Mike Guiffre
Jun 21 · 21 min read
Photo Credit: Ken Cooper

*Editors Note: this is the entire 7 part series. To view the individual articles, click on the subject links in the first section below.

7 Part Series: Attendance is not just an MLB Issue, but how do we Fix it?

There has been a lot of media focus on the declining attendance of MLB recently, some fair and some not. And while attendance is sliding it is hardly an MLB only issue other than it being the most visible due to large stadiums and the number of games. Many leagues, teams, concerts, and events are struggling to sell tickets as well.

You can look at many data points across the sports business landscape and see a myriad of varying conclusions as to why:

  • Ticket price
  • Ancillary costs
  • A changing consumer landscape
  • The ability to watch from home on a sick, affordable flat screen TV
  • *gasp* Those evil millennials

However, a lot of those data sets either do not tell the entire story and point to why attendance should be increasing and not the other way around. It is possible to maximize revenue by creating scarcity with affordable tickets. You can manage brokers strategically. Millennials, ironically, covet experiences amongst many other false assumptions. TV/Content drives attendance through brand awareness. And lastly, Fantasy Sports and Gambling are driving even more marketability and awareness.

The data points to more consumer interest. So why are ticket sales failing, and how can we quickly address it? Let’s examine five reasons why and define strategies to help. Plus, two sports business relatable bonus tracks on customer LTV and innovation using real-world examples:

  1. Create Scarcity
  2. Find Solutions to Real Problems
  3. Embrace Modern Content
  4. Market Specific Resale Strategies
  5. Non-Revenue Shared Operating Income

Bonus Tracks:

Innovation goes Beyond Tech: What Sports Business can Learn from Sheetz

Customer LTV: What Sports Business can Learn from Buick and Toyota

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Article 1: Scarcity (Pricing Strategy) and Maximizing the Interest Curve

I wrote about this prior, but it may be the most critical aspect of the current landscape. The core issue with the existing retail pricing strategy is not taking advantage of our prime selling times as we overprice early due to revenue FOMO.

The feeling is that if we under price and sellout revenue is left on the table. We then combine this strategy with last-minute price drops, which in turn devalues our best customers. I don’t think $5, $10 or $15 flash sales are a terrible idea. To the contrary. There are just better ways to manage the effectiveness of a long-term strategy. Check out this graph below from the original article:

The higher interest times come early and pick up again late. If we overprice at on sale, there are too many tickets available leading up to the event and not enough interest to move them all.

The overpricing creates supply which has trained fans to wait out the market. The more inventory, the likelier we are to see a price drop closer to the event. While MLB has a disadvantage because of the sheer number of games and tickets to sell, other leagues and sellers can run into similar problems. Concerts, for example, have difficulties with no customer base and unique needs in each market. It is a daunting task and very difficult if you miss the on sale.

The original planning does not take into account the high costs of staffing and marketing needed to move any product over many months. By missing high-interest times, we are setting ourselves up for failure. The fix is to manage the inventory better.

We can utilize our tech infrastructure to sell earlier. Define how many seats you can sell early for the $10 to $15 range and manage the specific sections. I would recommend heavily targeting families, groups, military, and students for better target marketing and quality control. You can also openly market these within the parameters without compromising your corporate or season ticket base.

You can stop the potential resale of these tickets by utilizing technology and implementing strict policies. Once you have limited supply, you can more effectively manage a sales, marketing, and broker strategy.

The revenue maximization comes in with a higher value of the remaining tickets due to lower supply (exceptionally high demand games), increased ancillary spends by the consumer, and savings from further internal efforts.

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Article 2: Stop Creating Solutions for the Wrong Problems

Photo Credit: Pixabay

Suite sales are not dying. Millennials are not social but like sports.
Suite sales are not dying. Millennials are not social but like sports.
Suite sales are not dying. Millennials are not social but like sports.

One of my biggest pet peeves in the industry is over time we have made too many assumptions. We have more data and infrastructure than most other industries. However, the ideology and copy cat aspect of ticketing strategy can lead to poor decision making and long term planning. Let’s take a look at two examples:

Suite sales are not dying. They are as strong as ever. The market has simply shifted. A full season lease may be harder for various reasons such as more events, the tax law, or businesses merely becoming savvier and more budget consciences.

That does not mean we need to make wholesale changes to our industry. It only means we need to work harder and smarter. The current solution I am referring to is the shift from suites to smaller all-inclusive areas. These sell for less revenue, include more expenses, and drive almost zero ancillary spends as they are all-inclusive.

