Sonics exec on what new arenas do for regular fans: “Nothing”

Ther’s a long article over at Deadspin by Jeremy Repanich, a low-level employeee of the Seattle Sonics before their move to Oklahoma City. And it includes some illuminating, if unsurprising, observations on the reasons why the owner of Seattle’s oldest pro sports team decided to demand a new arena just 12 years after the complete reconstruction of his old one:

When a team can make the same amount of money selling two courtside seats as they can selling an entire section of the upper bowl, they’ll target their sales strategies accordingly. Getting the affluent to your games means pampering them the minute they walk through the doors. At Safeco and CenturyLink fields, the Mariners and Seahawks do just that; they’re gleaming palaces of conspicuous consumption that ensure that fans paying top dollar are given a premium experience with food, drinks, and seatside service delivered efficiently and comfortably. The Sonics couldn’t do that. KeyArena had some low-budget exclusive hangouts, but nothing compared to the city’s other stadiums. So when Sonics execs saw the Seahawks reaping all the attention and getting fat off a stadium financed in part by public money, they didn’t feel happy—they were jealous.

Jealousy, though, isn’t much of a campaign strategy, as Repanich started to learn once the angry calls from fans started pouring in. (With no talking points provided by team management, he resorted to telling callers that the Sonics “needed a new arena to be competitive in the league” — an argument he apparently grabbed out of thin air.) He then describes a staff meeting led by team president Wally Walker:

He went through a litany of minor reasons why the team needed a new arena: higher capacity, bigger arena footprint, more room for high-end concessions, more places for premium seat holders, a.k.a. the super rich, the people who could afford a pair of courtside season tickets for $70,000. These were the justifications he offered us to explain why we were asking for a heaping pile of taxpayer dollars. After Walker’s spiel, a member of the sales staff asked the fateful question: “Wally, what will this arena upgrade do for Joe Sixpack—the regular fan?”

Dead silence.

After an uncomfortable few seconds, Walker said, “Well, nothing.” The wind went out of me. It was as if he’d punched me in the stomach. Walker tried to backtrack, but the damage had been done. The battle for hearts and minds had ended before it’d even begun.

The whole article is a great read, and is especially recommended for anyone interested in what it feels like to work for an organization that is trying to sell tickets to the very fans that it plans to abandon the minute it can. If there’s an odd note, it’s that Repanich seems to reserve most of his ire for Walker and Howard Schultz, less for demanding a new arena and selling the team to out-of-towners when they couldn’t get one than for being inept about the way they went about it. “I didn’t see how we’d get an arena deal led by men who couldn’t conceive of it as anything but a rich man’s boondoggle, perpetrated on behalf of other rich people,” Repanich writes. Howard Schultz, it seems, was worse than an envy-driven, greedy carpetbagger; he was a lousy liar.

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25 comments on “Sonics exec on what new arenas do for regular fans: “Nothing”

  1. “Nothing” is a really strange answer to that question. I mean, personally I don’t care about the fancy new concessions and better traffic flow new stadiums have, but that’s not “nothing.”

  2. Most of the “Joe Six-Pack” type people I know (speaking about Chicago fans) either don’t attend Bears, Blackhawks, Bulls, Cubs & Sox games due to the outrageous ticket & concession costs, as well as the fact that the majority have invested their money in at least a 50″ flat screen TV, allowing themselves to watch the team/games they want from the comfort of their home.
    Owners know this, thus the MASSIVE TV deals that have come down the pike (LA & other markets), that lead to TV advertising dollars as well.
    Frankly, I can’t watch the Bears in real-time…the amount of TV time-outs/advertising is absurd…I can DVR a game and watch actual plays/the entire game in less then half an hour!

  3. It’s not just that people are buying 50″ TVs, but that they’re willing to shell out $100/month for cable subscriptions (and premium league packages on top of that) to watch games on them. That’s what’s enabling cable companies to pay the huge rights fees that are driving the massive TV deals…

  4. As long as the tax structure stays as it is, companies and individuals will spend on the expensive tickets because of the tax breaks that come along with it. Owners know that even if you can’t afford to be there, you’ll spend to watch it at home.
    The revenue streams flow one way or another on top of taxpayer subsidies.
    The upward spiral of athlete costs, owner jealousy and demand for profits will continue to price out the customer with dwindling discretionary dollars.
    As long as franchise owners sign athletes to exponentially larger deals the fannies in the seats will be those who can afford the steep price.

  5. Actually, there’s a ton of research showing that athlete salaries have *zero* effect on ticket prices. (As just one example: Baseball salaries soared after the introduction of free agency in the ’70s, but inflation-adjusted ticket prices actually went *down*.) Most of the reason for inflated ticket prices has to do with the increased spending power of the 1%, as well as the tax subsidies for tickets.

    I wrote this a long while ago, but the basic premise still holds true:

  6. I’m with Dan M on the 50″ TV observation.

    This really is a foolish strategy for owners to follow, in the long run. They need to do something that makes coming to the arena more attractive than watching the 50″ TV. Right now, I can’t really think what that would be, other than catering to the people in the upper-bowl in exactly the same way as those in the lower-bowl.

