Financial Abstraction in Sports Venues: A Potential Game-Changer
“Excite the mind, and the hand will reach for the pocket.” — Harry Gordon Selfridge
Revenue generation is an art and a science, and Disney is the ultimate testament to this.
In 2008, Walt Disney World Resort’s then-president had tasked a team of Imagineers to get rid of any friction within the theme park’s experience, to which she referred to as “pain points”.
In 2013, just five years later, Disney introduced MagicBand; a wearable digital wristband that acts as a ticket, tracker, and credit card, all in one. Apart from smartphones, the band eliminated the need for guests to carry around anything physical.
With the swipe of their wristband, guests were able to enjoy a seamless experience across their entire journey- starting off with parking the car, entering the park, all the way to ordering food and purchasing merchandise, while at the park.
In its first-quarter after releasing the wristband, Disney reported an increase in their Parks and Resorts segment by 6% (to $3.6 million), their operating income by 16% (to $671 million), and their per capita spending by 8%.
While the increases were also attributed to higher ticket prices at the time, there was a noticeable increase in guest spending on food and beverages.
Whether knowingly or not, by introducing MagicBand, Disney’s Imagineers would become one of the first enterprise-level exploiters of financial abstraction.
You are probably wondering- what the heck is financial abstraction, and what does it have to do with sports venues?
Simply put, financial abstraction is the notion that as money becomes less tangible and more digital, the more of an abstract- or an idea- it becomes. Logically, when money no longer feels real, consumers are much likely to spend more.
When the average consumer makes a purchase, his/her purchasing decision is often influenced by their emotions first, logic second. Therefore, by abstracting money through a digital wristband or via a mobile payment solution, rationale will slowly but surely become a non-existent factor in the decision-making process of purchasing.
Disney, of course, is betting on this (and so should sports venues). By improving guest/fan experience and by digitizing the payment process inside the park/venue, logic will no longer play the deterrent role it once played, and revenues will subsequently increase.
This is why a family, a couple, or a teen walking past an ice cream cart at the park will probably not only snatch a bar but also not care about the price point. The psychology behind swiping a wristband instead of pulling out cash (or even a credit card) from one’s own pocket makes purchasing all the more likely.
While theme parks and sporting venues have their own differences, they do share a ton of similarities. In terms of experience, a fan attending a sporting event also has to deal with the hassles of parking, holding onto a physical ticket, waiting in long lines to order food and/or to purchase merchandise, just like a guest attending a theme park would.
Therefore, teams, leagues, and federations looking to benefit from the financial abstraction phenomenon must be able to understand the “pain points” and frictions that exist in the fan journey first. Until then, the average fan will continue to prefer tuning in from the confines of their living room.
In Part 2, we’ll thoroughly cover how executives can digitize the fan experience inside of sporting venues to optimize existing revenue streams while also tapping into new ones. On this note, it is worth mentioning that while it is true that COVID-19 may deter people from spending money carelessly in the short run, financial abstraction in sports venues is inevitable in the longer run. Sooner or later, stadiums will open, and cashless will become the new norm. Pro-activeness is key to succeeding in the next 2–3 years.
