Talking Tickets 4 September 2020–SportsBiz! Debt! West End! And, More!

Hey!

It is the Labor Day Weekend here in the States and I’m still here talking tickets!

How is everyone holding up? Let me know by replying to this email.

Happy Hour tonight at 5 PM EDT, y’all! We can’t be together but we can still toast one another. 

I’m going to try out a little something: on Thursday 10 September at 11 AM EDT, I’m going to host a virtual roundtable, brainstorming group. I’m going to limit it to 12 folks and we are going to spend 90 minutes together going through the groups’ challenges in their business and action steps to move forward. After, everyone will have access to me via email, text, and carrier pigeon to make sure they put these ideas to work.

The cost is going to be $100. Interested? Email me.

To the tickets!

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1. Things are already changing for sports business:

There were a lot of things this week about how sponsorships, ratings, and viewer consumption habits were already showing up for brands and organizations in sports business.

In the UK, we saw the release of a survey that showed that almost 20% of UK citizenswon’t be comfortable returning to events until there is a vaccine for the coronavirus.

While I’m always dubious of how much a person’s survey response will actually relate to real lived experience, it is interesting to see the mention of socially responsible organizations gaining in customer perception as the pandemic continues on around the world.

This mirrors other examples of buyer preference after major events like the halo effect of Wrigley’s gum after World War I in the United States and other examples during other crisis events.

A few weeks back, I chatted with my friend, Brett Zalaski, about the future of sports business for about 2.5 hours. We posted about half of the conversation to the podcaststream and I wrote up a blog with some of the ideas we explored fleshed out a little bit more.

The thing here is that the business of sports business is changing in front of our eyes.

Will all of these changes be permanent or radical?

I don’t think so.

What I do think we are going to see come out of the pandemic is that folks are going to have found other things they like to do, corporations are going to accelerate the changes they were already making in how they were spending their entertainment budgets on tickets and a need for new revenue streams.

I mean, six months into this, I still have chatted with season ticket holders that haven’t heard from their sales reps or their teams outside of a standardized email.

So take that for what its worth.

Depending on where you in the ticketing ecosystem, you’re going to have to think about putting the customer first, driving demand, and finding new streams of revenue.

2. A story we should be paying attention to is all the leagues and teams that are teetering due to the instability of their business models: 

There were quite a few stories this week that led me to go “WTF” with the debt.

I’ve said it a lot over the years, but it bears saying it once again…I’ve always scratched my head at the debt-fueled, losing money everywhere, and look at me I’m a genius model of business that has dominated so many places over the last decade or more in the US and other places around the world.

I’m old-fashioned in I grow my business by providing more value and charging more for something that it costs to create it. And, reinvesting in the business and building up a rainy-day fund…

So, when I saw the story on the NRL, I felt pained for my friends in Australia as the AFL, Victoria Racing Club, Melbourne Racing Club, and more have had to make really painful decisions in the last few weeks to keep their businesses alive.

Then I saw this article about the NFL having $10 B in debt! Then another article I didn’t share last week about Viagogo’s new debt.

Finally, the Pistons are offering their STHs a 5% yield if they pay early.

In general, I’m not an expert on corporate finance. But I do know that when you are taking on large amounts of debt when faced with poor cash flow or reduced cash flow situation that things can get ugly fast.

What is all of this debt likely to mean for businesses around the world of tickets?

  • Additional challenges to the current business model. If you look at the NFL where, I think, their current count is 27 teams will have no fans to start the year, you are likely to see decision making that tries to make up that gap or you are going to see decisions that lead to a lot of cuts in the way that business is done.
  • You may see more people get into trouble if the impact from the pandemic drags on. I can see a scenario where the 2020-2021 NBA season gets pushed back and the revenues of a team like the Pistons are challenged, leading them to struggle to pay the interest to their STH or having to give refunds and being in a position where their cash flow is compromised.
  • Debt could just cause these businesses to start declaring bankruptcy or, in some places, failing. Don’t laugh, we’ve seen it before…remember the Dodgers with the McCourt’s. And, one of the stories I shared a few weeks back was about keeping the lower levels of English football stable. Because of the nature of the ownership structures, we have no idea who is cash-rich or cash poor, we don’t know which ownership groups are overleveraged in other aspects of their businesses, and we don’t know what is going to happen as we continue through the pandemic.

