NBA Ticket Strategies

“If it doesn’t sell, it isn’t creative.”

-David Ogilvy

Last week, I looked at the decline in NBA attendance due to the recession, and the impact on revenue.  To counteract this loss, teams have implemented some new sales strategies to increase attendance and revenue.

One tactic is variable pricing.  Similar to the airlines changing seat pricing based on the demand for the flight, teams have begun using variable pricing to charge different prices for seats, depending on the visiting team.  Top teams get premium prices and lesser teams get lower prices.  This way, the teams are able to take advantage financially when top teams come to town, and to fill seats when worse teams play.  Some MLB teams have used variable pricing for a while, but so far only three NBA teams employ it:  Utah, Portland and Miami.  Although there has not been a study to see whether this has actually increased revenue in sports, theoretically, in MLB, it is predicted to add about $590,000 to yearly revenue.

Another tactic is ticket partnering, where season ticket holders can share a package of tickets for the same seats.  Initially, teams were reluctant because they felt they would lose money (because two potential fans would be sharing one seat, instead of taking up two seats).  However, with the recession, teams see this as a way retain fans who may not be able to afford a full season package this year.

One specific strategy, implemented by the Sacramento Kings, was to work with the local government and businesses to sell tickets.  Called “Operation Sellout”, the Kings involved the local community to sell tickets and promote the businesses.  It succeeded in selling out the first game, although subsequent games returned to the normal lower attendance.  This strategy, though, creates a closer bond to the city, which may lead to more involvement in the future.

Another future looking campaign is kids clubs.  Compared to other leagues, the NBA greatly underutilizes kids clubs for potential growth.  First, at a time when parents may not be able to afford games, it creates a link to children to keep them involved and create good memories for them.  Second, it increases potential for future ticket sales.  As Chris Granger, senior vice president of team marketing and business operations for the NBA says, “The earlier someone becomes a fan the more likely it is that they will become a more avid fan over time.”

These ticket strategies show the importance of the present, to cover immediate losses, and the future, to be able to grow the business when the economy recovers.  For teams to be successful, they will need to take both into account.

Next week, I plan to write about the aftermath of the Tim Donaghy scandal and how the NBA will deal with it.