Team business ups the game
Twenty years ago, big four sports teams employed stub counters to add up the stubs ripped off paper tickets to get an accurate attendance count.
When the Houston Texans played their inaugural season in 2002, they became the first team with electronic scanners that negated the need for stub ripping. The scanners did the counting.
A lot more has changed in the two decades since SportsBusiness Journal launched than eliminating ticket stubs, but that development underscores just how sophisticated the team business has grown. No longer the proverbial mom-and-pop business, teams are now entertainment, concession, real estate and event booking entities.
“Staffing levels have gone up dramatically,” said Jamey Rootes, Texans president. “Used to be NFL teams’ business operations were run by PR directors.”
Ticketing is eons beyond even eliminating stubs, of course. Now everything is digital and provides largely full price transparency. Most teams offer paperless options: The Kansas City Chiefs this upcoming season, for example, expect 70 percent of their fans to use tickets stored on their phones.
The move to digital ticketing also provides a rich set of data on fans and drives home the complex nature of a team’s business model today as analytics guide key decision making.
“The whole area of analytics and metrics 20 years ago probably was zero, or pretty close, or it was called something else, like finance accounting,” said Andy Dolich, who has been the top business executive on teams in the NBA, MLB and NFL stretching back to 1980. “If you were to take a guide of any of the big four sports leagues and looked at the titles that people have in their business operations 20 years ago and then look at them today, you would see titles that you couldn’t even comprehend 20 years ago.”
He mentioned “director of consumer intelligence” as one example. Those staffers use analytics for everything from determining the concessions that are the most popular with fans, to showing sponsors the return on their partnerships.
A deeper understanding of fans is crucial as teams now compete with in-home entertainment systems.
“Certainly, the advent of HDTV when that hit the mass scale in America probably signaled a shift that teams were no longer competing with other live entertainment, but the opportunity to watch for free from home,” said Jeff Dunn, vice president of business strategy and analytics for the Seattle Seahawks.
In response, teams have ramped up in-game offerings and built venues that offer greater amenities, placing a premium on the fan experience. “Twenty years ago, fans were content to get a cheap hotdog and a Bud Light,” Dunn said. Now, of course, the concession offerings need to be plentiful and often local.
Wooing fans also has led to micro marketing and targeting.
“Twenty years ago, sports was fairly commoditized; you had a 70,000-seat stadium,” Rootes said. “Now you are more and more marketing to an audience of one, a customized experience. Whether on value, all-inclusive or premium, you are having to think more deeply about your product, to one of 70,000.”
At the Seahawks’ home, CenturyLink Field, Dunn’s team divides the stadium into 150 sections and color codes each one to alert them to consumer issues.
Those more elaborate stadiums and wider amenities with VIP spaces, something Dolich calls the velvet roping of sports, have sent facility construction costs through the roof. The Los Angeles Rams’ and Chargers’ shared home in Inglewood, Calif., will shatter records at a price tag now approaching $3 billion.
“Twenty years ago, if you had today’s seating charts of all these venues and saw how many stratifications they had, you would say ‘holy moly,’” Dolich said. “That velvet rope stratification has increased to an incredible level.”
The escalating stadium prices have required larger business operations staffs to make sales pitches and generate revenue to pay off the venues.
“You are literally selling mortgages on the seats,” Dolich said. “That’s another major change, you are selling houses where before you sold seats.”
Will all of this hit a tipping point?
For Dolich, the key is to keep people caring about the game and the shared experience of watching raw emotion and incredible athletic achievement.
Dunn for his part said it is important to find that balance between providing technology and comfort and focusing on the game.
Perhaps the next 20 years in the sports world will be an effort to find that balance.