3. How will we get fans back in stands? 

This is going to be one of the more interesting experiments to watch because the Germans taught the world how to bring back European football safely and they’ve been leading the way in a number of important ways to bring their country back to life after the pandemic.

I mean, in Germany, they’ve put technology to use to track interactions, hot spots for touch, and a few other things that will be helpful in bringing events back to life.

In the States, we continue to just have a cluster.

We saw the first death from an infection at the big motorcycle rally in Sturgis where 260 cases have been confirmed from the rally as of now. Which if you follow the science and listen experts on the spread of viruses isn’t a bad outcome.

But we have a few issues that are standing in the way of really bringing fans back to arenas, stadiums, and other places in the States:

  • No unified national guidelines. This week, it seems we are on “herd immunity” and that would seem to be a “strategy” that would lead to prolonging the negative impacts of the pandemic.
  • Lots of decision-makers are afraid to make tough decisions and stand by them. I think I’ve said this before, but decision-makers around the world of sports and entertainment should have been much more forceful early on and this would have encouraged folks to take the actions necessary to have events more quickly. If you don’t think Nick Saban saying, “There ain’t going to be college football in the fall if y’all don’t wear a mask!” would have an impact on Alabama, you’ve never been to Alabama.
  • Too many decisions are being made out of panic due to poor business management before the pandemic. In number 2, we talked about debt and this is a story that has been playing out over the last few months. Cal has a huge debt load, and they aren’t the only ones. Some debt is good. But we are seeing that some of the business decisions going on were akin to finding the wizard when you got to the end of the yellow brick road.

Meanwhile, the French have scrapped social distancing guidelines for some smaller events.

4. Steve Cohen is looking like the winner of the Mets’ sweepstakes: 

I’ll be dusting off my resume and updating a strategic plan to make the Mets the biggest team in baseball.

So y’all handle the rest of the newsletter on your own, cool?

I highlight this story for a few reasons:

  • Baseball teams in major markets still have a great opportunity if they could get out of their own way with the way that the game is marketed and sold.
  • Seeing the Mets’ were losing $50M in an average year highlights a few of the issues I discussed earlier today and over the last few weeks like sales and marketing funnel, business model, and revenue streams.
  • As long as there are individuals willing to splash down the cash, some of the challenging aspects of debt, poor management decisions, and misguided strategy will never come back to bite anyone but the fans that are supposed to support the teams, buy the tickets, and wear the merchandise.

I’m hopeful that Cohen will buy the team and turn the Mets into a major market team. But I’ve been a Mets’ fan for a long time. And, my fan-boying is over!

5. West End is calling for a discount scheme to boost the industry and get folks back to the theatre: 

I’ve pointed y’all to my buddy, Richard Howle, and his work around pricing many times.

Most of you are going to be familiar with my work on discounts. If you aren’t, I’ll sum it up in a very tweetable form: “Discounts destroy brands!”

In the case of stimulating demand after a pandemic, I’m willing to give folks a little leeway on their pricing strategies to try and get their businesses back on firm footing.

I also like the idea of the government stepping in to support events and the arts because as we have likely noticed during the pandemic, this stuff is essential. Look at how many shows I’ve watched on Netflix…those things aren’t happening without artists.

What I would point out here is that any discount scheme would need to be designed and implemented in a way that didn’t destroy the long-term price structure of the theatre or events.

In too many cases, organizations get addicted to the sugar-high of discounts.

But as we continue to work through this mess, we do need to think through pricing, demand generation, and where we can use government programs or government actions to help launch the businesses again.

Just be careful with the discounts! Okay!

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I’m at home on my deck for Labor Day!

Check out the podcast feed, I’ve had some great podcast guests the last few weeks like Brett Zalaski, Zoe Scaman, and Harold Hughes.

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