Small markets, holiday spending issues, surprise home games, viewing enhancements, fan apathy, weather, elite opponents. All factored into the firestorm the NFL came under for three of its four wild card home games this weekend as teams rallied to hit sellout modes and avoid being blacked out. Only better prepared, large market Philadelphia avoided the controversy, selling out in minutes despite the fact that it is cold and plenty of people owned the latest TV’s from Camden through The Main Line.
In the end all three cities, Green Bay, Indianapolis and Cincinnati, hit their numbers with some corporate sponsor help, and we move on to the story of the day which is the actual games on the field. However even with the sellout, the weekend served as another problem that any type of live viewing experience from movies and plays to sports events, will have to continue to deal with; how to make the in-venue experience a “must be” place for those willing to spend discretionary dollars.
Now maybe this weekend was an outlier for the NFL, who point out that blackouts are at an all-time low and that the huge excitement of last-minute playoff qualifying games last week is what is really important. It is also noteworthy that opponents for the three games…Kansas City, San Francisco, and San Diego…aren’t exactly easy drives from where they are playing this weekend, further adding to the movement of distressed seats.
We are also talking about a few thousand seats not the swaths of open sections that Bowl Games and many other sports have to deal with even in postseason, and at the end of the day the NFL Playoff experience is a shared one by fans in stadiums and millions engaging on broadcasts and in any host of second screen experiences. Politicians maintain that the blackout rule is archaic and needs to be changed to better serve the fans, while the leagues and broadcasters argue the law needs to be upheld in order to keep the games away from a pay per view scenario which could be forced by loss of gate revenue and other factors. It is not something that can be solved overnight, but in the end can brand enhancements come out of the controversy that the NFL and its local teams stemmed in the first week of the playoffs? Here are some thoughts. Is the issue an embarrassment for the NFL? Not really. What it is is the next amplification of a business challenge that has been a long time in coming for all live events, with the NFL being the largest stage.
What are some of the potential answers?
Lower the ticket prices? The NFL sets the market for the playoffs, based on each market’s ability to pay. Elite events naturally deserve elite prices, but with the secondary market in full swing now does a lower price mean more tickets would move, and at what price point will those seats be filled on short notice? Also this is still a business, and although the gate is no longer the biggest driver, it is still vital to the mix on the revenue side so teams cannot afford to throw hundreds of thousand dollars away in lower costs because of the fixed number of home games. Each team has their own formula for success…the Colts and many others have group plans for example that they could not activate with such a short turnaround this week for example. In the end, the teams looked to local brands to buy blocks of tickets, in Indy, Meijer used them to donate to military groups and deserving families, which was a nice added perk, while in Green Bay Associated Bank, local Fox affiliates and Mills Fleet Farm and Bellin Health came in and used the tickets for customers and other partners as a thank you. However how many of those sold actually will get used in frigid temperatures, and is the bottom line more important at that point than the fan experience? Hard to say. Are there incentives that can be created for those who purchased in advance that would make the outlay more important to them beyond the game? Perhaps, but only those experts in the marketplace will know what buttons are best pushed to get the handful of distressed seats filled. At the price point being asked, its not T-shirts and hats, maybe it’s working with partners to get a break on heating prices or free gas cards or even a slight break on college tuition or a high end meal service that gets written off. Each market will be different.
Lower the blackout threshold? This is perhaps the most viable short-term option, if the threshold is for short notice games the first week of the playoffs. It probably shouldn’t apply after that to make sense, and if it was at 90 to 95 percent of capacity for week one, the issue would be avoided. This would also go along way with public perception, as most people probably believed there were huge swaths of unsold seats, not a few thousand in stadia that are gargantuan compared to other sports outside of NASCAR. The 95 pct threshold also gives teams a few more precious days to get last minute groups and walkups into place, and if weather and hype hold, will push some folks into purchasing even on game day, which is not such a bad thing either.
