Money Ball For Sports Business Management

by Jenny on April 19, 2017 Comments Off on Money Ball For Sports Business Management

North American sporting events have recorded steady gate-revenue increases since 2011, jumping from $17.8B in 2015 to $18.7B in 2016. (Source: Statista)

These numbers are expected to continue rising through 2020, and there’s still advertising, merchandising, licensing, and media rights revenue to account for. Needless to say, the sports industry is doing quite well as of late. However, with big money comes big expectations; not only from business partners, but from fans as well.

At this level, there is little-to-no tolerance for failed returns on investment. Just as advertisers can realign their budgeting if there’s a decline in sports viewership, fans can spend their limited disposable income on other entertainment options if they feel sufficient value isn’t being delivered.

Sports franchises commonly look to “butts in seats” as an indicator of how they are performing from a sales standpoint. If people keep buying tickets, why try to fix what isn’t broken?

The glaring flaw with this approach is the lack of foresight. Fans attending today may not attend tomorrow; so without an understanding of who is filling those seats, franchises are vulnerable to unaddressed churn. By the time negative effects of unaddressed churn are realized, it’s too late for remedial action.

As we shift from the age of technology into the age of experience, those failing to prepare will be left behind. The bright side is, in this age of technology we are equipped with an ever-growing list of data sources offering the insights needed for a smooth transition.

For example, consider the “butts in seats” approach to revenue tracking. A sell-out crowd is a sell-out crowd, and on paper the numbers look strong. However, if a season ticket holder doesn’t renew and that seat is filled by a series of single game buyers, profits drop because the cost of filling that seat increases.

Without a strategic approach to tracking and analyzing sales data, this one instance can multiply throughout the venue and suddenly gate revenue yields declining profits. Now what? Based on the “butts in seats” approach things should be fine, but the numbers show otherwise and without a clearly defined problem there’s no effective way to find a solution. This is not a desirable position for any business.

Now, consider a sports franchise taking a more detailed approach to monitoring its revenue streams. Tapping into varied information sources (i.e. gate sales, non-game day box office sales, online sales, etc.), strategic analytics can be run on the incoming numbers producing data-driven insights for a detailed perspective of sales activity. What is the percent breakdown of ticket type for any particular game, or over an entire season? Answers lie in the numbers, and the numbers don’t lie.

By simply tracking and recording ticket sales by ticket type, a shift from season tickets to single game tickets can be identified quickly. The first step to addressing an issue is isolating the issue while it’s still manageable; like stomping out a pile of burning leaves before it turns into a wildfire.

Furthermore, leveraging strategic data-driven insights can apply to other areas of sports business management such as game day operations efficiency or fan experiential satisfaction.

From the moment a fan considers purchasing a ticket they engage in the purchase process and are producing valuable data with every action. If fan activity data is captured and analyzed correctly, it will paint a detailed picture of who that fan is and how they operate. With this understanding, sales managers can have a focused approach for how to handle existing clients or sales leads. Stadium operations staff can have real-time feedback on everything from concessions to entertainment. Marketers can craft personalized messages delivered through targeted communication channels at the exact right time to convert an idea into a purchase.

Take a step back and consider all the areas within a business that would benefit from data-driven insights, offering “insider” information leading to smarter decision making.

Are you thinking a data-driven sales strategy might be worth looking into further? Click here for more examples of how sports managers can benefit from statistics and analytics.

If your team is ready to benefit from a data-driven strategy today, then it’s game-on.
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