I admit that I was not the biggest fan of LeBron James’ overhyped “The Decision” on ESPN last month. However, his move to the NBA’s Miami Heat has resulted in two professional teams becoming very creative with their ticket pricing.
From betsysoler via Flickr - LeBron James, Dwayne Wade, and Chris Bosh can make a team's business staff look very good!
First, I’ll discuss the Miami Heat, who benefit the most from James’ move to South Florida. On a recent episode of Sports Business Radio, Eric Woolworth discussed why the Heat decided to not sell all seats as season tickets for the 2010-2011 season. Woolworth, the Heat’s president of business operations, discussed how the team learned from their acquisition of Shaquille O’Neal several years ago that selling all of your tickets before the season does not maximize interest and revenue. Woolworth talked about how the team is keeping tickets available for group deals and for special pricing for particular nights of the week and opponents.
The Florida Panthers National Hockey League team is also increasing their creativity in pricing. The Panthers are offering their fans an opportunity to name their price on certain tickets for the upcoming season. Fans pick the game and offer a price, and the team will respond yes or no within 24 hours. The Panthers have a tough sell with hockey at the southern tip of Florida. The team has not drawn well in past years, and the Panthers have decided to try something new. As you can tell from the Panthers’ official web site, they are making a big deal out of this.
Both teams are being very intelligent with their pricing, and it serves as a model for what you can do in your business. Many businesses look at every single cost and try to reduce them, but one of the best ways to improve your profits is to price intelligently. The Heat and Panthers realize the power of smart pricing. The Heat have sold thousands of season tickets this year, so they have a fixed revenue stream and a lot of cash from those sales. They can change the pricing on tickets for a big-name opponent like the Los Angeles Lakers, or they can reduce prices for a business group (i.e. potential corporate partner). The Panthers realize they will maximize revenue by having more fans in the arena. According to HockeyArenas.com, a group of four people attending a Panthers game will spend almost $20 a person in concessions, merchandise, and parking. If you can get fans into the arena, they are likely to spend more money.
I am very interested to see how each team’s pricing strategies work this year. They play different sports in different leagues, but they are competing for entertainment dollars in Miami – still one of the hardest-hit areas from the real estate bubble. Both teams’ business staffs are providing great case studies for those of us who know strategic pricing can be a competitive advantage.
