Selling Premium Seating in Today’s Sport Marketplace

The Sports Business Journal article is Selling Premium Seating in Today's Sport Marketplace.  Premium seating is extremely important to all sports teams because that is where the majority of the revenue comes from.  “Research shows NBA teams typically generate $20 million from premium seating” (Lawrence, Contorno & Steffek, 2013, p. 9).  This statistic shows that premium seating generates a huge chunk of revenue at NBA venues.  There are several long- term planning issues and factors involved in the selling of premium seating through marketing in today’s sports marketplace.  

The first long- term planning issue that a senior executive for a sport’s team would need to deal with is competitiveness.  The reason for this is because fans do not attend as many games for their team if they are not playing well.  For example, if a team is playing well enough to make the playoffs, then more fans will want to watch that team play in person and more premium seating will be used.  However, if a team is not playing well enough to make the playoffs, the fans will not care about going to the games as much because the team will not win the “prize” at the end of the season.

The next long- term planning issue that a senior executive for a sport’s team would need to deal with is the economy.  If the economy is in a recession, fewer fans will be able to afford going to sports games.  If fewer fans go to sporting events, then there will be less premium seats filled which means the team’s organization will lose money.  When the team loses money, they are unable to afford their best players as well as adding players from other teams because they do not have enough money to pay them.

The last long- term planning issue that a senior executive for a sport’s team would need to deal with is the condition of the stadium/arena.  This is huge because older stadiums and arenas are usually prone to more problems.  Examples of this are deterioration, less technology, and uncomfortable seating.  Older stadiums and arenas become costly to repair and renovate.  The reason they must be renovated is the safety codes the stadium and arena officials must abide by.  The biggest reason the condition of stadiums and arenas is important is because fans are more likely to go to a newer more beautiful stadium or arena.  The reasons for this include comfort, amenities, and overall appearance.  If a stadium or arena is popular due to its appearance, more people will go which will in turn, fill up more premium seats.

I would not change anything to do with the long- term planning because I feel as though these factors are out of a senior executive’s control.  The only thing the executive can control is instructing management to acquire skilled players in order for the team to be as competitive as possible.  The other factors such as economy and arena/stadium conditions are not really controllable.  If an executive wanted to upgrade the arena/stadium, it would be very costly and it would take a lot of time before the costs were approved into the budget given they can't rely on subsidies.

I would choose option 1 which is $75,000 per year for three years for a couple of reasons.  The first reason is because the costs are evenly spread out which means the budget would not be higher in any of the three years because of the contract.  Also, the annual return of 8% on $75,000 brings in the most revenue annually.  Overall, option 1 is the most logical because the other two options would put serious financially stress on the organization.

I agree with the thought that owning a sport’s team is more precarious then owning a company like Nike.  I feel this way because fan support, economy, competiveness, and arena/stadium conditions are all factors while them only real factor a company like Nike has to worry about is the economy.  I disagree that being in the right market is more important than the quality of the team itself.  The reason for this is because the more competitive a team is; the more fans will show up.  If Boston teams do not compete well, then fans likely will not show up to games there either.  The main factor is competitiveness and if a team is competitive, the fans will show up no matter how small the market is.

Reference

Lawrence, H. J., Contorno, R. T., & Steffek, B. (2013). Selling premium seating in today's sports marketplace. Sport Marketing Quarterly, 22(1), 9-19.