The changing face of the sports fan (cont.)
We are far removed from the $6 tickets of Super Bowl I in 1967, a game played in front of 31,054 empty seats at the L.A. Coliseum and from the Yankees playing the Red Sox at Fenway in front of 11,000 people, as happened more than once in 1960. Nowadays, such scenes are unimaginable.
Last NFL season, for instance, advertisers competed to fork over $2.7 million for 30 seconds of Super Bowl commercial airtime. This year, with five months remaining until Super Bowl XLIII, NBC has already one-upped itself, selling 85 percent of its advertising inventory at a record-high $3 million per 30-second slot. Said NBC's head of ad sports sales, Seth Winter: "We see the end zone right now."
Regrettably, most fans can't say the same. The price for a seat at Super Bowl XLII was $700. On the online reseller StubHub.com, one customer actually traded $90,000 in February for 14 seats to watch the Patriots and Giants in Glendale, a mark-up of 918 percent per ticket. As Michael Hershfield, founder of the competing site LiveStub.com, once quipped, "You gotta mortgage your home to get into the game."
In that spirit, eBay bought StubHub for $310 million in early 2007 ($74 million more than J.P. Morgan paid for Bear Stearns in March and $60 million more than Barclays paid for Lehman Brothers' North American investment banking and trading unit in September). On StubHub's Web site, the World Series (average secondary ticket price: $1,036), BCS Championship ($1,362) and Super Bowl ($3,540) each sparked traffic in excess of 1,000 seats sold, with the latter two events setting all-time company records for sheer dollar volume moved. This July, StubHub moved its 15 millionth ticket (a Red Sox-Yankees ticket for July 4, if you were wondering).
But there's more. In perfect synergy, the Jets announced an unprecedented partnership with StubHub last month, wherein the best seats at the new stadium -- dubbed the "Coaches Club," complete with "private 20,000 square foot bar and lounge designed by Nobu architect David Rockwell" -- will be awarded via auction. It takes $5,000 per PSL to have the chance to bid.
The bottom line
The harsh truth is that only when those precious luxury suites start to go unclaimed -- thus portending a loss of corporate windfall -- will leagues truly begin to worry. For the time being, they have the audience, the revenue and an ever-visible, ever-popular product.
"A lot of us behave like we're addicted to sports. We live our lives through it," Southern Utah economist Dave Berri said. "Just think about the things we support with bumper stickers. No one has a car that declares that they're a fan of Starbucks or Tom Cruise."
Recently, NFL commissioner Roger Goodell warned of a potential slowdown in an internal memo. While he stressed that individual teams' bottom-line budget projections will be secure for the coming fiscal year, he conspicuously observed a simple detail that has long been true for other American businesses: "Costs are rising and ... revenues are under pressure."
If the economy doesn't recover soon, sports executives fear corporations will ultimately scrutinize shrinking margins and decide how important it is to have a physical presence at games, whether it be through advertising, naming rights, luxury boxes or corporate season tickets.
"While we have seen dramatic growth in recent years for things like corporate hospitality and sponsorships, we are worried about that continuing," Red Sox executive vice president Sam Kennedy told the SportsBusiness Journal. "We haven't seen any dramatic cut, although we have had some 2009 planning with sponsors who have told us stories about their business that aren't pretty."
For the time being, the turnstiles will continue to spin -- even if it's no longer the average fan who's coming through the gate.