July 27, 2008

Fixing Albany

AFTER THE MANCHESTER WOLVES (9-7) finished off their season with an impressive and exciting 46-45 win over the Corpus Christi Sharks (8-8), I was scanning the headlines on ArenaFan and found a rather interesting story about the Albany Conquest. As in, the team's for sale. As in, the team's for sale for just a quarter of a million dollars.

Hmmmmm. Let's see ... oh, drat. I don't have the money with me. Well, let's look at my books, then -- oh, drat. I'm short. Plus, even if I did have a quarter of a million dollars, that wouldn't be enough money to rescue the Conquest. To do it right you would need at least a million bucks on top of that. Sadly, the Conquest is a money-losing franchise and so you would need a lot of capital to right the ship.

But I do think it could be done. Albany has some particular hurdles that must be overcome, but they can be overcome with the right amount of grit and hustle, by which I mean salesmanship. First, though, let's look at some numbers.

It costs about $1 milion -- now, perhaps $1.1 million or $1.2 million -- to run an af2 franchise for a year. That we know, based on a Forbes magazine story written a few years ago which featured my team, the glorious (and profitable!) Manchester Wolves. It is possible you could get away with less but since you don't want to cut corners, you should expect to pay that kind of money. So let's settle on an expense figure of $1.1 million.

This consequently means that you need revenues of at least $1.1 million to avoid nasty calls from your bankers. So how do you get $1.1 million in revenues? Well, let's look at the revenue breakdown. According to the Forbes article, 47 pc of revenue for a typical af2 team comes from ticket sales, 33 pc from corporate sponsorship, 10 pc from merchandise and concessions, 9 pc from radio and television advertising, and 1 pc from "other." Broken out for our example, that means selling $517,000 worth of tickets, getting $366,666 in corporate dollars, $110,000 from merchandise and concessions, and roughly $100,000 from radio and television.

The two big areas where a front office can do well are on the ticket and corporate sides. Everything else will follow.

Now the corporate dollars require salesmanship. Your corporate sponsors want value for money. How do you do that? Sell ads and tickets. Sell naming rights to the field. Sell ads on jerseys. Sell ads on the padding. Sell ads on the banners around the field. Do business in-kind: you feed my players one night a week, I promote you during each game and invite people to eat at Joe's with the team. Throw in some free tickets as incentives for companies -- they can be used as free morale-boosters for the troops. You provide free stuff for giveaways and we'll promote the hell out of it. Give away gasoline. Give away a car. But promote, promote, promote.

Let's break it down even further when it comes to ticket sales. There are eight home games in a season, meaning one would need $64,625 in ticket sales per game for that portion of the break-even price. An Albany Conquest season ticket holder this year paid anywhere from $33.75 to $9 per game for a ticket, depending on location, with most going for $16 each. If we assume the really good seats cancel out the endzone seats, let's say the average is $16 each. Thus, if the team could sell 4,039 season tickets, they'd break even on that component right from the get-go. The average overall attendance in Albany the past year was about 3,700, according to ArenaFan.

There are two problems I see with the Conquest's strategy as is. First, they've made many of the tickets too cheap. Second, there are no discounts for youth or seniors -- at least, none that I saw on their tickets page. Both these things are serious errors in my mind and will be difficult to correct. After all, since you've devalued the tickets (and the team isn't all that good) you have little power to increase prices. Second, in not discounting tickets for youth and seniors, you're creating a mental barrier for potential buyers.

So how does one fix this? Volume. Raise the adult prices a little bit -- there's some breathing room there. For instance, the single-game sideline seats could be sold for $20 instead of $18 without too much blowback. But youth tickets could be sold for $10 and senior tickets for $15. Be ruthless in cutting prices for kids. Kids mean adults. That's the iron-clad equation of minor-league sports. Kids mean adults.

Let's say you have a family of four wanting to buy sideline tickets for a season. This year, they would have paid $512 for season tickets. Now, I don't know about you, but to me $512 is a lot of money. Here's a better idea. Sell the adult tickets for $18 each (a $2 increase over now) and sell the kids' tickets for $5 each. That brings in $368 -- not too much less -- but your family of four is going to think, "Wow. Football games for the kids cheap." The kids will be happy, which makes the parents happy, and it's good for everyone. (The Wolves offered really cheap youth season tickets this year, and I thought it was particularly inspired).

If you were able to attract just 50 new families with this pricing scheme, it would translate to $18,400 in revenue. If you attracted 500 new families, it would translate to $184,000.

One final thought on promotion: af2 teams should work hand-in-hand with the athletic departments of their local middle and high schools. That's a natural fan base. Run football clinics, offer discounted tickets, do what you have to do, but do it. It'll be good for the players on your team and good for the kids and, one would hope, good for the bottom line.

Oh, there's also the whole football part of the equation. That's the easy part. But Albany's hapless performance on the field needs to be fixed. My guess -- and this is just a guess -- is that a good team on the field would translate into 1,000 or 1,500 tickets sold a game at the very minimum. Also, the team make sure to work with its loyal fan base and get them more involved with the team. That will excite them even more and spread the word to their friends and family.

Posted by Benjamin Kepple at July 27, 2008 09:32 AM | TrackBack
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