Better Education of the Secondary Ticket Marketplace? The leagues and teams have done a good job of trying to manage the marketplace and see what the options are. However searches by the uninformed will see very high prices and very low prices for elute games. Giving fans a better primer on what is available and where can also be a better driver for distressed seats, even at a discount offered by the primary seller at the last minute.
Enhance The Fan Experience? Colleague Darren Heitner pointed out new ways the Dolphins, along with other teams are doing more to help fans better enjoy the in-stadium experience. A lot of that enhancement has to do with mobile, and many teams are still struggling with better connectivity in stadia that are older. The investment in “stadium only” enhancements is still risky for some teams not willing to invest, because for the NFL at least, you are not talking about a majority of ticketholders who need such enhancements to plunk down their dollars. You are talking about that less than five percent, and are enhancements worth the cost of investment. The reality is though, that a larger number of fans will start questioning ROI as the out of stadium value grows, so investing now as a hedge against the churn in sales is worthwhile. Why is mobile so important? Look abroad for the reason.
There will be a time when the well-connected in stadium fan will be able to use his or her mobile device for everything they need; from tracking seat location improvements to special meals to better parking spots, to video and yes, the revenue stream of online wagering on all that goes on in the game. You see many of these enhancements being used by corporations like Disney to better control crowd flow and offer more incentives by geo targeting where and what their consumers are doing at their parks…you see it in the music business with crowd sourcing at concerts, and you see it in better equipped stadia in the UK and elsewhere where fans are constantly engaged and interact with all going on around the event. Part of the sports experience elsewhere is through the gaming and gambling experience on mobile, and there will come a time when that enhancement becomes legal and federally regulated in the U.S. It is an inevitability. That investment in better connectivity is perhaps the best part of the draw for the casual fan going forward. Making the stadium a place where you can only get something…the amplification of the giveaway…is the key part of moving the distressed fan away from his or her living room.
Is there a simple answer? No. Does the NFL have issues that almost every other sports or media company wishes they had as their biggest challenge today? For sure. In the end, for the short term, the seats are filled and most importantly the millions of local eyeballs watching the broadcast will be sated for the postseason. That means big TV ratings, happy sponsors, and a respite from the controversy.
There are some that think that technology has made the in-game experience obsolete, and that we will head the way of “Slamball,” a once made for TV sport that was taped in a huge hangar with a few hundred spectators. That is more an issue for concerts and other entertainment properties which are more repeats time and again. An event like the Harlem Globetrotters for example, would be in more danger than a live sporting event. Live sports, unlike anything else in entertainment, is still a tribal shared experience where you have the ability of seeing something in person that you never thought possible. Ask those at Auburn-Alabama or someone who has seen a no-hitter or a shootout in the NHL or a golden goal in soccer or the final point at the US Open or Tiger’s winner at The Masters if they would trade that experience for anything and the answer is no. Does it mean somewhere down the line that mega-events will become pay per view? Doubtful, given the larger scale dollars and viewership needed to make the finals of a sport viable, and the billions already invested in broadcast for the long term. Boxing, the UFC and the WWE have taken the path of using free events to feed a pay per view build, but for team sports that approach would be much more drastic and detrimental to the brand that each team has in the marketplace. It is not entirely out of the question, but it is not on the horizon for now.
What has to happen for the in-stadium experience is evolution. Maybe it is a smaller crowd threshold, but it is definitely enhanced wireless capability and the ability for teams to tap new streams of revenue to offset rising ticketing costs that are passed through because of the cost of talent on the field and other cost amplifications that the marketplace puts upon other businesses in addition to sport.
In the end for the NFL is the blackout a black eye? Nope. It’s a punch that a mature savvy business needs to take and come back with long term viable answers that will make not just football, but any live even effective, profitable and worthwhile for those who will continue to follow their passions and attend. There is not one solution, there are many that need to be combined, and the eventual answers will come from the digital, the traditional and the still to be developing marketplace globally, not just from one weekend of play across the States. Take notice and learn sports business, the NFL offered up some painful, and hopefully short term, business lessons for all to learn from this weekend.
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