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Volume 24 No. 112

Sports Facilities and Franchises

The ’17 AXS Ticketing Symposium closed out last night with a candid conversation with Hawks and Philips Arena CEO Steve Koonin, with the discussion ranging from his venue’s massive renovation to the NBA schedule to protests during the national anthem. On the venue’s transformation: “We’re in the live entertainment business, and that means a great night out. Millennials are looking for more than a seat, a hot dog and a beer. So when you do these types of things with your buildings, you’re making a bet on the future. We have to build a building with multiple things to do and with multiple attractions. Our building wasn’t conducive to the social experience of today. It was built, as were a lot of venues, where you go, you get a hot dog in aluminum foil, and you watch a game. That just doesn’t make sense anymore.” Koonin also expects the demographics to change at a renovated building. He said, “Today we’re around 82% fans and 18% business. I think you’ll see the business side rise, especially with these new hospitality spaces where you can buy two, four, six, eight or 20 tickets. ... And more women. We’re currently around 34% women, and I’d like to get that to 40%.”

TOUGH GIG: Koonin, who had previous stints at Coca-Cola and Turner Broadcasting, called the team business the toughest he has been in. Koonin: “We’re in the food service business. We’re in the media business. We’re in the ticketing business. We’re in the sponsorship business. We’re in the music business. We’re big time in the security business. I think we counted 14 business that we’re in. ... We feed more people under one roof than any restaurant in Atlanta. I think there is a little naivete when you work on the periphery of sports. When you’re an operator, there is a complexity that requires great expertise and great people.” He said of Hawks Owner Tony Ressler, “Tony is what an owner should be. He is a very successful businessman. He owns hundreds of companies and he understands it’s the people that work for him that have to be empowered, have to have the resources, have to be used as a sounding board. ... I cannot tell you how wonderful it is to work with him.”

PLAYER SUPPORT: As to whether Hawks players may protest during the national anthem, Koonin said, “The NBA has a policy, and they’ve been very clear on the policy. Our players know they have our support. We have ongoing dialogue with them, and I think our players will stand for the national anthem. But I think our players believe the best way to demonstrate unity is to link arms. And I think LeBron James said it, but our players have a platform before and after games.”

Quick hits:

  • On the cable bundle, “How people here buy 100 products each month and use only 12 of them? Now how many of you subscribe to cable? Well, you do that.”
  • On millennials, “ADD used to be disease. Today it’s a life skill.”
  • On the changing media landscape, “The world is changing, and we don’t know where media is going. And if anyone says they do, they’ve been drinking all day, because it’s very complex.”
  • On real estate development plays for NBA owners, “When we grew up, the anchor store in every market was the mall. Mass traffic to the mall. Today, malls are in trouble. What’s the new anchor store? Where do people want to spend money? Sports facilities. Our friends at the Braves crushed it.”

Sports teams remain in the early stages of the Big Data movement despite business intelligence groups in place across the big leagues. There is no quick fix for how teams use analytics to grow business and generate incremental revenue. Ultimately, it is a journey that takes time before teams see results, AEG VP/Digital Strategy & Analytics Aaron LeValley said during a panel discussion at the ’17 AXS Ticketing Symposium. “You’re not going to get there tomorrow,” LeValley said. “You have to make sure you have a plan and know how you’re going to use data. Make sure you know which business problem you’re trying to solve.” Part of the issue is that industries that have used Big Data for years are moving so quickly in the space that “as soon as we feel we catch up, Google does something new,” Kroenke Sports & Entertainment VP/Business Intelligence Jeremy Short said. “A couple of years ago, we weren’t talking about machine learning and artificial intelligence. All of a sudden, there’s a new technology that we haven’t embraced yet.”

