Chiefs Mellinger: Chiefs need to rethink their business model - Page 4

**Tribal Warfare** · 08-21-2011, 05:27 AM

Chiefs need to rethink their business model
By SAM MELLINGER
The Kansas City Star

The NFL is facing a major problem and Kansas City is at the center of it. At stake is a chunk of the league’s revenue and even its popularity. A bad move here or a mistake there and the whole thing begins to tumble.

You can see the problem in empty seats at Arrowhead Stadium, once the rockin’-est place in the NFL. You can hear it in the complaints about rising prices and a fumbling economy. And you can read about it all over the Internet.

The costs of attending an NFL game have never been higher, and the benefits of staying at home have never been greater. Those trends are conspiring to make the old business models of the Chiefs and other teams outdated.

The consequences are amplified because NFL teams keep local profits generated in their stadiums while sharing national revenue 32 ways. You might be interested to know that even while opening “new” Arrowhead Stadium with a team that won the AFC West, the Chiefs finished in the bottom quarter of local revenue.

The downside has never been more obvious than it is right now, with the league coming off a lockout and the Chiefs facing another week of trying to sell preseason tickets at regular-season prices.

You remember how that went over nine days ago, when coach Todd Haley essentially turned the first preseason game into a nationally televised conditioning drill for which fans paid full retail.

“If we learned anything from the last few years with the economy, it’s that you need to be adjusting your model as you go,” says David Carter, executive director of USC’s Sports Business Institute. “The market conditions have wreaked havoc on so many. If you’re not paying attention to what your consumers are looking for and what they’re going for, you’re setting yourself up for a problem.”

The Chiefs have a particular problem because a season ticket that used to be famously difficult to buy is now easily available, with operators standing by.

A team that used to sell out and fill Arrowhead even for losing teams now wages weekly fights against blackouts with a renovated stadium and playoff team.

The problem isn’t hard to isolate. The cost of attending a Chiefs game has risen 30 percent higher than inflation over the last 20 years, according to Team Marketing Report’s Fan Cost Index, which takes into account tickets, concessions, and other items.

Prices continue to rise even through a brutal economy. Struggling fans are literally asked to pay more with less — when there’s more to experience than ever before by paying nothing.

Chiefs officials wouldn’t talk in specifics for this column, but their cost hike is roughly in line with the rest of the league. Most ticket prices have been frozen or dropped the last few years, and they rank around league average in pricing. They were also aggressive over the summer in marketing and ranked first in the league in new season ticket sales.

Even so, this is a growing problem that has executives worried.

Dwindling crowds and increasing need to discount and package their tickets mean a decreasing value and demand for those seats. This is a cycle that feeds on itself, and the consumer ease of using secondary markets to purchase tickets only complicates matters.

The NFL is a $9 billion industry, so nobody’s going broke; the issue is a tectonic shift in how fans consume the product and, accordingly, in how teams must operate to remain competitive.

Publicly, the Chiefs will talk up the $375 million in renovations to Arrowhead as an improvement on the fan experience, but aside from wider concourses and the new Hall of Honor, virtually all of the major work was done on suites and other amenities for the kinds of fans more likely to wear Polo shirts than Jamaal Charles jerseys.

NFL attendance dropped for the third straight year in 2010, to its lowest point since 1998. The Chiefs routinely averaged around 75,000 through 2008; last year, they averaged 67,672, up by fewer than 200 tickets despite those renovations and a vastly improved team.

Through virtually every feedback avenue that exists, a growing and vocal portion of the fan base is complaining about the value and rising cost of going to Arrowhead.

Using the Team Marketing Report numbers, going to 10 games at Arrowhead Stadium would cost more than $3,500 for a family of four.

For that money, you can buy a 42-inch LCD television with surround sound, three leather home theater seats, the Sunday Ticket package to watch every game, and still have nearly $150 per week to spend on beer and food.

Which one sounds like the better deal?

Reasonable people can disagree, but the numbers indicate that more people are choosing technology and comfort at home.

Part of the problem is that while your man cave will never fully replicate the in-stadium experience, the in-stadium experience just can’t replicate your man cave. DVRs mean you control the replays, an Internet connection means you never have to wonder about a statistic or fact, and the remote means you can watch any game you want.

