest concept in selling NBA season tickets. Other teams, including Washington and Charlotte, offer automatic renewals on a voluntary basis, but the NBA confirmed that the Cavs are the first team to require all of its season-ticket buyers to agree to automatically renew season-ticket plans.
The Cavs began requiring all new season-ticket buyers to agree to an auto-renew policy in 2012, but this is the first time the team is making all of its season-ticket holders participate in the auto-renewal plan — including renewing customers, along with those new full- and partial-season buyers.
“Last year, 35 percent of our season-ticket base was in the plan, and this year it will be 100 percent,” Sims said. “We have a lot of leverage now, and this is the only option.”
Other teams could follow the Cavs with mandatory auto-renewal plans beginning next season. “Some teams are testing it right now,” said Amy Brooks, executive vice president of the NBA’s team marketing and business operations division. “Just like a gym or cable subscription, from a fan’s perspective, you have a consistent payment spread out over a long period of time — and from the team’s perspective, it adds more security. We see it as a new concept.”
One drawback to the new effort is that it allows a fan to opt out of a season-ticket package at any time during a year, instead of that separation coming only during the traditional NBA springtime renewal period. One NBA team executive also said that fans are hesitant to commit to auto-renewals given the discretionary spending nature of buying season tickets.
For teams, the policy essentially eliminates a club’s season-ticket renewal efforts and allows sales representatives instead to shift to a sales-service focus on season-ticket plans — purchases that in the past few years have become touted as 365-day “memberships,” with teams creating clubs that offer year-round benefits to season-ticket holders.
Sims said there will be no sales staff cuts in Cleveland with the new approach.
Industry consultant Bill Sutton noted how the change puts the emphasis on fans’ actions more than has been the case with how sales have been done in the past.
“It was huge in the health club industry and it makes sense in the NBA because you don’t have to dedicate the staff and the effort to renew season tickets,” said Sutton, principal of Bill Sutton & Associates, which counts NBA teams such as the Orlando Magic and the Phoenix Suns as clients. “Teams can control their cash flow as well, and it takes an action on the season-ticket holder not to renew. Otherwise, they just keep getting renewed and renewed.”
