Tuesday, September 11, 2007

The National Football League – that’s the ticket

Last year the National Football League sold out the first twelve weeks of the league’s 2006 regular season schedule, an almost unprecedented string of sellouts that appeared at one point to suggest the NFL may have sold-out their entire 2006 schedule. The sellout string ended, but the NFL established a new record for total attendance last year. NFL paid attendance for all 2006 games was 22,199,712, an increase of more than 400,000 (407,616) over the previous record total of 21,792,096 in 2005. It marked the first time in NFL history that the 22-million paid attendance mark was reached.

The NFL completed their 2007 opening weekend Monday night, managing to sellout their opening weekend, but not without a twist that suggests one needs to pay close attention to how the NFL enforces their 72-hour blackout rules. Nonetheless sports fans have spoken and the most valuable ticket in the industry remains tickets to NFL games. And even more interesting, NFL fans are ready to pay the price for buying tickets, with the cost of tickets for NFL games increasing this year from where they were last year.

The average ticket price for the 2007 season is up about $4.50 from the previous year, with a season ticket costing $67.11, according to Team Marketing Report’s trademark Fan Cost Index.

Twenty-three teams reported overall increases of individual season ticket prices, according to TMR research. Eight teams reported double-digit percentage increases, the same number as last year. Only two of the 2006 teams’ repeated similar increases in 2007 – the Miami Dolphins, who raised prices by 11.4 percent to $66.11, following some seat scaling changes at Dolphin Stadium, and the Arizona Cardinals, now in their second year at University of Phoenix Stadium. The Cardinals raised prices by 10.5 percent with a ticket costing $56.71, on average.

Dallas Cowboys fans will see the largest increase (27.2 percent to $84.12), a sure sign of things to come as the team prepares to move into its new state-of-the-art stadium in 2009. The team went from having the 16th most expensive ticket to the sixth. Jerry Jones’ team was stagnant as far as increases in the previous season, but now sports the biggest Fan Cost Index total increase – up 20.9 percent to $416.50. The Baltimore Ravens raised ticket prices by 24.5 percent to $77.20, and their FCI total rose 17.3 percent to $411.81.

The Indianapolis Colts, one the sport’s best bargains during the Manning era, increased individual prices by 10.5 percent after their Super Bowl victory, with an average season ticket at $70.98. That figure is lower than most Super Bowl champions.

While the Pittsburgh Steelers remained unchanged in 2006, the previous five champs had bumped prices up the following season by an average of 18.5 percent.

The Colts have already unveiled ticket price levels for their new stadium, Lucas Oil Stadium, which opens in 2008, and prices will continue to rise incrementally.

The losers of Super Bowl XLI, the Chicago Bears, raised prices by 9.1 percent to $84.89, following a 12.9 percent jump in 2006.

Super Bowl XL teams, Pittsburgh and Seattle, increased prices two years after going to Detroit. The Steelers, who missed the playoffs with an 8-8 record, bumped up average tickets by 11.4 percent to $65.94. The Seahawks, who increased prices by 12.7 percent last season, bumped them up by 8.5 percent to $54.74, now among the five lowest prices in the league.

For the fourth straight season, the Buffalo Bills are the NFL’s best bargain, according to their individual ticket average. Fans will pay approximately $46.46 for a seat at Ralph Wilson Stadium – an increase of 12.5 percent. Two teams decreased ticket prices in 2007 – the San Francisco 49ers and Minnesota Vikings. This was the second straight drop in pricing for the Niners, who moved to a tiered pricing structure in 2006.

The New England Patriots remain the priciest franchise in football. Their average price of $90.89 is steady for the second straight year, following a 20 percent jump from 2004 to 2005. The only change at Gillette Stadium is a $5 parking increase that bumped up the league’s highest Fan Cost Index total to $482.47.

The Bears leapfrogged the Washington Redskins for No. 2 on the FCI list as a 6.5 percent increase pushed their total to $468.04. Washington ($441.43), the New York Giants ($427.62) and New York Jets ($425.28) round out the top five.

Ticket prices as they so often are driven by the law of supply and demand. It’s no mistake tickets for Boston Red Sox games are the priciest in Major League Baseball, averaging more than $47 for each of Fenway Park’s 36,000+ seats. Fenway Park is officially listed as having the second lowest capacity in Major League Baseball, only Oakland’s McAfee Coliseum seats less than Fenway Park, and remember the A’s decided not to sell McAfee Coliseum’s upper deck by tarping off upper deck. Last year when the A’s made it to the American League playoffs, MLB officials were prepared to force the A’s to remove the tarps covering the upper deck adding 20,000 seats to their stadium’s capacity.

