Note: I've added the word "possible" to the title as my intention with this post is not for it to be an indictment, rather a voice of concern from a devoted fan.
I first learned of our Front Office's (FO) brush with Groupon on the footiebusiness.com blog (Jeremiah also covered it here). Ben Berger isn't the greatest writer in the world (his use of the royal "we" is annoying), but the subject matter of the blog (various MLS business developments and notes) has always fascinated me given that MLS is, at best, third in the pecking order of major sports leagues in the United States. On Friday he covered Seattle's ticket deal on Groupon:
The team put 350 tickets for its Friday night game against Houston up on Groupon, with $37 tickets in the stadium corner on sale for $16. Given the remarkable success the team has had in selling tickets during its first two seasons, it seems surprising that the team has utilized Groupon and seemingly devalued its brand by discounting seats.
Let's start with some raw comparisons. The quoted $37 regular price is for an all-inclusive single-game ticket in the corner sections of the upper deck. My season tickets are not in those sections, and due to the pricing complexity of the overpriced friendly this season, I can't calculate the exact face value of a season ticket up there. I believe it's approximately $25 for someone who's been a season ticket holder (STH) since 2009 and $31 for someone who bought in 2010 or later. While I'm not certain about those prices, I am reasonably sure that they're at most plus/minus $1 (if you know the exact face value, please share in the comments). Now compare those prices to the $16 paid by a Jonny-come-lately through Groupon. Indeed there's a real possibility that an original 2009 Alliance member paying $25 per seat per game was sitting next to someone who nabbed the Groupon deal and paid $9 less.
This doesn't just estrange STHs, it also will cause single game ticket buyers to question future entertainment dollar investments. There are approximately 2240 seats in this price range (28 sections, 80 seats each). That means the FO offered 15% of these seats on Groupon. Of the remaining 85%, a portion (likely small) were sold to STH and the rest were sold to single-game ticket buyers. This means that it's very likely that a fan who can't afford season tickets, but faithfully bought single-game tickets when they went on sale March 1st, may also have been sitting near a Groupon buyer and feeling like he/she was ripped off.
The point is, the FO decides the actual "value" of a ticket when they announce their pricing structure before each season. Season ticket, single-game ticket, and other buyers then decide whether the "value" is an appropriate exchange for their hard earned dollars, and make their purchase decision. When our FO plays the Groupon game, they start unraveling that value proposition, and alienating their faithful fans who "invested" before the season (and many who've been investing since 2009). This will affect their future purchasing decisions.
More points after the break...
As I write this I'm reminded of a post by Dave Clark made back in October when the renewal mails were just going out. Here's a small quote, but I encourage anyone who doesn't remember it to read the whole post. It matters in this discussion.
I'm going to renew my tickets, even at the higher price. I'll cut other things out of my life. But I'll also be calling my ticket rep and seeing if there is any way to adjust the price in any way. Those who think the increase is too much, too soon probably should do so as well.
The Sounders use of Groupon alienates hard working fans who committed to pay for a full season at what they thought was a discounted season ticket rate.
I get that this is a business, and like any business they want to experiment with marketing and in the end its about making money. That said, a sports team in a given city lives and dies by it's STHs. Those who are so invested in the team that they are willing to drop a non-trivial dollar amount in exchange for the right to be present at all of the games played that year. Deals like this cheapen the investments of these faithful fans. And if they are accompanied with another price hike in the offseason, the message from the FO is clear: they'll happily gouge the faithful fans and then turn around and offer even better deals to random Groupon users ignoring the fact that their price hikes have scared away too many real fans. They're deciding that some opportunistic deal hunter is worthy of a better price than someone who's invested in a whole season's worth of tickets.
If they're not sure they can sell all of the tickets for a season after deciding to raise the prices, then they shouldn't raise the prices. The beauty of the Sounders "stadium situation" (a term borrowed from Jeremiah) is that if they then sell out all available tickets, they have the luxury of making more seats available if they so choose. This is pretty simple and the Sounders are very lucky to be in this situation with an artificially limited amount of available tickets. It creates an opportunity to treat supply as a variable, something that few other sporting teams in the world can do (crappy baseball teams often tarp over sections of seats too), and no other MLS team does. Connecting this reality with the fact that they recently exhausted their season ticket waiting list, and the message is clear: "we've found a balance of price, supply, and demand." Which means that any increase in ticket prices next season should be expected to decrease overall demand. Therefore, if they intend to increase ticket prices again, one would expect it to be accompanied by a closure of currently open sections.
The formula of increasing prices in the offseason and then giving sharp discounts mid-season, is bad business. If they raise prices in the offseason, the question is how
stupid faithful will some of us be to go ahead and renew our tickets at full price when we know that the FO is perfectly willing to turn around and cut the price for opportunistic buyers who have no vested interest in the team, league or sport.
Bottom line, nobody should ever get a better deal than a STH gets. Whenever that's not true, the FO is screwing up and alienating their most loyal customers. With the renewal pricing mistake (not just a communication screw up), the Cascadia Summit ticket fiasco, and now the best deals on seats being offered through Groupon rather than to STHs, the FO is establishing a poor track record. Seattle's success in the stands, while great, is still fragile. If the missteps continue, with either further price hikes this offseason or undercutting STH pricing during the season, no MLS team has more altitude to fall from than the Sounders.
Last thing, to be clear, I love Groupon and use it a lot. I also think it's a great tool for struggling teams in the league to experiment with pricing. The Sounders do not need to perform such experiments and the side effects of doing so will be felt in possibly unexpected ways.