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Leagues and Governing Bodies

Teams, leagues stare down ticketing storm

Major League Baseball stands to take a big hit on any games that are canceled because it has more ticket inventory than any other league.getty images

Hanging on to season-ticket holders and retaining ticket revenue is fast becoming one of the main business concerns for teams that face serious financial consequences as the pandemic shutdown rolls on.

 

While nobody knows when or how their seasons will be restarted, or even where the games may be played, teams across the major leagues are adopting similar strategies on ticketing: Offer clients ticket credits to save revenue; pivot to more flexible season-ticket selling strategies, which delay and offer new payment plans to fit consumer budgets; and constantly communicate with fans to help them navigate the issues.

For the teams, refunds and credits are sensitive topics as they try to balance retaining ticket revenue in the face of economic turmoil. Since the outbreak, jobless claims in the U.S. have soared to more than 26 million, and many others still with jobs have faced salary cuts.

Some teams already are quietly offering refunds on a case-by-case basis, even with no games yet officially canceled as teams respond to particular financial hardships from buyers.

But the potential of mass refunds also poses a major financial concern to teams. Across the major leagues, ticketing revenue is second only to media rights revenue, accounting for anywhere from one-fifth to one-third of annual revenue. Major League Baseball is especially reliant on ticketing, given the sheer number of games played in a typical season.

The NBA was quick to release its ticket policy just after the shutdown, releasing a statement that said refunds or credits on tickets will be issued should games be canceled or played without fans. Teams are also able to work with the league to create their own specific ticket renewal and credit policies.

The NFL last month instructed teams to reassure fans they will be given refunds or credits toward future games in the event games are canceled, or played without fans, but otherwise the league has not given further guidance about ticketing strategy.

MLS and the NHL have given their teams the flexibility to adopt individual policies around ticketing, refunds and credits. MLB is expected this week to outline a leaguewide policy for refunds for any canceled games, but is leaving teams wiggle room to best serve their individual markets with other ticketing matters.

MLB

MLB is expected to provide clarity on a leaguewide ticketing refund policy as early as this week, according to a league source. The league has not yet announced a policy because even though the season was scheduled to begin March 26, no games have been officially canceled. The league has treated those games as if they were rainouts because it is still possible, at least in theory, to play a full 162 games, a scenario that appears extremely unlikely.

The MLB ticketing issue attracted a brighter spotlight last week when two fans in New York sued MLB, its 30 teams and ticket resellers over the cost of tickets for games that haven’t been played. The lawsuit is seeking class-action certification. 

In reaching out to nearly half of all MLB teams to offer a window into how they are communicating with ticket holders, it’s clear that it varies greatly. One team that ranks among the bottom half in average attendance is quietly providing refunds to fans who request them. Another has stopped season-ticket sales altogether but is reaching out to season-ticket members with personalized emails featuring content about the franchise and specific messaging pertinent to their account. That team is also holding virtual meetings, including having two dozen account holders engage in a Q&A with the general manager. 

The St. Louis Cardinals are providing season-ticket holders with special web pages, email correspondence and other opportunities, including a VIP Zoom town hall with John Mozeliak, president of baseball operations.

For the Arizona Diamondbacks, the goal of communicating with season-ticket holders has been to “get to know the account holders on a deeper level by talking about more than just the things associated with their ticket account,” a spokesperson said. “The reps are sharing their experiences working from home these past few weeks, showing photos of their families, homes and pets, and asking their accounts to do the same. It has been received very well and there have been some amazing responses where people have really opened up to us.”

The Minnesota Twins are expected to begin offering credits, refunds or other incentives to ticket holders for games that are ultimately canceled. The Twins have added programs for season-ticket holders and select groups, a spokesperson said, which include launching a virtual “Lunch and Learn” webinar series, where fans can ask questions of team personnel on a variety of subjects, including working out at home (presented by their strength and conditioning coaches) and lawn care (hosted by their head groundskeeper). — Eric Prisbell

MLS

New York City FC is located in one of the U.S. epicenters for the COVID-19 pandemic, and as a result, the team has been forced to evaluate its payment calendar for season-ticket holders. For March, April and May, NYCFC ultimately decided to defer those charges. 

“Given the severity around New York City and New York state more broadly, we immediately made the decision to pause our payment plans,” said Matt Goodman, chief commercial officer and chief operating officer. 