When it comes to the National Football League, the law of supply and demand isn’t necessarily dictated by the size of the stadium, but rather the teams’ history in their marketplace, how that team compares to other sports teams in that region and other factors.

The Cowboys move into their new stadium in time for the 2009 NFL season. Their current facility (known as Texas Stadium) seats a shade over 65,000 fans. Their new stadium will seat at least 85,000, with the stadium having the ability to increase their capacity to more than 100,000 (when the stadium hosts the 2011 Super Bowl). Cowboys; management (Jerry Jones) increased their ticket prices by 27.2 percent. The Cowboys average ticket price for the 2007 season -- $84.12, a sure sign that when the Cowboys make their move in two years their average ticket price will hover around $100 per ticket. Sports franchises history dictates are most likely to increase their tickets the year they move into a new stadium, not two years before they make their move. Connecting the dots, Jerry Jones is making his first price hike this year, will continue with a modest price increase next year, at least 12 percent in two years – voila, the average Cowboys ticket price two years from now will be right around $100 per ticket. And here’s an interesting number to ponder. Texas Stadium seats just over 65,000, the Cowboys new stadium will seat more than 85,000 – will the Cowboys be able to fill their new stadium?

On March 27, 2000, NFL owners approved the sale of 49% of the Ravens to Steve Bisciotti. In the deal, Bisciotti had an option to purchase the remaining 51% for $325 million in 2004 from Art Modell. On April 9, 2004 the NFL approved Steve Bisciotti's purchase of the majority stake in the club. Three years later Ravens fans are dealing with a 24.5 percent price increase. The Ravens who aren’t playing in a new stadium, have no plans to play in a new stadium and are five years removed from winning the Super Bowl benefit from the other NFL team playing in their geographical region, the Washington Redskins.

The Washington Redskins play their home games at FedEx Field. FedEx field crams in more than 92,000 for Redskins games. The Redskins have a season ticket waiting list of 150,000, 150,000 people are on a waiting list hoping one day they’ll get the privilege to buy one of the most expensive tickets in the National Football League. The average ticket price for Redskins tickets didn’t increase this year, it stands at the same $79.13 it was in 2006.

The Redskins and Ravens play their home games less than 40 miles from each other. Let’s make one point clear – there is enough interest in attending NFL games in the “Greater Washington area” to support two NFL franchises. What a difference from 23 years earlier, a period that changed the face of franchises moving from one city to another, in this case in ‘the dead of night’.

By early 1984, after the Baltimore Colts' lease on the dilapidated 64,124 seat Memorial Stadium had expired, Colts Owner Robert Irsay wanted the City of Baltimore to upgrade the stadium or build a new one. But with attendance dwindling and the team playing poorly, city officials were wary of such an investment and negotiations were slow and contentious. Relations between Irsay and the city of Baltimore deteriorated, and despite numerous public announcements that Irsay's ultimate desire was to remain in Baltimore, he nevertheless began discussions with several cities interested in becoming home to an NFL franchise

Irsay narrowed the list of cities to two, Phoenix and Indianapolis. Under the administrations of Indianapolis mayor Richard Lugar and then William Hudnut, the city was making an ambitious effort to reinvent itself into a `Great American City.' The Hoosier Dome (later renamed the RCA Dome) had been built specifically for and was ready to host an NFL expansion team.

Meanwhile in Baltimore, the situation worsened. Eventually, the Maryland legislature intervened and threatened to pass a law giving the City of Baltimore the right to seize ownership of the team by eminent domain. As a result, Colts owner Robert Irsay began serious negotiations with Hudnut in order to move the team before the Maryland legislature could pass the bill. The City of Indianapolis was more than willing to receive the team and provided the Colts owner with a $12,500,000.00 loan, a $4,000,000.00 training complex, and the use of the brand new 57,980 seat Hoosier Dome. After agreeing to the deal, Mayflower Transit trucks were dispatched to the team's Maryland training complex at 2:00 AM on March 29, where workers loaded all of the team's belongings and the trucks left for Indianapolis by 3:00 AM.

The Colts, who won the 2007 Super Bowl, are set to move from the RCA Dome into Lucas Oil Field in time for the 2008 season. The RCA Dome seats just a shade over 57,000 one of the smallest in the National Football League. The Colts raised their 2007 ticket prices by a modest 10.5 percent reasonable when the stadiums capacity and winning a Super Bowl are factored in. Lucas Oil Stadium will have seating for 63,000 that will be expandable to seat 70,000 for large events (i.e. the Men’s NCAA Final Four basketball championships). The other major difference between the RCA Dome and Lucas Oil Field, there will be close to 150 suites in the Colts new facility, the RCA Dome has just 104 suites most of them put in after the stadium was built in 1983. The suites will in the Colts new stadium will be the economic engine driving the new facility, and with a shade over 63,000 seats the Colts understand the size of their market and how a stadium’s capacity needs to relate to the size of the market to create the law of ‘supply and demand’.