Myself, along with Jared Frank, EVP at the Association of Luxury Suite Directors, took an in-depth look at these renovations. While some make sense in older buildings that overbuilt suites, cutting out revenue and more specifically non-revenue shared income (see article #5) can have adverse long term effects. Just as we are training customers to wait, we are teaching our corporate customers to spend less.

The real solution is to strategize, market, and sell suites better. Creating cheaper products with less spending capabilities that are easier to sell is building a solution for the wrong problem and potentially harmful long-term.

The second misconception is pretty much anything strategized to Millennials or Generation Z when it comes to ticketing, including social areas or subscriptions. The reality is we are missing a golden opportunity as Millennials, and younger generations covet experiences to the tune of 4 times the spending compared to a decade ago. The difference is Millennials want uniqueness through FOMO, not the social aspect.

Eventbrite and McKinsey both did studies involving the younger generations and live events. While the results are not surprising, the way the entertainment industry has reacted to them is.

From the McKinsey article, Millennials consume about as much sports content as Generation X, just in a different and more readily marketable fashion (Digital and Social Media).

Yet, we have not changed our strategies enough to align with how the secondary ecosystem can aid in this fashion (see article #4).

  • Millennials and Generation Z are not social. How anti-social are they? They do not communicate in person and before getting married all but stopped having sex. Our solution is to create and market social products they do not want in fashions they are not interested in receiving. Such as over the phone or generic messaging.
  • Millennials are not teenagers anymore and are becoming parents. 53% of Millennials have children. That’s right, and we have a tech-savvy generation of Dad’s with smartphones, smartwatches, white sneakers, and khakis out there. So, Instead of creating innovative, frictionless, unique, or family-friendly products for them, we market areas that are none of the above. For example, my family and I attended a game in a social space as part of a workgroup. We had cheap tickets, a good view and an excellent experience except for one complaint. It was not suitable for children due to alcohol use by other guests. The usher warned us before the game even started. The product is right for some, but not all. The marketing should reflect that based on readily available data.

The solutions? Social areas are fine for those who want them. Same with subscriptions. However, those should be treated as tools to reach a small segment of fans.

For individuals who are not social? Who have young children? Do what the data says to do. Create unique, family friendly products through a frictionless experience. Then utilize technology and market what they want to them where they are. Hint: online begging for content.

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Article 3: Content is Your Friend. Even TV.

Source: Fantasy Sports. Graph: ScottFuchas4

Piggybacking on Article #2 and misconceptions, we have had a similar four-decade-long issue regarding content. Years ago the big misconception was that TV broadcasts were hurting attendance. It was a foregone conclusion for many executives. The biggest problem was the complete opposite had happened. Nobody bothered to check.

The more exposure, the more sales. Broadcasting games live on TV was the equivalent of someone paying you to advertise your product. Short of online infrastructure revolutionizing ticket sales, live broadcasts have been our biggest ally.

It is similar now with the excuses we read as to why attendance is down. Digital is not hurting attendance, and it is creating more loyal fans. Fans crave experiences and are more engaged than ever because of the online “tools.”

Engaged, you say?

To the tune of 16.7 billion online engagements in 2017 for the top 6 US professional sports leagues alone (NFL, MLB, NBA, NHL, MLS, NASCAR). TV viewership grew over time, but these engagements can drive revenue, especially combined with the targeted advertising potential based on the users online profile.

Even Millennials are still fans. How many in the business know that MLB is the 2nd most popular professional sport not just overall but for Millennials as well? According to McKinsey, there is only a slight drop in fandom between Generation X and Millennials for some sports and increases in others:

Chart: Maps People

We still have a ton of fans (*cough*Customers) and have the unique opportunity to engage with them 24/7. The customer craves it: Did you know that sports fans are 67% more likely to use Twitter to enhance their experience?

While some leagues shied away from digital content to protect broadcast rights, overall, we see a pretty significant shift in strategy. The NHL even hired a twitter personality who made a GIF of goals in real time to work exclusively for them as they should.