    Right now, staying at home and watching my 32″ (I’m a cheapskate) is way more attractive than fighting my way to Power Balance Pavilion. You need one of the scam bracelets to maintain your balance in the kind of seats I can afford.

    Completely off-topic: The Sacramento City Council will vote to completely unwind the arena proposal on Tuesday. Once this resolution passes, they’ll be back to before square one. This will polish it off; nothing they’ve done to this point will apply to anything in the future. It’s the nuclear option.

    I don’t expect it to pass unanimously, but it will pass.

  7. Neil,

    I think you’re being a little bit unfair on salaries having no effect on ticket prices. “What the market will bear” is affected by player salaries in all sorts of ways. Some of it is justification, some of it is inspiration and some of it is celebrity, but the fact is that having rich people in the middle of a crowd makes ordinary people far more willing to spend money to be part of said crowd.

    I’d also disagree on the TV thing and the 1% thing.

    Having a great TV makes most people I know (including myself) more eager to attend live events. If the event looks great on TV then it makes it look more fun to be there live. Pro wrestling promoters for years had that same flawed if-it-looks-good-at-home-why-go-out logic in keeping their biggest matches off TV.

    On the 1% thing I find that the cast majority of people who attend sporting events are similar to me. They have a job, they are far from rich, and in any objective analysis they are spending far more than they should on live sporting events. The only way I’d credit the 1% if if you give them credit for the effect of trickle-down economics raising living standards for middle and lower income people.

    Bottom line to me is that this Deadspin guy is just plain wrong. New stadiums really benefit the masses. The upper crust are going to get VIP treatment no matter how nice or not-as-nice a stadium is. It’s the average folks who will have to deal with crappy concessions, long bathroom lines and bad sight lines.

  8. “New stadiums really benefit the masses.”

    As long as “the masses” is defined as “the people who pay to go to the games” – and they pay for the new stadia – then all is cool.

  9. @ Ben Miller

    Not sure how old you are Ben but I’m 36 and I find the experience of going to a game to be more and more of a chore and I don’t think it’s because I’m some bitter old curmudgeon (although cheering for the Oilers probably doesn’t help).

    There was a time I could find the energy to go to 15 games a season. Then it was 10. Now, maybe 5. I probably turned down 4 invites or offers of a pair of tickets outright this last season alone.

    Flat out, it’s a demographic thing. Young people with money to burn go to games, older people with time commitments and budgets less so and when they grow grey it’s been so long since they’ve gone it’s more of a nice novelty and less a must-go event.

    With an aging demographic and TV offering a better substitution than ever before sports teams should be extremely concerned.

    And if the average family is bumped out of sporting events today the risk is in 20 years the kids don’t have that nostalgic memory of Sunday’s with the parents out at the park.

  10. Man, having those great site lines on a crystal-clear TV does not make me want to pay $30+ for seats and $15+ for parking. Not even close.

    The more I watch my TV, the less I like fighting crowds.

    The old statement is, “With age comes wisdom.” I guess that makes me really, really wise.

  11. I want to accuse Ben Miller of being a shill for the sports team owners, but in many of his posts, he comes across as extremely gullible and naive.

    That said, going to the games is a huge chore and just not fun. Some of these new stadiums are located in areas with terrible parking that get congested very badly. Paying over $10 for any parking is absolutely disgusting and ridiculous. The hidden fees creep up and make it feel like game day is nothing but a scam. If I have $50 to spend on a game, I don’t want to be extorted out of another $50.

    As for young people? I could never afford to go to games as a student. No way. It’s really ridiculous.

  12. Went to see the Browns and the Dolphins last year in September (live in Ontario, so four hour drive to Cleveland).

    Tickets were $67 a piece after fees. Parking was $20 a spot Had the first row of the third level, usually premium seats for football, and the upper deck was stratospheric because of luxury boxes. Beers were $10, food bland. Sat next to a psychopath who yelled encouragement to the Browns to perform acts seen on “Oz” to injured Dolphins players.

    Five minutes into the first quarter, I wanted to be at home watching it on TV, because I could have purchased NFL Sunday Ticket and a nice slew of Chinese food and non-Budweiser beer.

  13. Lots of personal opinions here which is fine but ticket prices are going up and people are still going to arenas and stadiums…I believe attendance is up in every sport over the last 10 years so it appears to be just supply and demand.

    Watching sports in HD builds more loyal fans and loyal fans go to games…it doesn’t mean you will be building a fan base away from the arena will build more potential customers for the arena.

    As far as young vs. old I am pretty sure that is just a personal feeling. I don’t have the data handy because I think Darren Rovell quoted it somewhere but MLB age demo for attending games is getting older while NFL has been staying the same and NHL and NBA are getting younger.

  14. Well JB,

    The NFL probably doesn’t subscribe to your theory about watching on TV first, getting interested in the product and then going to the live game or it’s blackout rule would have been rescinded long ago.

    I didn’t think in the past the NFL was correct about this, but now with PSLs and higher ticket prices and high performance home video, I believe that the desirability of staying at home at watching has reached a tipping point for many fans.