Cell service at stadiums during games is often terrible, and there’s a reason the Cowboys made two 60-yard-long high-definition video boards the centerpiece of their gorgeous new stadium. Take it as a sign that teams are feeling the need to play catch-up to what fans now enjoy at home.

Officials with the Chiefs and around the league have been reluctant to explore more aggressive in-stadium technology, such as personal tablets — the cost would be significant, and there is concern it could be a distraction and lessen the crowd’s energy.

The Chiefs are trying other strategies, things like value-pack ticket bundles, but like a lot of NFL teams, they’re in a tough spot. They depend on local revenues that they can keep but are watching their ability to generate that money sputter.

The only choices are to reverse the trend or adapt.

Technology isn’t going anywhere but forward, so the Chiefs — more than most teams — must adjust their business model accordingly.

Deberg_1990 · 08-21-2011, 01:21 PM

Quote:

Originally Posted by Phobia

I think the article is spot-on. Does this columnist have any business giving it? I don't know - it's probably relevent to his subject matter. Is the irony thick coming from print media? Absolutely.

But yeah, if I attend a game paying full boat for everything I'm taking a chunk out of my family's budget and it's just not worth that to me any longer. Love to watch the Chiefs and I really hope they win but I'm no longer in the Chiefs marketing target demographic and I accept that. It's hard to watch rookies who will never step foot on the field make in one year of riding the bench what I'm going to make in a decade. I'm not mad at them for making the most of their opportunity, good for them. But it's hard to see guys making that kind of money to play a game the rest of us have to pay in order to play.

I think you make a good point. The NFL gameday experience is not really for " working families" anymore. The days of taking a family of 4 or 5 to a game are pretty much over. The owners are smart enough to know this. Me personally, I might go with a buddy or take one of my family members but not all.

Whatever the case, this story states they still averaged 67K in attendance last year. They probably wont make drastic changes unless it dropped into the 50-60K average.

Mr. Arrowhead · 08-21-2011, 01:26 PM

I gave mine tickets i had for 5 years up this year and i am just going to buy single season seats, and so far it seems like a big bargin

08-21-2011, 01:26 PM

Quote:

Originally Posted by Chiefaholic

You don't think the Hunt family had people who advised Lamar of profitable investments with his money? Once you get THAT much cash, you don't do much more than sign checks and let your financial advisers do their jobs.

"of their own volition"

Spott · 08-21-2011, 01:30 PM

When it costs me about 200 dollars to see every game on my big screen TV all year long with the Sunday ticket, I really have almost no desire to see a game in person again. Getting gouged for tickets, parking, beer, etc. every year got old quick. Now I get to see way more than I would if I went to the game for less than the price that I used to pay just for the preseason tickets alone.

08-21-2011, 01:35 PM

Quote:

Originally Posted by Deberg_1990

I think you make a good point. The NFL gameday experience is not really for " working families" anymore. The days of taking a family of 4 or 5 to a game are pretty much over. The owners are smart enough to know this. Me personally, I might go with a buddy or take one of my family members but not all.

But it never had to be like that. Greed has taken over the game. I'm all for somebody making a healthy profit. No problem at all with that. But these guys are nickeling and diming the last nickel and dime from consumers while compensating their coaches, players, and management well above anybody's standard of living all the while demanding public funds for facilities and various tax breaks for training camps and earnings taxes. Its easy to vote with your wallet and your hard-earned dollar but then when the whole thing fails you lose a favorite past-time. I don't want to lose NFL football but they're going to greed themselves right out of the market - both ownership and players. There is a finite amount individuals and companies are willing to pay for seats and sponsorships respectively. If they haven't already surpassed that margin they're very close to it.

I know a lawyer who does very, very well for himself - lives on a $1,000,000 acreage and he's bitching about paying for tickets.

CoMoChief · 08-21-2011, 01:41 PM

This is the first season where I've looked only to sit in the upper deck.....haven't done that in I don't know how long.....but considering I've been able to purchase tickets for $25-$30 (section 310), and figure in parking (I carpool, but still $30 parking is ridiculous)..but paying to sit in the lower level just isn't worth it anymore.

KC native · 08-21-2011, 01:43 PM

Quote:

Originally Posted by Mile High Mania

It won't change until fans decide to stay home and watch on TV... I've been out to the new Cowboys' stadium a few times and it's just incredibly too expensive. I'd love to take the kids (or the family) to a game, but we're talking huge $'s and that's just not happening.