I would need a separate article or series entirely to analyze and create an in-depth content strategy. And most leagues are starting to embrace this. However, when you sit down to map out your strategy if nothing else remember these four things:

  1. The more content you have that is engaged with, the better online profiles are created for your partners (both primary and secondary) to market to. Consider additionally working in a strategy to combine data and utilize other platforms to automate marketing messages up-selling individual tickets buyers based on their profile.
  2. We have the unique ability to market 24/7 to customers who want and engage in the content. Let’s not squander that opportunity.
  3. While it is common advertising practice now, in ticketing, we have an advantage over other advertisers because of the customers increased engagement. We have much better data through positive, relevant content. We can target even more accurately based on a genuine personal profile and not demographic data, which is only a slight indicator of purchase intent.
  4. Do not make assumptions. Listen to what the data is telling you and use it to drive ticket sales.

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Article #4: Develop a Sound Resale Strategy for Each Market

One of the more interesting objections to brokers I have heard over the years is “why wouldn’t I just do it myself”?.

This objection confused me inside of an industry that outsources everything. Arena management, concessions, premium seating, sponsorships, parking, and other revenue generating areas have been outsourced as long as anyone can remember. Most colleges outsource their entire revenue generating operation, and there are too many companies to list that exist solely to help sports business.

To be clear, I am not against these outsourcing models. Outsourcing is an annual $85 billion industry in the US alone for a good reason. I do not see why the same principles can’t apply to the retail part of ticketing. Which because of volume should be the one that needs it. Ticketing follows a basic product outsourcing model:

An infrastructure to include sales efforts, data, analytics, pricing strategies, employees, customer service, and other costs that are likely impossible or irresponsible fiscally for one entity to put together.

IMHO the reasons for anti-resale sentiment are more emotional based on an outdated view of the model. Resale, via retail, plays a vital part of the ecosystem, not just to utilize brokers, but for season ticket holders as well in terms of LTV through cost offsetting.

When developing a strategy, you must remember that each market is different. While this is a copycat industry, the retail side requires a unique strategic vision depending on many factors such as market size, economy, business health, team performance, and season ticket base.

We will look at the strategies below, but first, why do we need secondary retail in the first place? For these five simple reasons:

  1. It is a Retail Distribution Model

As I have written about previously the resale market in ticketing in nothing more than standard online retail. There are outlets that are spending hundreds of millions of dollars combined on digital advertising to move other companies products because that is where the customers are. The combined product offerings allow for increased awareness and marketing dollars that one entity cannot match.

2. Online Consumer Data

These same outlets carry a much deeper consumer data set. Tickets sold to every venue or team in your same market. It is a way for a team or venue to buy into more customers in the same city. This data also includes a much cleaner view of the customer, their spending habits because of the market-based pricing, and increasingly more accurate data such as demand spikes and pricing adjustments.

3. Cost of High Purchase Intent Online Clicks (PPC)

Logically, this should follow the next point about general digital costs. However, it has become increasingly more relevant in ticketing. While everyone knows what SEO and PPC are, the newer model in recent years contains increased costs for higher intent purchase clicks and display advertisement targeting.

Source: WordStream

The online data profiling has so much depth and is so sophisticated that search engines can identify your top targets. It is so effective companies large enough are not balking at the price.

You can also bid higher on other data points, such as repeat customers. This bidding is important in retail because the secondary sites have “repeat” customers that may not have bought your tickets, just other buyers in your market. Or who are traveling to your area. Knowing this, they will invest heavily in higher purchase intent PPC and display targeting on your behalf to buyers who may be repeat for them but new for you.

4. General Cost of Digital and Social Marketing

Digital marketing, affiliates, social, PPC, and SEO are not cheap but effective and necessary. As you can see on the chart, they take four of the top six spots for marketing ROI.

Even for the two (email/video), digital does not explicitly account for, the data profiles complied are what allows for a more direct to consumer targeting in those efforts driving the ROI.

Because secondary sites carry a more retail model, they have the data and marketing budgets to effectively work on your behalf in the channels the consumers prefer.

5. Retail Infrastructure

This point gets lost with a lot of executives and consumers. However, one of the most critical aspects of how secondary websites work is the infrastructure that has been built by the sites and through vendor partnerships:

  • Some tools that allow brokers or large ticket holders to post tickets on multiple sites at once allowing for an easy way to manage distribution to hundreds if not thousands of channels.
  • Sites like Vivid Seats or TicketNetwork have affiliate programs that allow their inventory to be posted on other ticketing sites. The original sites handle customer service and fulfillment thus giving your inventory more exposure
  • They have built-in automation for customer communication and ticket delivery methods, even for mobile delivery. Ticket customers crave a frictionless experience, and these sites invest heavily in providing just that.

