NBA teams step up ticket discounting
By JOHN LOMBARDO
Staff writer

Published January 05, 2009 : Page 01

NBA executives will meet in Phoenix next week to address the most pressing issue facing the league: how to make bargain-hunting fans open their wallets during the worst economic crisis since the NBA was born in the mid-1940s.

The league holds sales and marketing meetings annually, but this year’s gathering, set just before teams begin their season-ticket renewal effort in February, is critical given the intense pressure to protect next year’s ticket sales. The prevailing sense is that most teams generally will hold the line on season-ticket prices, but there is far more to the equation, including whether teams will continue this year’s aggressive but delicate strategy of discounting seats to move a growing inventory of tickets.

“What is striking is the aggressiveness of the affordability offered by teams,” said Chris Granger, senior vice president of team marketing and business operations for the NBA. “The majority of our teams are discounting and adding value to tickets. There are now more than 2 million tickets being sold at $10 or less. The difference this year from others is that it’s more of a buyers market and people are looking for deals. We are just falling in line with the general economy.”

Last year, the league had 1.7 million tickets priced at $10 or less.

Bill Sutton, a former NBA marketing executive and current consultant to several NBA teams, estimates that most franchises are now selling between 1,000 and 2,000 seats for $10 or less for each game, marking a sharp change in how teams look at their discounting ticket strategy.

“The philosophy in the NBA used to be that we never wanted the discounts to come directly from the teams,” Sutton said. “We wanted teams to offer discounts through alliances with sponsors or through a partner’s promotion. But now we may have to have discounting or variable pricing, with Monday, Tuesday and Wednesday night games likely to be sold like a movie matinee because people expect deals on everything.”

Ticket discounting and added value promotions so far this season have helped preserve the NBA average attendance, which stood at 17,151 fans per game on Dec. 28, up 0.9 percent compared with last season. The league’s paid gate is tracking even from last season, though NBA officials would not disclose the specific paid gate. But team and league marketing officials know that much of the 2008-09 season-ticket buying occurred in early 2008, before the economy plummeted.

Now, with the economy in full retreat, teams such as the Charlotte Bobcats are adopting very aggressive discounting plans to drive attendance. The Bobcats, who ranked 28th out of the 30-team NBA with an average attendance of 13,567 through Dec. 28, a drop of 4.9 percent to date from last season, are in the middle of a promotion offering single-game tickets ranging from 10 percent to 50 percent off through mid-January. More than 4,000 tickets were sold through this sale. The Bobcats also have instituted a Sprite Family Four Pack program to additional weekend games throughout the season. The deal includes four tickets, four hot dogs and four Sprites for $44. The team has sold 1,000 tickets through the promotion.

Most recently the team partnered with Domino’s Pizza to create a $5 ticket in the upper bowl for each remaining game of the season, and have sold more than 500 tickets through that promotion.

“Our ticket discount program has yielded some very positive results so far, while still maintaining the integrity of our season tickets, a major consideration of ours as we put the program together,” said Fred Whitfield, president of the Bobcats.

But it is not just the NBA’s struggling teams that are offering cut-rate tickets.

The San Antonio Spurs, one of the NBA’s model franchises with historically strong attendance, has been selling $25 upper-bowl seats in mini-plan packages for $10 per game. It is the first time that the Spurs have discounted individual game tickets.

“We haven’t discounted historically, but when I got here, there were tickets to sell,” said Frank Miceli, Spurs senior vice president of marketing, who joined the franchise in late September. “The Spurs were a victim of their own success. There is a portion of our market that either didn’t think they could afford to attend or didn’t think tickets were available so they never had the opportunity to attend games.”

The Spurs, using a nine-game, $99 package with a 10th game against the Los Angeles Lakers thrown in free, sold 720 upper-level tickets in three weeks, helping the team move seats that are the most difficult to sell.

“We had never done it, but now we are trying to get fans to sample us on a more than one-off basis,” Miceli said.