You aren't lying. Cowgirls stadium is ridiculously ****ing expensive. I haven't been to an actual cowgirls game, but I have seen a TCU game and took the family to monster truck show twice.

$9 beers. $7.50 nachos. Parking was north of $40 IIRC.

Arrowhead is expensive but not as bad as Jerry world.

**Bearcat** · 08-21-2011, 01:48 PM

He's right, but I think it's funny he singled out the Chiefs, even though they have one of the best home schedules in years. A couple years ago I thought about buying season tickets this year, knowing they would play the NFC North and possibly have a 2nd place schedule or better. I didn't get season tickets, but I'm still going to 5 games.

That said, I have been concerned about the product on the field for a few years, and little things like paying a few more dollars every year for parking really annoy me, much less paying $90-100/ticket.

tboss27 · 08-21-2011, 02:10 PM

Chiefs are number 1 in new season ticket sales, and this journalist is concerned about their business model? I drive 13 hours round trip for every game. I realize I'm in the minority of people who would be willing to do that, but there are plenty of people in KC who are willing to shell out big bucks for Chiefs games. The NFL is a 9 billion dollar industry, pretty sure their business model is just fine.

08-21-2011, 02:17 PM

I've been buying jerkey at a roadside shop halfway between Dallas and Houston for almost 20 years. I'm eating the last of my most recent trip there at this very moment. But the last time I spent $45 / lbs for their premium products, Elk and Buffalo. However, they just priced themselves out of the market. I can buy a whole lot of filet for that kind of money. I can buy Kobe for that. I won't be stopping there again. 20 years of frequent trips to that place. Thousands of dollars. But I'm done. It's over for them.

08-21-2011, 02:18 PM

Quote:

Originally Posted by tboss27

Chiefs are number 1 in new season ticket sales, and this journalist is concerned about their business model? I drive 13 hours round trip for every game. I realize I'm in the minority of people who would be willing to do that, but there are plenty of people in KC who are willing to shell out big bucks for Chiefs games. The NFL is a 9 billion dollar industry, pretty sure their business model is just fine.

Most teams keep their season ticket holders year to year. Misleading statistic. The Chiefs have pissed off so many STH that they have more cancellations and more opportunity to sell.

**gblowfish** · 08-21-2011, 02:19 PM

I never buy any concessions at Arrowhead, except when it's really cold, might get a coffee. Never ever buy beer there. I can drink as much as I care to in the parking lot right before the game. So why pay $8 for a crappy beer when I can drink good stuff, and as much as I want, before I go in. Same with food. I can eat like a king at the tailgate, why pay $5 for a hot dog in the ballpark?

**Bugeater** · 08-21-2011, 02:29 PM

Quote:

Originally Posted by gblowfish

I never buy any concessions at Arrowhead, except when it's really cold, might get a coffee. Never ever buy beer there. I can drink as much as I care to in the parking lot right before the game. So why pay $8 for a crappy beer when I can drink good stuff, and as much as I want, before I go in. Same with food. I can eat like a king at the tailgate, why pay $5 for a hot dog in the ballpark?

I've always been surprised by the number of morons that buy food in the stadium. It makes no damn sense at all.

**Bearcat** · 08-21-2011, 02:29 PM

Quote:

Originally Posted by tboss27

The NFL is a 9 billion dollar industry, pretty sure their business model is just fine.

It's like any business model... you want to make more money each season and keep growing. However, with skyrocketing salaries and ticket prices, how long can the NFL keep it up? Greed has caused the NFL to really over-reach its bounds. The article says NFL attendance has been down 3 years in a row. College football is gaining popularity, despite its flaws... and IMO, the game of CFB has at least stayed the same, if not gotten better, over the past few years, while the NFL, overall, is pretty mediocre.

KC native · 08-21-2011, 02:29 PM

Quote:

Originally Posted by gblowfish

I never buy any concessions at Arrowhead, except when it's really cold, might get a coffee. Never ever buy beer there. I can drink as much as I care to in the parking lot right before the game. So why pay $8 for a crappy beer when I can drink good stuff, and as much as I want, before I go in. Same with food. I can eat like a king at the tailgate, why pay $5 for a hot dog in the ballpark?

