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Old 08-21-2011, 05:27 AM  
Tribal Warfare Tribal Warfare is offline
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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 Those trends are conspiring to make the old business models of the Chiefs and other teams outdated.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.
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Old 08-21-2011, 07:07 AM   #2
CoMoChief CoMoChief is offline
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Well you can look at the gold level and see that no one likes paying that kind of money to watch the Chiefs play football. Anyway I look at it, I think it's silly.

Those tickets used to be cheap enough to where almost anyone could get them. They were expensive, but not out of this world expensive like they are now. That section game after game looks like a ghost town, as does the upper-half section of the 300 sections (esp in December).

I don't see $Clark Hunt$, or any NFL owner for that matter, changing this anytime soon, unless attendance just hits a massive drop.
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Old 08-21-2011, 07:10 AM   #3
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Quote:
Originally Posted by CoMoChief View Post
Well you can look at the gold level and see that no one likes paying that kind of money to watch the Chiefs play football. Anyway I look at it, I think it's silly.

Those tickets used to be cheap enough to where almost anyone could get them. They were expensive, but not out of this world expensive like they are now. That section game after game looks like a ghost town, as does the upper-half section of the 300 sections (esp in December).

I don't see $Clark Hunt$, or any NFL owner for that matter, changing this anytime soon, unless attendance just hits a massive drop.
I was thinking the whole time, why does this just apply to the Chiefs?

As long as they are selling tickets, they aren't changing their business model.

How many games have we not sold out in the lat 20 years? 3?
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Old 08-21-2011, 07:12 AM   #4
Mile High Mania Mile High Mania is offline
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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.
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Old 08-21-2011, 07:15 AM   #5
Halfcan Halfcan is offline
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Wow 2 straight articles Bashing the Chiefs. Mellinger is sure not winning any fans at Arrowhead One.
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Old 08-21-2011, 07:29 AM   #6
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America should spend more money on education and not watching athletes run around, maybe we wouldn't have a crap economy.
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Old 08-21-2011, 07:39 AM   #7
DaFace DaFace is offline
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A journalist giving business model recommendations makes me chuckle.
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Old 08-21-2011, 07:45 AM   #8
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Quote:
Originally Posted by Marcellus View Post
I was thinking the whole time, why does this just apply to the Chiefs?

As long as they are selling tickets, they aren't changing their business model.

How many games have we not sold out in the lat 20 years? 3?
Well As Mellinger states, it's mainly the in stadium local revenue that's hurting. More and more no shows =less parking money, less concessions, beer and food revenue.
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Old 08-21-2011, 07:47 AM   #9
Deberg_1990 Deberg_1990 is offline
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Quote:
Originally Posted by DaFace View Post
A journalist giving business model recommendations makes me chuckle.
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Well hes not wrong? There have been threads created on here before about this very same subject.
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Old 08-21-2011, 07:50 AM   #10
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And these reasons are why the NFL should feel blessed with the huge television contract they have. It is giving them revenue from the format most fans are using today. I would say the league is adjusting just fine.
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Old 08-21-2011, 08:00 AM   #11
DaFace DaFace is offline
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Originally Posted by Deberg_1990 View Post
Well hes not wrong? There have been threads created on here before about this very same subject.
Yeah, but that's from a fan prospective, not a business model prospective.
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Old 08-21-2011, 08:00 AM   #12
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The war department is a big Broncos fan so we went last night to watch the Bills-Broncos. I could recon two teams that we play. Co-worker has season tickets and sold them to us for 1/2 of face value just trying to get something out of them since they couldn't go. With parking and 1 beer, 1 bag of peanuts, 1 pretzel, 1 lemonade and 1 coke we were out well over $100 for 2 people for a preseason game. The tickets were upper level endzone corner. Far enough up you couldn't read names and could only make out numbers if the player was "squared up" to me and I could see his whole back. I will still probably attend a game at Arrowhead some day, "bucket list" type thing, but I really don't care if I ever go to a stadium again.
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Old 08-21-2011, 08:08 AM   #13
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Originally Posted by DaFace View Post
A newspaper journalist giving business model recommendations makes me chuckle.
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Old 08-21-2011, 08:08 AM   #14
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Quote:
Originally Posted by DaFace View Post
A journalist giving business model recommendations makes me chuckle.
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Actually, he didn't give any recommendations. He just threw out some numbers and said they need to change.

If I understand correctly, the problem is that ticket prices have gone up over the last 20 years, it's nice to sit at home and watch a game and Chiefs executives wouldn't comment.

OK...so what's the solution? I've got an idea, if you are going to channel JWhit, make up a marginally clever nickname for someone and cry about the 'right 53'.
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Old 08-21-2011, 08:11 AM   #15
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Quote:
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A journalist giving business model recommendations makes me chuckle.
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Heh. I chuckled.
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