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Have A Constant Growth Strategy

Sports executives should be constantly developing and redrafting a constant growth strategy to build more revenue in each ancillary space. This is where the world of dynamic ticket pricing has caused some influx; its created a disadvantage on revenues by inflating some, while masking the deficits of others. Just because you can raise the price on something, generating more revenue, does not mean that the entire franchise ecosystem is sound. You’re simply hiding the problem areas by seeing only the record per caps, now inflated by raising the price at the ticket counter.

A growth strategy means understanding how each ancillary works, as well as developing ways to create new ancillary components. Dynamic ticket pricing should never be considered the cure-all to avoid growth strategy development either. It won’t save you to jack up the price at one end outside the stadium to show success, only to have the other end inside the ballpark fail completely.

Consider how concession items are now becoming ancillary components within each team’s growth strategy:

There is always the same staple of concessions faire that is available within each sports facility. Hotdogs, soda pop, beer and popcorn.

Now, part of that growth strategy is offering exotic faire such as sushi or wholly-created concession items such as jumbo ice cream burgers which are 32 lbs of sugar, fat and a Surgeon General’s warning.

These are items that are created within a growth strategy in order to capture a different segment of the audience that exists in the team’s ecosystem each game. It provides new ways for the customer to experience the same product, by purchasing different ancillary components.

But the growth strategy can even focus on the more permanent outlook of an ancillary model rather than just an add-on such as a concessions item.

The luxury suite and premium space are a good example of this and one that is way too under-developed by the majority of teams out there.

Luxury suites themselves are considered a dinosaur product. Suites do not sell like they used to. In the 1990s, there were companies vying for the chance to sign 10-to-20 year contracts on a 24-person luxury suite in an arena’s 190-suite system.

That isn’t feasible anymore. Companies are actually backing away from the luxury suite space because it may be too huge to fill every night of the week during the year and also produce an ROI for the business.
Teams should be focusing on developing a growth strategy now on what that luxury suite space will be replaced with. That means doing more than simply creating smaller suites. I’ve chatted with numerous sports executives how feel that the makeup of suites within a sports facility’s system is going to be sharply reduced in the next 5-to-10 years. But what comes after the suite?

Part of this discussion needs to be fostered as a franchise’s growth strategy. Each customer component from city-to-city may have some similarities, but there are enough differences in tastes which can change how customers engage with any product, especially a premium one. That means planning out what should happen and why.

A growth strategy may involve a reduction in capacity as well. The 18,000-seat arenas built in the 1990s prior to the explosion of the Internet could easily be reduced by 3,000-to-4,000 and provide sell-out crowds at a higher price point. But is this where the team wants to go or should they actually stay with a larger capacity at a lower price point? All of these are questions that team executives should ask themselves as they move forward.

And that’s the key to this: Moving forward. Not just a year-to-year raising or lowering or prices. But a firm understanding of exactly what each revenue stream is, and how to build it up further.

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