This all the way. I've never been one to get food inside of Arrowhead. When it's cold, we sneak pints of crown in, buy a pop and we're good to go.

08-21-2011, 05:27 AM
Tribal Warfare The Boom Boom Room Join Date: Aug 2000 Location: Far Beyond Comprehension Casino cash: $942813	Mellinger: Chiefs need to rethink their business model Chiefs need to rethink their business model By SAM MELLINGER The Kansas City Star The NFL is facing a major problem and Kansas City is at the center of it. At stake is a chunk of the league’s revenue and even its popularity. A bad move here or a mistake there and the whole thing begins to tumble. You can see the problem in empty seats at Arrowhead Stadium, once the rockin’-est place in the NFL. You can hear it in the complaints about rising prices and a fumbling economy. And you can read about it all over the Internet. The costs of attending an NFL game have never been higher, and the benefits of staying at home have never been greater. Those trends are conspiring to make the old business models of the Chiefs and other teams outdated. The consequences are amplified because NFL teams keep local profits generated in their stadiums while sharing national revenue 32 ways. You might be interested to know that even while opening “new” Arrowhead Stadium with a team that won the AFC West, the Chiefs finished in the bottom quarter of local revenue. The downside has never been more obvious than it is right now, with the league coming off a lockout and the Chiefs facing another week of trying to sell preseason tickets at regular-season prices. You remember how that went over nine days ago, when coach Todd Haley essentially turned the first preseason game into a nationally televised conditioning drill for which fans paid full retail. “If we learned anything from the last few years with the economy, it’s that you need to be adjusting your model as you go,” says David Carter, executive director of USC’s Sports Business Institute. “The market conditions have wreaked havoc on so many. If you’re not paying attention to what your consumers are looking for and what they’re going for, you’re setting yourself up for a problem.” The Chiefs have a particular problem because a season ticket that used to be famously difficult to buy is now easily available, with operators standing by. A team that used to sell out and fill Arrowhead even for losing teams now wages weekly fights against blackouts with a renovated stadium and playoff team. The problem isn’t hard to isolate. The cost of attending a Chiefs game has risen 30 percent higher than inflation over the last 20 years, according to Team Marketing Report’s Fan Cost Index, which takes into account tickets, concessions, and other items. Prices continue to rise even through a brutal economy. Struggling fans are literally asked to pay more with less — when there’s more to experience than ever before by paying nothing. Chiefs officials wouldn’t talk in specifics for this column, but their cost hike is roughly in line with the rest of the league. Most ticket prices have been frozen or dropped the last few years, and they rank around league average in pricing. They were also aggressive over the summer in marketing and ranked first in the league in new season ticket sales. Even so, this is a growing problem that has executives worried. Dwindling crowds and increasing need to discount and package their tickets mean a decreasing value and demand for those seats. This is a cycle that feeds on itself, and the consumer ease of using secondary markets to purchase tickets only complicates matters. The NFL is a $9 billion industry, so nobody’s going broke; the issue is a tectonic shift in how fans consume the product and, accordingly, in how teams must operate to remain competitive. Publicly, the Chiefs will talk up the $375 million in renovations to Arrowhead as an improvement on the fan experience, but aside from wider concourses and the new Hall of Honor, virtually all of the major work was done on suites and other amenities for the kinds of fans more likely to wear Polo shirts than Jamaal Charles jerseys. NFL attendance dropped for the third straight year in 2010, to its lowest point since 1998. The Chiefs routinely averaged around 75,000 through 2008; last year, they averaged 67,672, up by fewer than 200 tickets despite those renovations and a vastly improved team. Through virtually every feedback avenue that exists, a growing and vocal portion of the fan base is complaining about the value and rising cost of going to Arrowhead. Using the Team Marketing Report numbers, going to 10 games at Arrowhead Stadium would cost more than $3,500 for a family of four. For that money, you can buy a 42-inch LCD television with surround sound, three leather home theater seats, the Sunday Ticket package to watch every game, and still have nearly $150 per week to spend on beer and food. Which one sounds like the better deal? Reasonable people can disagree, but the numbers indicate that more people are choosing technology and comfort at home. Part of the problem is that while your man cave will never fully replicate the in-stadium experience, the in-stadium experience just can’t replicate your man cave. DVRs mean you control the replays, an Internet connection means you never have to wonder about a statistic or fact, and the remote means you can watch any game you want. Cell service at stadiums during games is often terrible, and there’s a reason the Cowboys made two 60-yard-long high-definition video boards the centerpiece of their gorgeous new stadium. Take it as a sign that teams are feeling the need to play catch-up to what fans now enjoy at home. Officials with the Chiefs and around the league have been reluctant to explore more aggressive in-stadium technology, such as personal tablets — the cost would be significant, and there is concern it could be a distraction and lessen the crowd’s energy. The Chiefs are trying other strategies, things like value-pack ticket bundles, but like a lot of NFL teams, they’re in a tough spot. They depend on local revenues that they can keep but are watching their ability to generate that money sputter. The only choices are to reverse the trend or adapt. Technology isn’t going anywhere but forward, so the Chiefs — more than most teams — must adjust their business model accordingly.
Posts: 42,034

