Sports leagues, franchises hope they’re recession-resistant

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Hockey is more dependent upon ticket sales than the other big sports leagues when it comes to turning a profit.

That’s because hockey measures national media rights payments in the tens of millions of dollars per year. Baseball and basketball count media dollars by the hundreds of millions, the NFL by the billions.

So even a winner on the ice easily can slip from profit to loss if the turnstile doesn’t keep turning.

Consider the Carolina Hurricanes franchise that turned a $10-million profit during its 2006 Stanley Cup season. During the subsequent offseason, the Hurricanes spent $10 million to retain key players. During the 2007 the franchise broke its regular season attendance record.

But the team missed the playoffs, and the loss of postseason ticket revenue pushed the franchise from profit to loss. ‘We walk a very, very fine line,’ the Hurricanes’ chief executive said at the time.

That line continues to grow finer for all sports leagues and teams facing hard realities created by the global finance crisis, a U.S. recession and rising domestic unemployment.

‘If you’re a sports team or league that’s reliant on the turnstile, you’re facing big trouble right now,’ said David Carter, executive director of the USC Sports Business Institute.

That’s why many franchises are busy pitching holiday packages and other ticket deals. Several NBA teams are offering holiday packages akin to what the Washington Wizards are advertising: two tickets to three upcoming games, along with a Caron Butler jersey, for $99.

Half of MLB franchises are freezing or cutting ticket prices for the 2009 season. And though most Super Bowl XLIII tickets will have a face value of $800 or $1,000, the NFL also will make 1,000 tickets available for ‘just’ $500.

Closer to home, the Kings are focusing on pricing that shows ‘increased value,’ said Chris McGowan, the team’s chief marketing officer. ‘We’re being way more creative in how we market and we’re also discounting [ticket prices] a bit more than before.’

Last year’s $99 Holiday Pack included two tickets to three Kings games. The package still costs $99 but fans now get a pair of tickets to four games -- along with a $50 gift card for the nearby ESPN Zone.

‘Fans are reacting positively,’ McGowan said. ‘We’re going to beat last year’s [sales] numbers.’

The Kings also are trying to keep their most important customers -- season ticket holders -- happy. The franchise created a squad that is on hand during games to make sure that these fans get what they want -- whether it’s better food and beverage service or assistance with buying tickets to an event at the nearby Nokia Theatre.

What sports marketers fear is that, as economic gloom spreads, more fans will think twice before spending discretionary time and money on entertainment. ‘They could spend a couple of hundred dollars bringing the family to a game, or maybe they decide to save it for an even rainier day, or to put something special under the tree,’ Carter said. ‘They’re looking at trade-offs.’

And with good reason. Team Marketing Report recently issued its annual Fan Cost Index, which estimates what it would cost a family of four to attend big-league games. You can quibble with the index elements -- four tickets, two beers, four soft drinks, four hot dogs, parking fees, two game programs and two caps. But the 16th annual survey shows an upward trend over the years.

Here’s what the most recent survey said about the cost of taking a family of four to big-league games:

Consumers with less discretionary income arguably want more for their money. That creates additional pressure on sports franchises to perform -- and not just by fielding a winning team. ‘It’s right down to the fan-service elements, having to worry about clogged parking lots, rude ticket-takers, overpriced concessions,’ Carter said.

Many sports marketers say that their industry is recession-resistant, but that belief seems likely to be tested if the economic downturn proves to be lengthy.

The WNBA recently closed down the Houston Comets, one of its most storied franchises, and the Arena Football League won’t play during 2009. Baseball, basketball and football have been cutting employees and costs.

And, as Carter noted, a troubled franchise can cause problems across a league.

‘The leagues are only as strong as their weakest franchises,’ Carter said. ‘So if you’re in a smaller market, have no meaningful cable TV rights deal and are hemorrhaging at the turnstile, it creates a huge problem for the entire league.’

-- Greg Johnson

Photo (top): Kings fans show their spirit during a 2006 game against the Ducks. Credit: Allen J. Schaben / Los Angeles Times

Photo (inset): Last season’s Super Bowl tickets had a face-value price of a mere $900. Credit: Alan Diaz / Associated Press