That is the how and why, let’s take a look at the types of Retail or Broker Strategies available to teams and rights holders.

  1. Risk Mitigation

Selling to multiple broker accounts. The upside here is that a team gets guaranteed upfront revenue, and the risk of a poor sales year is spread across multiple accounts. While the team also will not share in any upside if the ticket market increases, if the inventory was managed correctly. the lack of supply should allow for revenue to be made up in other ways.

2. Consolidation

Signing an agreement with one broker to buy or manage all of your resale. The upside is control of inventory, a more consultative approach with one vendor, typically more upfront revenue, and usually a buy into more upside. The downside is one vendor takes on all the risk, which can lead to a long term issue in a downturn and avoiding the temptation to over-control the market prices.

3. Consignment

Working with one vendor to post all of your tickets to multiple sites who then takes a percentage of the sale. The downside is no upfront guaranteed payments and typically misfiring on pricing due to lacking natural supply/demand. The upside is better control of inventory and revenue gains in an upswing of sales and prices.

4. Selling on One Site

Some teams/venues will sign agreements with one site individually to move inventory. The upside is a manageable process combined with collecting all of the consumer data. The downside is you are missing out on potentially hundreds of millions of dollars in marketing from the other sites, including their deep consumer databases and profiles.

5. Season Ticket Holder Costs (including the playoffs)

One of the main reasons overpricing can hurt is because season ticket holders cannot offset their costs. They will then cancel. Using a lower cost model should cause an uptick in season ticket or playoff packages sales and renewals. The season ticket model is not dead, but if you are too worried about missing out on potential revenue, you may hurt your numbers in the short and long term.

The key is to analyze your situation and decide which route is the best for your organization. With a wide variety of markets, stadium sizes, ticket sales numbers, and other factors, there should not be a copy cat approach. Each organization should create a plan that is right for them.

Brokers, resellers, consolidators, websites, and vendors are all businesses in it for the long term. Work with each on this strategy, and once customized, it will be effective.

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Article #5: Maximizing Non-Revenue Shared Inventory

An unknown to many outsiders of the sports business landscape is that the revenue is from playoffs and non-team events can be vital to an ownership group.

Whether the league is a salary cap structure with a dedicated percentage of revenues going to the players or a non-cap with ownership revenue sharing league, non-sports events and playoffs are typically accounted for separately. Meaning these revenues are of the utmost importance and usually drive operating income.

  • Non-Team events such as concerts can drive revenue through rent, parking, concession commission, premium seating, or other factors.
  • Playoffs vary from league to league, but the standard set up is the team pays into a pool which is used to pay the players. The rest is revenue for the team.

We discussed in a previous section about how turning suites into smaller areas can limit revenue potential. However, that theory doubles down when adjusting for concerts, events, and playoffs.

Every suite that goes unsold, every catering package not purchased, every concession item not bought, every parking spot that sits empty is costing 100% true operating cost for the ownership group.

These products can get lost or forgotten but may be the most important. Be sure to include them in your resale strategy. There are ways to market and manage the products and revenue that help your organization the most.

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Bonus Track #1: What Ticketing can Learn from Sheetz

Photo Credit: Specious

A few months back, my wife and I were in Pittsburgh, Pa for a few weeks to close out a rental property we had owned and to visit family and friends. The first morning on our way to drop our 2-year-old at the babysitter for the day we passed a Sheetz. Immediately we look at each other and scream with excitement “SCHMUFFINS!”.

After drop off, we pop in, head to their amazing ordering system, order up our custom Schmuffins, pick up a few other items, pay and head out.
If you have never heard of Sheetz, as they are not entirely national yet, you will not understand. If you have been to a Sheetz, then you know why we screamed.

Several years ago, they stumbled upon something amazing that should have been obvious to the rest of us. They were one of, if not the first, to look at the convenience store model and think, “wow this experience sucks, let’s make it awesome.” That is not a direct quote by the way, but I imagine that is how the first meeting went.

They decided against a stand-alone small store area with one employee, awful food like day-old hot dogs on rollers, overpriced snacks, and a customer line that, for some reason goes right through where we shop. They instead built an empire out of brand recognition, quality, excellent staffing, and an experience that even beats most deli type outfits.

I am sure it was a ton of hard work, but the result seemed pretty straightforward. How did Sheetz do it? From my viewpoint, they hit on a few critical business decisions:

Innovation

  • Innovation does not have to be through technology. It was innovative to take an already scaled, profitable model and become the leader.
  • They are always innovating. The Sheetz of today was not the Sheetz of 5 or 10 years ago. They have consistently been changing, growing, adding products, and improving the experience.