According to Goodman, the team’s thinking is that those future payments will be made when games are played, but “it’s all predicated on what happens with the schedule.” He said only a “small handful of people” have requested a refund on payments, and the team is taking a fan-by-fan approach when similar situations arise. 

Each team’s response to ticketing and the rationale for handling payments may differ based on its location, Goodman said, and how the coronavirus has affected its region. He and his ticketing department consulted with the league office and highlighted the importance of delaying the initial March 15 payment, three days after MLS shut down. 

The Vancouver Whitecaps FC, meanwhile, continued altogether with their most recent April 15 payment, said CEO Mark Pannes, who added that the team has communicated with fans that the plan is still to complete a full season. Pannes did say, though, that should a season-ticket holder not be able to make a payment for any reason, he or she can defer. He declined to share specific numbers around how many fans have deferred payments, only saying it’s “low.” 

As teams continue to assess their options on a week-to-week basis, both Pannes and NYCFC’s Goodman said there’s been regular dialogue with the league office on ticketing strategies, with Pannes saying that if the league alters its thinking about the viability of the current season, it will also reevaluate its ticketing approach.

Pannes said that despite the uncertainties with the 2020 campaign, the team is moving forward with “right pricing” BC Place for the 2021 season with Barry Kahn, CEO and founder of Austin, Texas-based Qcue. As part of that program, the Whitecaps are modeling different scenarios for what the venue could look like in an overall reduced capacity, possible safe-seating designations and other unique situations that could result from the coronavirus. — Mark J. Burns

NHL

Amid uncertainties for the remaining months of the 2019-20 NHL season, the league isn’t driving any leaguewide ticketing policies as teams navigate payment schedules and sales outreach for the upcoming 2020-21 campaign. Chad Slencak, vice president of ticket sales with the Pittsburgh Penguins, said the league office has given teams the freedom to operate independently. 

Teams such as the Pittsburgh Penguins have used frequent messaging, like this Twitter post with Sidney Crosby, to keep fans engaged.Twitter

As he explained, Penguins season-ticket holder deposits for the 2020-21 season were originally due on March 20. Prior to the deadline, though, the NHL paused regular-season play, with just 50% of season-ticket accounts at the time having paid their initial 20% deposit. The ticketing department communicated with fans about the delayed deadline, and Slencak said the deposit date could be extended to June or July, but no decision has been finalized.

Executives at the NHL league office declined to comment.

“This is a microcosm of the overall organizational approach,” added Terry Kalna, senior vice president of sales and broadcasting for the Penguins, of the team’s flexibility. “Everything we’ve done since that ominous March 12 date has had a strong human element.” 

When the league pressed pause, the Penguins had six regular-season home games remaining and over the past month, the organization has been scenario-planning around those tickets. According to Slencak, on the assumption that regular-season games are canceled, fans could receive a credit toward this year’s playoffs, assuming they are held, or toward the 2020-21 season. Or, if the entire season is canceled, fans could roll over their credit to the upcoming campaign or receive a refund altogether. 

Slencak said the Penguins have communicated weekly with season-ticket holders via email, which includes any combination of a message from a player or coach, food recipes from alumni, and photos of players’ new puppies. The team has also spotlighted season-ticket holders, including a local school teacher and nurse. 

“We’ve been keeping it light, fun and interactive,” Kalna said. “We’re not doing a hard sales push right now.” 

He also mentioned that the stop in play has delayed the formal unveiling of a new season-ticket holder membership platform designed to provide increased value for fans. Kalna declined to provide specifics on the launch date and what the initiative entailed. — Mark J. Burns

NBA

NBA teams are developing a range of ticket credit policies while offering flexible payment options to maintain critical season-ticket renewals and new sales for next year. 

The league’s current policy, outlined by Commissioner Adam Silver after the shutdown, calls for the league to offer refunds or credits to fans for any games canceled or played in empty arenas. So far, no games have been canceled due to the virus and the league will wait until at least May 1 to make any decisions about restarting play. Some teams already are quietly offering ticket refunds on a case-by-case basis.

Teams are looking to limit potential lost revenue by developing various ticket credit options. While nothing has been finalized, the options could include having ticket funds rolled over to games next season, attaching food and beverage offers as part of their ticket credits for future games, or even offering credits in the form of experiential events such as behind-the-scenes arena tours, and meet-and-greets with players.

While teams look to preserve ticket revenue for games this year, they also are adopting more flexible payment plans to protect new season-ticket sales and renewal efforts.