The NBA mandates that all teams offer at least 500 tickets for $10 per game. But some teams are cutting that rate in half. The Miami Heat, a team that only a few seasons ago led the league in season-ticket sales, is now selling at least 500 seats for $5 each per game in the AmericanAirlines Arena’s upper bowl, seats that a year ago were sold as season tickets.

Even the Chicago Bulls, a team that is always in the top five in NBA average attendance, are getting more aggressive in discounting. So too are the LeBron James-led Cleveland Cavaliers, a top drawing team this season. The Cavs in mid-December announced a plan to offer free tickets to young fans participating in a three-day basketball skills clinic over Christmas for $90. Registration includes one free ticket to a select Cavs regular-season game with additional tickets to be made available at a discount. The program follows other Cavs discount-ticketing programs throughout the early part of the season.

“What we are doing is creating more opportunities to attract new ticket buyers into the mix where in the past we have not had to do it,” said Len Komoroski, president of the Cavaliers. “November and December are challenging months and we are much more strategic in building awareness.”

While nearly every NBA team offers some discounting and added value plans over the holidays, a traditionally tough selling period for the NBA, the challenges are expected to intensify through the season’s second half.

“I have been in the league for 22 years and can’t recall anything like this, other than the lockout year, which were different circumstances,” said Michael McCullough, chief marketing officer for the Miami Heat. “Teams are really getting creative with pricing to win back fans.”

But there is a major downside in discounting tickets. Teams that aggressively discount seats also risk alienating the fan who pays full price and potentially driving away full-season-ticket buyers.

“Like most sports teams, we do discount, but our policy is to only discount seats in the corners or ends of the upper level of the United Center, for selected opponents, and primarily on selected weeknights, with a few exceptions,” said Steve Schanwald, executive vice president of business operations for the Bulls.

The Bulls offer discounts to groups of 25 or more — and the team’s group sales are up by 40 percent this season compared with last year. The team occasionally will also offer last-minute “distressed inventory” tickets on Ticketmaster and on Bulls.com for seats in the upper reaches of the United Center.

Yet the Bulls do not promote their cut-rate ticket offers.

“Any discounting we do is primarily done in a very stealthy manner and not particularly overt,” Schanwald said. “I do feel that mass and very public promotion of ticket discounting can erode the perceived value of one’s brand. It would send the wrong message to the marketplace about the value of our product. That said, empty seats also send the wrong message about the perceived value of our product, so we must walk a fine line in regards to ticket discounting. The line we choose to walk in this regard generally excludes any discounting for games involving our most attractive opponents, generally excludes weekend nights, and only includes seats in the corner or ends of the upper seating level.”

Don’t look for the discounting trend to slow given the current economic turmoil. Instead, it will become more sophisticated as teams continue to create ways to offer value. The league does not hold its teams to any specific discounting guidelines and allows as much discounting as each team believes is needed.

“We want to enable our teams to be as creative as possible and we allow them to do what they want,” Granger said. “We believe that with 30 teams, they generally will be successful.”

Don't expect beat writers to tell you this, but the NBA is heading for serious trouble (along with the rest of pro sports). The economy in the States is really bad, and as Obama keeps saying, it's going to get worse.

The NBA knows it, and it will change the salary cap, what teams considerable reasonable salaries. It's going to lead to stupid trades, and for the paying customers, fantastic ticket deals to get you into the building.

Whatever you think you know about NBA salaries, about the reasons for accumulating cap space, is about to change. And that makes it especially hard to predict the value of expiring contracts, of good players with bad contracts, etc, even the presumption that certain players will opt for free agency rather than sign extensions.

Posted by crzymdups:

i said this a while ago. knicks should sit tight on lee because by the summer no team in the NBA is gonna throw $60M at him. because they will not wanna spend the money.

sports are supposedly mostly recession proof and the NBA may get some increased TV ratings, but it sure seems like ticket sales and merchandising sales will be way down this year.