  15. You misinterpreted my comments. I didnÔøΩt say local team and I didnÔøΩt say watching first then buying tickets. Growing a community of fans is good for all aspects of the business, including going to games.

    I somewhat agree with your second point yet there is no data to support it so I question if it is real. Certainly the last 10 years attendance is strong, I am sure there has been some pressures of the last 3 year recession but I imagine it is minor.

  16. Roger C- Actually what JB is saying is true. Attendance is way up in every sport the last 10 years. Look it up yourself. Still that doesn’t justify building new stadiums at taxpayer expense. Matter of fact since attentance is so high in every sport that makes it a good reason why owners can build their own dam stadium.

  17. @ JB

    You make some good points but I have to point out a couple of things:

    One – record revenues and attendance is impressive and while I don’t want to dismiss this point completely I’m curious how much of that has to do with entertainment tax breaks on tickets for businesses?

    Two – the event-ticket bubble is getting very close to collapsing. The Black Keys are coming to my town very shortly and while I debate whether to go I don’t debate where I’ll be buying my tickets: they are cheaper from online resellers than I could ever get them from Ticket Master. I find the same with non-playoff sports events. As long as someone else is subsidizing these tickets, attendance should remain high. Once the general public realizes the pricing schedule is at the point that its cheaper to buy a few tickets every year than being committed for the whole kit and caboodle the season ticket market will follow.

    To me it’s a question of when, not if.

    Three – in the last ten years, possibly more, the average fan has been aggressively priced out of the game. Maybe they still watch at home, maybe they even watch with their kids. Will those kids, once they’re earning money and looking for places to spend it, spend it at the ballpark or will they be content staying home and watching it there like they always have? Or will they not care whatsoever?

  18. One thing to keep in mind re: attendance is that you don’t actually have to sell to the entire sports fan market — especially in a sport like football, where you only need to find 70,000 suckers willing to pony up for ten tickets a year, increasing spending power among the top 1% of earners, or at least among the top 5%, is plenty to drive ticket prices upwards.

    For the other sports, right now they’re dancing on a knife’s edge of charging enough to squeeze every last penny out of the rich folks, while not so much that they leave tons of empty seats that have to be given away or can be snapped up on StubHub. It’s basically a business model of sell to people for whom money is no object (or corporations for which it’s a tax writeoff) and let the rest of it work itself out.

    As I’ve written before, there’s a very real risk of a bubble popping here, especially for teams that aren’t doing well on the field. (The Minnesota Twins, I see, have gone from the toughest ticket in town to one of the cheapest ones in a hurry.) But we haven’t seen it yet industry-wide.

  19. No stories on the Phoenix Coyotes? Glendale’s about to hand over a 17 million/year subsidy to a new owner to cover the team’s annual losses.

  20. @Andrew on your first point) would be great to see that data. I work for a company that “sponsors” some of the pro teams around here and it often makes me a little sick that I am sure there are exec boxes and tickets that are offered/thrown in/dangled in front of the people that sign the deal…not a good use of corporate funds. At the end of the day, the revenue is still up.

    your second point) Seems like both you and Neal have some data or theories. I am not questioning your point when I say this but are there any articles or write ups that you can point me to, to learn more. Music is a little tough comparison because of eroding retail music sales revenues, many bands, musicians need to make their money on the road thus crowding the market but competing for the same $…supply in demand again at work…with excess supply. I am sure you have some more info on sports I just don’t like the comparison to music.

    your 3rd point) I agree that the average fan has been aggressively priced out of seeing the games live. I would think something needs to give but I am seeing record TV ratings for sports across the board (except for baseball) so it doesn’t look like that has started to happen.

    @Roger C. I am not sure what you find so offensive about my comments. I am just looking at the data around some of these theories people are claiming. To be transparent, I am a sports fan but don’t regularly go to games. I also do not think stadiums should be publicly subsidized. I like data and I like economics which is why I am here.

  21. JB: I ran down some of the available data for Slate last year:

    In short, all four sports leagues have seen attendance dip in the past four years. Is that due to the economy? Sure, but that doesn’t make it less real, nor make the threat of a ticket bubble collapse less real.

    I’ll readily agree that it’s too soon to tell whether ticket demand will keep sliding, or will recover as disposible income does (at least disposible income for people in the ticket-buying class). MLB attendance is up so far this year, but that’s against a dismal April last year, so we’re going to need a lot more data points before we can draw any conclusions.

    (I’d love to see an index showing what people are actually paying for tickets on StubHub or wherever as well, but so far nobody’s put together one.)

  22. Thanks for the link Neil. You (via the article) have once again pointed me in tons of other directions to get a deeper understanding of the situation. I appreciate it and it is the never ending vortex of information and data. (I should stop asking for more info) :-)

  23. I’d rather go to games at my college’s crappy old campus stadium than the new NFL stadium in Colorado. Part of it is seat proximity, cheaper seats in new stadiums are much further from the field because they are above the Suite and Club level ring. Another part of it is that the old stadium has much more charm and character.

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