The New York Giants (6.1 percent, $81.29) and the New York Jets (7.7 percent, $80.70) rank fourth and fifth in NFL ticket prices. Giants Stadium where both teams currently play their home games seats just a shade over 76,000. Both teams will move into a new shared facility in time for the 2009 season. The new Giants/Jets stadium will seat more than 82,000 and have room for more than 250 suites. There are 119 suites in Giants Stadium all built after the stadium opened. The same law of “supply and demand” that dictates the Colts new stadium seat only 63,000 also determine that it makes more sense that the Giants/Jets stadium seat more than 82,000. Indianapolis population is less than 1 million, while there are more than 9 million people living in and around East Rutherford, New Jersey where the NFL’s two New York based franchises play their games.

Both the Giants and the Jets have season ticket waiting lists. There are more than 70,000 on the Giants list, not quite as many on the Jets list. Robert Wood Johnson IV, Woody Johnson bought the Jets from Leon Hess in 2000 for $635 million, the third-highest ever for a professional sports team and the most for one in New York. Three years later in 2003 the Jets instituted a $50 annual fee if you wanted to be on the teams’ season ticket waiting list.

The most expensive ticket in the National Football League belongs to Robert Kraft’s New England Patriots. Kraft ‘held’ ticket prices at their 2006 average -- $90.89. In the off season the Patriots picked up Randy Moss in a trade and were considered in the pre-season Super Bowl favorites. They also play in a market (New England) that has the most expensive baseball tickets and NBA and NHL prices that rank among the highest in their respective leagues. The stadium seats 68,756 in a region that may not be as populated as the Greater New York area, but New England arguably has the most loyal fans in sports in any geographical region. Foxboro Stadium where the Patriots played between 1971 and 2001 could accommodate 60,292. Again a modest increase in capacity worked well with both the demand for tickets and how the Patriots have to compete with other sports franchises in the New England sports marketplace.

And the NFL’s 72-hour blackout rule – it could renamed, “when is a sellout not really a sellout rule”. Two NFL home teams (the Minnesota Vikings and the Jacksonville Jaguars) were both granted extensions to help each team facilitate a sellout for Sunday, avoiding the games being blackout in their respective markets. The St. Louis Rams announced their home game Sunday (against the Carolina Panthers) was sold out. In all three cases less than 1,000 tickets remained available when the deadline arrived. However in each case local sponsors and the local Fox or CBS affiliate (whichever was broadcasting the game) choose to broadcast purchase remaining tickets in order to realize the advertising revenues if the game was broadcast locally.

Steve LaCroix, the Minnesota Vikings’ vice president of sales and marketing, told the Minneapolis Star Tribune how a blackout of Sunday’s game was avoided. Local Fox affiliate KMSP (Ch. 9), which will air the Vikings-Falcons, actually purchased 400 tickets from the team.

The Vikings had received an extension from the NFL on Thursday and had until 2 p.m. to sell the tickets. As of Thursday morning, the Vikings were 1,700 tickets shy of a sellout. The move makes sense for the Fox owned-and-operated station from the standpoint of ad revenues. Locally, KMSP had 16 30-second spots to sell during the game at between $15,000 and $20,000 apiece. If the game had been blacked out that would have meant the station would have lost more than $250,000 in ad revenue.

Jaguars fans were able to watch Sunday's season-opener against Tennessee on television. The club avoided a television blackout after ticket sales reached the blackout threshold before the 4 p.m. Friday deadline.

Approximately 300 tickets remain that were returned by the Tennessee Titans.

"We're tired of talking about tickets," said Jaguars senior vice president/business development Tim Connolly. "We should be talking about the quality of players on our team. Going forward, we'll do our best to get every game televised. Occasionally we won’t. When they're not televised, we feel badly, but we're not angry with anyone or upset. We know that people are doing the best they can."

With approximately 1,700 tickets remaining on Thursday afternoon, the club asked the NFL for a 27-hour extension from the usual 1 p.m. Thursday deadline – which was 72 hours before kickoff – to 4 p.m. on Friday.

The club sold the majority of its tickets after Thursday afternoon and the Jaguars didn’t have to rely on a corporate sponsor to buy any remaining tickets. While there are approximately 300 tickets remaining, the NFL doesn’t count them for blackout purposes because they were returned by the opposing team. The Jaguars are home again this Sunday, against the Atlanta Falcons – the NFL’s sellout string could easily be stopped at week one.

For SportsBusinessNews this is Howard Bloom. Sources used in this Insider Report: Minneapolis Star Tribune, Florida Times Union and Team Marketing Report.

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