Jets, Giants Learn Lessons / NFL Needs to Change Antiquated Rules

In the past week, the New York Jets have started to call people from the season ticket waiting list to notify them of availability and the New York Giants have taken to reduce game ticket prices in the new stadium by up to 37% to help move inventory. Two teams that had given sell-outs for long time periods, now must get down to business for the first time in many years. The announcements illuminate a few issues at play that involve current market conditions, breaking traditional marketing rules with price changes amid secondary market pressure, and the NFL’s local blackout rule.

Dating to 1973, networks will black out any games not sold out within 72 hours of kickoff within the home team’s 75-mile local market. Similar to the Chicago Blackhawks methodology until recent years, the spirit of the rule is to get people to attend the games and avoid television competing with ticket sales. Its now 2009, many studies have shown no correlation between ticket sales and availability on local television. In fact, if anything, blacking out games will negatively effect ticket sales by damaging team affinity in its local market. Often, teams and networks arrange to buy up unsold inventory before game time to avert blackout, a loophole within the rules. However, a better solution – do away with the rule. Roger Goodell could never black out a Jets or Giants game in New York without an onslaught at his Park Ave. office. Using these backdoor loopholes to get around the rules is unfair, since the league and networks then help decide who gets blacked out (sorry Detroit). The league should help promote the local team – dismiss the rule.

Team marketers, and marketers in general, always live by the rule that you can never reduce prices because it trains customers to delay purchases in hopes of more cuts. The Yankees threw that out the window chopping high end ticket prices in half during the season. Taking that lead, the Giants are preemptively reducing prices now, over a year before moving to the new stadium. On one side it’s a smart move because its shows they are cognizant of current market conditions, and will not stubbornly hold out on fans. It also gives the team time to compensate early buyers with additional value in other ways.

On the downside, PSL prices remain fixed, and that seems to be a sticking point with many fans. NFL teams need to look at other PSL systems. Possibly a timeshare system, where PSLs get sub-divided and fans can buy half or a quarter of a PSL, and based on the price determine their place in a lottery to select games each year. Or the team can add perks for PSL owners, group off-season parties, better access within the stadium, and deals for non-football events at the stadium. One problem is that teams put a PSL on almost every ticket, making price the only differentiator. A different approach is to make the PSL a differentiator, raise the prices, cut the inventory, and add a laundry list of features.

Today’s economic situation is exacerbating the situation, but the secondary ticket market is the real problem. Why should fans commit to this upfront investment when tickets can usually be had at market value – much lower than face – closer to the games? Those ridiculously priced Yankee seats, readily available for a fraction of face value. Teams must recognize season ticket holders often rely on the secondary market to recoup expenses, when they price tickets where fans will actually lose money the eventual backlash is significantly lower demand due to the unstable market. Prices must drop until its economically stable.

PSLs help fund the outrageous stadium price tags teams run up. What if teams took a phased, modular approach to stadium building. Build the core stadium and key amenities, but skip on that extra $100-300mm in extras until you gauge what the market is willing to pay for the stadium. Maybe the Yankees could have cut the cushioned OF seats if they knew ticket sales would sag or prices reduced. Maybe the scoreboard can be 10’ smaller without changing demand. Cut stadium prices, reduce PSL or entry-level tickets, but make it easy to add (and actually plan the construction) amenities in the first few years if demand exists.

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