08-21-2011, 01:26 PM	#47
Mr. Arrowhead MVP Join Date: Jul 2007 Location: Wichita Casino cash: $10015708	I gave mine tickets i had for 5 years up this year and i am just going to buy single season seats, and so far it seems like a big bargin
Posts: 7,763

08-21-2011, 01:30 PM	#49
Spott Court Jester Join Date: Aug 2000 Location: Orlando Casino cash: $3112400	When it costs me about 200 dollars to see every game on my big screen TV all year long with the Sunday ticket, I really have almost no desire to see a game in person again. Getting gouged for tickets, parking, beer, etc. every year got old quick. Now I get to see way more than I would if I went to the game for less than the price that I used to pay just for the preseason tickets alone.
Posts: 19,694

08-21-2011, 01:41 PM	#51
CoMoChief Mahomes Dynasty Join Date: Mar 2005 Location: Parts Unknown Casino cash: $8052254	This is the first season where I've looked only to sit in the upper deck.....haven't done that in I don't know how long.....but considering I've been able to purchase tickets for $25-$30 (section 310), and figure in parking (I carpool, but still $30 parking is ridiculous)..but paying to sit in the lower level just isn't worth it anymore.
Posts: 39,156

08-21-2011, 01:48 PM	#53
Bearcat Would an idiot do that? Join Date: Nov 2000 Location: Arizona Casino cash: $2844931	He's right, but I think it's funny he singled out the Chiefs, even though they have one of the best home schedules in years. A couple years ago I thought about buying season tickets this year, knowing they would play the NFC North and possibly have a 2nd place schedule or better. I didn't get season tickets, but I'm still going to 5 games. That said, I have been concerned about the product on the field for a few years, and little things like paying a few more dollars every year for parking really annoy me, much less paying $90-100/ticket. __________________
Posts: 55,279

08-21-2011, 02:10 PM	#54
tboss27 Starter Join Date: Feb 2009 Casino cash: $10015003	Chiefs are number 1 in new season ticket sales, and this journalist is concerned about their business model? I drive 13 hours round trip for every game. I realize I'm in the minority of people who would be willing to do that, but there are plenty of people in KC who are willing to shell out big bucks for Chiefs games. The NFL is a 9 billion dollar industry, pretty sure their business model is just fine.
Posts: 734

08-21-2011, 02:17 PM	#55
Phobia Guest Casino cash: $	I've been buying jerkey at a roadside shop halfway between Dallas and Houston for almost 20 years. I'm eating the last of my most recent trip there at this very moment. But the last time I spent $45 / lbs for their premium products, Elk and Buffalo. However, they just priced themselves out of the market. I can buy a whole lot of filet for that kind of money. I can buy Kobe for that. I won't be stopping there again. 20 years of frequent trips to that place. Thousands of dollars. But I'm done. It's over for them.
Posts: n/a

08-21-2011, 02:19 PM	#57
gblowfish Be Kind To Your Pets Join Date: Jun 2002 Location: Glorious Independence, MO Casino cash: $17686178 VARSITY	I never buy any concessions at Arrowhead, except when it's really cold, might get a coffee. Never ever buy beer there. I can drink as much as I care to in the parking lot right before the game. So why pay $8 for a crappy beer when I can drink good stuff, and as much as I want, before I go in. Same with food. I can eat like a king at the tailgate, why pay $5 for a hot dog in the ballpark?
Posts: 40,830