Plotting a ticket strategy is left up to each team given its respective market conditions, said Matt Wolf, senior vice president of the NBA’s team marketing and business operations division. “At the same time, all teams are actively engaging with their members to communicate as much as possible, check in on their well-being and discuss options regarding their season-ticket memberships.”

The Milwaukee Bucks, which at the time of the shutdown had the NBA’s best record and were deep into their season-ticket renewal efforts for next year, quickly pivoted when the games stopped, said Jamie Morningstar, senior vice president of ticketing sales and service for the Bucks.

“From a renewal standpoint, we have pushed back our timeline for our various exploding deadlines and we have offered the option for members to defer their April payments and have them spread through the remainder of their pay plan,” Morningstar said. 

The Minnesota Timberwolves have paused most season-ticket sales while increasing communication to current customers.

“We have sold some season tickets, but the large portion has been to stay connected to prospects,” said Ryan Tanke, chief operating officer for the Wolves. “Early on there were comparisons to past lockouts, but in those cases, it was in the front end of the season. Here you are dealing with a health crisis which creates a real fear, and you have the economic part and we have to be mindful of how it may change our business.”

The Golden State Warriors, which last year opened the new $1 billion Chase Center, began their season-ticket renewal efforts in late January with a March 16 deadline, a date that fell just as California’s shelter-in-place order went into effect. By then, the team was pacing at a robust 92% renewal rate. Still, the Warriors gave season-ticket buyers the option to postpone the May 1 payment until August.  

“It has become very important to provide flexibility,” said Brandon Schneider, chief revenue officer of the Warriors. “In a normal year, you have deadlines. We haven’t had that approach. People have come to us and asked if we can work with them and the answer is yes.” — John Lombardo

NFL

It has jokingly been said that the NFL’s national media contracts are so robust teams could play in empty lots and break even, as long as the games are on television.

That idea could be put to the test in the 2020 season, and it’s anything but a joke.

Sources say scenario planning at the league and team level is proceeding with a high degree of confidence that an NFL season will be played in some fashion. But beyond that, the range of possibilities is broad, including scenarios in which no tickets could be used anywhere, or the schedule is delayed, or the 32 teams compete under a hodgepodge of local restrictions. That uncertainty puts local ticket sellers in a difficult spot, hoping to deal straightforwardly with valuable customers while not losing their business.

As unemployment rates soar, almost every NFL team has delayed season-ticket payment deadlines. The handful that hasn’t either had early cycles that were mostly complete before the pandemic, or are offering to work with fans on a case-by-case basis.

The Jacksonville Jaguars have twice pushed back their season-ticket renewal and payment deadline, first from March 27 to April 24, and then again to mid-June, said Chad Johnson, vice president of sales and service. Their top goal is to retain customers, he said.

The Jags have created several new payment options, including payment plans for 2020 that go into 2021. That plan came after many season-ticket holders told them a full economic recovery would likely take that long.

“We are obviously paying attention to every business metric, whether it’s cash flow, expenses or retaining customers,” Johnson said. “We’re keeping an eye on all of those things, but the ultimate success in this season is maintaining our ticket base. That’s the driving factor in everything we did.”

It’s not clear whether the NFL will depart from usual practices for single-game ticket sales. The 2020 schedule is on track to be released by May 9, and teams are preparing for those to be available as usual.

In March, the NFL instructed teams to reassure fans they will be given refunds or credits toward future games if the events are canceled, or played without fans, but otherwise the league has not given further guidance about ticketing strategy.

Losing game-day income such as tickets, merchandise and concessions would be a severe blow to NFL teams. But with roughly 70% of all revenue generated at the league level, teams wouldn’t quite face the existential risk such losses pose in most other sports. Some of the lowest-revenue teams would face cash flow problems, but the league would be able to bridge the crisis with the broadcast revenue and reserves built up through “decades of conservative financial management,” said Marc Ganis, a consultant with deep ties to the league and many teams.

“The key is to get the games played, and the NFL is in a strong enough financial position that they can help teams that may need some liquidity assistance weather the storm,” Ganis said.

Teams are still planning for a difficult time, said one executive, if they must pay players a full salary while taking major hits to their local revenue. “It’s still a pretty big financial change,” he said.

If games are lost, the salary cap for 2021 will be reduced, providing some relief for the teams. But that will come many months after the present squeeze. — Ben Fischer

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