Brand Recognition

  • You can recognize a Sheetz from anywhere on the road. The color scheme has changed slightly over the years to more modern looks. However, every renovation, every new building carries the same brand color and store set up.
  • The name and product names became an institution. They have done an excellent job of branding. Piggybacking off of their name, you do not just get a muffin, you get a Schmuffin. Want a bagel? How about a Shmagel? A biscuit? Nope, a Schmisket? There is not one person in an area that has Sheetz who would not recognize or get excited at these products.

Customer Experience and Removing Friction

Sheetz has the best customer experience and created a competition against not only convenient stores, but delis and similar restaurants as well. Why?

  • You can go to Subway, wait in line, go through a process, and be generally annoyed. Or go to Sheetz, use a touchscreen to order (that is up to date on products), take your receipt, shop, get gas, pay and pick up.
  • The lines are not near shopping! I find this to be the most amazing albeit easiest fix. Instead of everyone getting in everyone's way, you can shop, order food, wait, eat, or get in line without one point of friction.
  • They have a place to sit to eat your Schmuffin! Just like moving the customer lines away from shopping, a place that sells food added a seating area? MIND BLOWN.
  • They have automated other friction points such as additional food items or lottery tickets. All are making the experience that much more frictionless.
  • In a hurry? They still provide a better experience with fresh made to go products.

Quality

  • The food is good. You can order a quality item and not have to choose between a hot dog roller, a warming pizza plate or a frozen sandwich that needs to be microwaved.
  • They are typically very clean, up to date with basics that are either aesthetic or in structure and have top of the line technology for the industry.

Staffing (or overstaffing it seems)

  • I do not know the specifics, but there always seems to be a manager, unlike most similar stores.
  • Multiple employees are making food and at the registers.
  • Additional staff members are cleaning or doing other projects.

What can ticketing learn from Sheetz? It is quite simple. Innovating does not have to be the next big thing in tech you can brag about LinkedIn that has not shown results. It can mean improving something already great. We have many advantages in ticketing over most industries with engaged customers, better data, more recognizable brands, and infrastructure others pay for.

Instead of always trying to be the most innovative, maybe the first step should be to make what we have better.

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Bonus Track #2: What Ticketing can Learn from Buick and Toyota

Photo Credit: Heritage Toyota

Customer Lifetime Value (or LTV) matters as much as hitting your current numbers. Just ask those responsible for Buick. While Buick has turned the corner and might be the rising star for GM, it is because of recent modifications to products and marketing after forgetting about a new generation for years. They have also not quite reached previous levels.

The problem with Buick when moving into the new century was not the product. They made a nice car. It was not the price. While expensive for some, they did have a more luxury brand. The problem was their average buyer was 60 + years old, and they were not creating products or strategies for a new generation.

Graph Credit: Auto Guide

While Buick made changes and started to turn the corner around 2014, it took years of creativity, marketing, product reinvention, and a shift in some focus to overseas.

In contrast, Toyota saw the writing on the wall years ago, and then recently, as their cars produced started to dip. Their buyers were becoming older in the ‘90s and 2000’s so they reinvented the basic business model. Separate luxury brands in product and marketing while driving strategies to attract younger buyers for the long term.

As you can see by the chart below, business was still strong in 2007, and they were able to fight off another dip. Long term Toyota’s strategy of getting in front of problems created more straightforward fixes.

Source: Statista. Graph #’s per 1,000

The strategy did not stop there as Toyota was ahead of the curve in modern day marketing by hiring a younger set of digital marketers and auto journalists who could transform content on their website.

One can argue that in ticketing, we are making adjustments to drive younger fans, including subscription-based ticketing and technology upgrades. However, attendance and for some leagues viewership is declining.

If we have less engaged or paying customers now, we will have less in the future. Buick was able to pull themselves out of a hole, but it was not overnight. Toyota was on the same track but decided to strategize early to fix it. The time is now to start reinventing our process.

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Mike, a 20 year veteran of the ticketing industry has executive experience with primary and secondary roles. He resides in Denver with his wife Jacqui, VP/Head of Studio at UpPurpose (A United Way funded marketing consultant), and their son Grayden, a 3 year old bad ass snowboarder. See more of Mike’s media at www.michaelguiffre.com