IT TAKES MORE THAN JUST DATA: In many cases, teams are just starting to invest in Big Data and analytics, compared with others that have been more aggressive in spending money in technology to find out more information on who is attending events in their buildings. It takes a tremendous amount of resources in addition to money to form a data analytics group that can effectively grow business, panelists said. “If you think about when those conversations started, so many teams had nothing,” Cavaliers VP/Business Intelligence Kevin O'Toole said. “It’s taken a long time for teams to build the foundation … making recommendations and creating more personalized experiences, which requires a lot more than just analytics.” But these efforts can pay off in the long run. The Patriots have been entrenched in Big Data for the last 15 years, and have tested multiple business strategies tied to their research. One “big win” for the Patriots tied to analytics was the design of a T-shirt printed with the slogan, “Do Your Job,” and sold only at the team store at Gillette Stadium. It ultimately became the No. 1 seller in that retail location, said Kraft Analytics Group CEO Jessica Gelman. “That product line became a million-dollar business,” Gelman said. “It all started with this very small piece of data and testing and analytics, and thinking about your customer and what they want, and it became something much bigger.”

AVOIDING THE PITFALLS: For the Magic, it also took a few years to get results after the initial investment in data generation. It takes patience before it all comes together, Magic CMO Anthony Perez said. “You can look at it as, What’s the return going to be on my investment?” Perez said. “The other side is, if I don’t do these things, how relevant will I be in the future? If you’re not at the level that consumers expect, you’re falling behind.” Some of the biggest mistakes teams make in the analytics space revolve around collecting too much data for the numbers to make sense, which can result in a waste of time and research. “A huge focus of learning is how to leverage technology to actually do the work for you,” Gelman said. “We were changing over systems every two years. That’s really painful to be both managing a system and transitioning. ... It’s not reasonable for continued growth.”

There are plenty of questions about the future of season tickets, but they are still a “really important part of our revenue base -- the most important part,” said MSG Exec VP/Ticketing, Suites & Corporate Hospitality John Abbamondi during a panel discussion at the ’17 AXS Ticketing Symposium. “I don’t think season tickets are going away anytime soon,” he said, “particularly for us in our market with a big corporate base. Forty-four games may be a lot for an individual, but not a company. What we’re trying to do is be more responsive to the idea that there are customers out there who want to pay top dollar to have the right experience -- the right number of times. So we’re creating more and more products for them.” 49ers VP/Sales & Service Jamie Brandt said of season-ticket sales, “In the NFL, they’re certainly not dead. It’s pretty important for us to fill our building with season tickets. Most of us do that. With a few exceptions, it’s 80-85% of capacity for season tickets. By no means are season tickets dead in the NFL. In fact, it’s the lifeblood for most teams.”

OPEN SESAME: Blues Group VP/Ticketing & Guest Experience Josh Bender said of the blurring between the primary and secondary ticketing markets, “That’s what keeps me up at night -- figuring out how to work with those markets together. We have one of the largest buildings in the NHL, so we have a lot of tickets to sell. Many fans go right to the secondary market now, and don’t even look at the primary. ... So you look at all the distribution channels you can.” Abbamondi said there is “no question the industry is moving toward an open distribution model.” Brandt said “utopia” is when his team has “decision-making over who, what, where, when” with regard to their tickets, and that he is “intrigued by Amazon as a distribution platform.” Brandt: “Their customer base is so large because their analytical capability as to who may be interested in our events is so compelling.”

WHEN THINGS ARE GOING WELL: Abbamondi noted MSG Owner James Dolan has an “internal policy that we don’t raise prices if we don’t make the playoffs.” Abbamondi: “Unfortunately for the Knicks, that means we haven’t raised prices in a while. Obviously that’s a very fan friendly move, but in some ways, it’s helped us not get too far in front of ourselves.” Brandt added, “It’s really hard to fill a building when the team’s not doing well. ... Santa Clara doesn’t scream ‘destination.’”

