I’ve been following this for a week.
Scott Friedman and Darren Rovell have covered this the best.
I grew up in the shadow of Augusta National and remember Masters Week from my childhood.
But it isn’t something I spend much time thinking about.
Then, I realized it perfectly explains sports business now.
I ask myself, “Does this matter?”
Yes.
Yes, it does.
Three angles stick out.
First, major events want greater control over their tickets and the fan experience.
Second, unique events want to capture more revenue.
Third, preserving brand value is key for all events.
I point here for a few reasons.
One, strategy.
Two, the Masters is unique; it is a once-a-year event.
Three, the Masters brand is its most valuable asset.
Public companies can attribute 40% of their value to the company’s brand.
The Masters?
The whole thing is the brand.
Let’s take a look.
The Masters has a competitive advantage.
Unique advantage.
Forget sports.
The Masters’ advantage is global.
The Masters happens once a year.
It is one of golf’s four majors.
It has mystique.
The location adds to this mystique.
Where the tournament falls on the sports calendar adds power.
The way Augusta National manages the tournament underlines all of this.
No cell phones.
Cheap, high-quality concessions.
Merchandise is only available at the tournament
This adds up to a competitive advantage.
Augusta National must uphold that.
They do this in two ways:
- Controlling the experience.
- Controlling the tickets and access.
This is where power comes into play.
Augusta National is the only venue that can host the Masters.
There is no competition.
They hold all the power in every situation around the tournament.
Full stop.
Someone described Augusta National as the “Southern Mafia.”
It is true.
They should be.
That’s the point of having a competitive advantage.
Any supplier that wants to work with Augusta National knows that Augusta holds the cards.
You make the best deal possible, but you don’t have control.
You do what the club needs you to do.
Full stop.
One-of-a-kind events write the rules.
Customers.
Forgetaboutit.
The club’s 300 or so members get badges.
Patrons of the club get badges. Augusta National stopped adding new ones years ago.
Potential ticket buyers spend decades entering the lottery, hoping to get picked.
Until something crazy happens, selling the Masters isn’t an issue.
Augusta National has the power to write the rules for its badges.
Full stop.
What happened this year?
First, in 2019, Augusta National posted an RFP for RFID tracking.
RFID tracking allows the club to track badges near the ground.
Second, Augusta National partnered with On Location on a new premium hospitality space called Map & Flag.
Third, the tournament questioned badge holders aggressively to try and uncover badges purchased on the secondary market.
How many?
I’ve heard different numbers.
As low as a few hundred.
As high as several thousand.
I don’t know.
Does this constitute a crackdown?
Sure.
Is it nefarious?
No.
It is good brand management.
Why?
Your brand is intangible.
It is a few brain cells stamped with an image that pops up when people think about you.
This image is built over the years through contacts and experiences.
Good.
Bad.
Indifferent.
Every action reinforces or undermines the image.
This is strategy.
How should you approach this?
Three things to consider.
First, value-based decision making.
Tony Knopp posted about brokers not adding value, not being needed.
He’s right.
That’s been my take for years.
I worked in the secondary market for years.
My focus was always on adding value.
That’s why I was great, and my partners loved me.
That’s not how it goes now.
The secondary market is now dominated by rent-seeking.
Value extraction.
Not value adding.
Technology exists that can limit a lot of this.
What has been absent has been consistent action to limit resale in the way that Augusta National has done over the last week.
The NFL has done this with the Super Bowl.
I believe more event producers will follow.
Does this constitute a backroom deal?
No.
This says Augusta National has been working to manage its brand effectively.
They have the tools and the willingness to act on that plan.
These are the power dynamics of competitive advantage.
Every event should focus on these power dynamics.
This is the core of strategy.
This is the core of brand management.
Creating a competitive advantage.
A competitive advantage is not passive.
If you don’t continue to improve your advantage, it will erode…often much more rapidly than you imagine possible.
That’s the final key.
Things can change fast if you aren’t careful.
I teach that it takes years to build positive associations with your brand.
But negative impact can happen in a snap.
You must be vigilant in managing your brand.
That is why there is risk in these actions.
What could happen?
A simple answer is On Location, and Augusta National could overreach on pricing.
That $72,000 4-pack of badges is awesome.
But how many customers can or will pay that?
How quickly do you cut prices if you got it wrong?
What is the price of getting pricing wrong?
Look at this year’s Super Bowl.
Tickets came out high.
The matchup was a rematch of another recent Super Bowl.
The Chiefs fans might have had “fatigue” from recent success.
Prices started to fall.
If you think a ticket is a commodity, you might say, “market-clearing prices.”
I believe that nothing is destined to be a commodity.
I’d say you are teaching people that it #PaysToWait.
Especially when a pattern develops that prices will fall.
Plus, you are undermining the premium position of your brand.
Brands must balance revenue maximization and brand perception.
You don’t want to jump over dollars to pick up dimes.
I’d say that the “ticket” story we saw play last week is really a lesson in strategy and brand management.
Let me know what you think.
DW