The Royals and Hawks are two big-league teams that have cut the number of ticket brokers they do business with in order to get greater control over single-game ticket sales on the secondary market. During a discussion of yield management at the AXS Ticketing Symposium, Royals VP/Marketing & Business Development Mike Bucek said the team had consolidated its broker business over a three-year period, eliminating all but two of the 227 season ticket holder accounts that were essentially brokers. “We decided that (number) was just too much,” Bucek said. After the dust settled, DTI Management and Tickets for Less signed on as the official Royals’ ticket brokers. There is a partnership between the two firms as part of the consolidation. “It’s really helped us, giving us a lot of data and a lot more insight into an area that was behind the black curtain before,” Bucek said. “It made us smarter.” The Hawks, meanwhile, have a deal with Eventellect, a Houston-based inventory management firm. “We started (dropping) a (high) percentage of accounts that we suspected were re-sellers,” Hawks Senior VP/Ticket Sales & Service Kyle Brunson said. It was important to find one partner the Hawks could trust that would help them efficiently resolve the issue. “We lean on those guys on a game-by-game basis,” Brunson said. “It’s a real luxury having another set of eyes ... providing data to us.”

LOCAL FOCUS, NATIONAL KNOWLEDGE: In K.C., playing in MLB’s third-smallest market and one of its smallest venues, the Royals and their secondary partners have developed a profitable business with strong customer service and few complaints from fans buying from those two outlets. On its own, Tickets for Less, a local firm, understands the Royals are a regional draw. “It’s one entity that seems to take very good care of people,” Bucek said. DTI, by comparison, is a national company that gives the team a broader perspective on secondary ticket trends. The Hawks gained enough trust in Eventellect to share their plans for the team’s $200M renovation of Philips Arena, a rebuild that expands the traditional club seat and suite model to a mix of seven new premium seat products. “We have a real opportunity to bring them in early in the process,” Brunson said.

HOW THINGS WORK: In general, teams want greater transparency from their brokers. They want to learn more about the secondary market and the value of their assets, said Greg Nortman, Chief Strategy Officer of Dynasty Sports & Entertainment, a big league ticket broker. “They’re looking for me to show them exactly how these things ‘age,’ when they sell, where they sell and educate them as it goes along,” Nortman said. “We know best how these markets are performing. They want to make sure they’re getting it right in the market.” Said Bucek: “To a certain degree, their level of distribution was more sophisticated than ours and we need to understand it a little better. They can point things out that make us look better.”

The NCAA runs 90 championships across 23 sports, with a variety of ticketing strategies for those events. In a morning Q&A at the ’17 AXS Ticketing Symposium, NCAA Dir of Championship Marketing & Ticketing Josh Logan talked about the organization’s ticketing approach, as well as marketing strategies to drive attendance and revenue. Logan was immediately asked about the NCAA’s premier event, the men’s basketball title game. Logan: “We’re out there planning a good 18 months ahead of time. We then come into the host city for monthly meetings around nine months out. ... And not only are we playing in a football stadium and putting a basketball court at the 50-yard line -- we’re bringing in a seating system of our own to put on the lower level. So we put in 20,000 of our own seats, and that’s more than many traditional arenas. And we’re selling the other 50,000 seats. A lot of pre-planning to put together something of that size.” While some have taken issue with holding an NCAA hoops title game in a football venue, Logan said there is always “more demand than tickets.”

BUDDY SYSTEM: Logan discussed the role of partnering up for ticketing for a big event like the Final Four, saying, “Relatively, we’re a small staff. Just doing the ticketing from a men’s Final Four perspective, it’s myself and one other staff member. ... PrimeSport sells and produces our ticketing and hospitality packages. AXS does our digital ticketing, so we use the Flash Seats technology. This may or may not be the biggest digital ticket event out there. Of the 70,000 or so tickets out there, half may be digital. ... AXS coming in and training our staff is incredibly valuable to us.”

NOT JUST HOOPS: Logan mentioned softball, wrestling and volleyball among other big events for the NCAA. He said, “We sort of look at our top revenue-producing championships and focus primarily on those. There are around 15 of those, all at the Division 1 level.”