Thursday, April 17, 2008

Innovations in Season Tickets

It's not often you see entrepreneurship with professional sports franchises in how they offer tickets to fans, but this is certainly an idea that should turn some heads. Thanks to TPS regular Rob Holub for the heads up.

The Minnesota Timberwolves, an NBA franchise, have 43 home games next year. They were one of the worst teams in the league this season, somewhat to mostly attributable to the fact that they traded their best player, Kevin Garnett, before the season started. When you don't make the playoffs in the NBA, you enter a draft lottery, a process due which the first three picks in the draft are determined by chance. The worst teams get more ping pong balls than the teams that barely missed the playoffs, but nonetheless, any team that fails to make the playoffs has a chance at the first three picks. Minnesota's record is sufficiently bad such that they should not end up with any pick worse that #6 in the next draft.

So what did the team do? They decided to offer season tickets next season for $43 multiplied by the draft pick they end up with. So if they win the lottery and end up with the first pick: $43 season tickets. #2 pick? $86 season tickets. And so on.

I'd jump at this in a second if I lived in Minneapolis. Let's assume they end up in the worst possible scenario-- #6 in the draft-- then season tickets are $258. And that's your bill if you go to every single game and sell none of them. What are the odds that no games throughout the year will be must-see games that will demand a high resale value? If nothing else, this is a tremendous investment opportunity. And what if the Timberwolves are actually good next year?

The curious thing is that the tickets cost less for a better draft pick. Assuming you'd want to watch better players, and those players go earlier, you'd think they could get away with inverting the pay structure and getting even more people to sign up. You're paying $43 to see the #1 pick, yet $258 to see the #6.

You do have to sign up for the deal before the draft itself, so I guess there is a moderate risk involved. A $43 deposit is the only requirement.

Very intriguing.

(And Justin persuaded me...I'm going to try to label posts henceforth.)

1 comment:

The Chosen Rob said...

The decision to take the position of the pick and multiply it by the number of games is curious, and obviously the result of creating a simple promotion, rather than one that would maximize consumer surplus under the price ceiling.

Based on the fact that Minnesota plays in the West, I believe they'd have Kobe come to town at a minimum of twice, maximum of thrice per year. Throw in one visit from Lebron and one from KG, and I'd be pretty confident that you could resell those 4 or 5 particular games and get close to earning your money back depending on the multiplier/draft pick position.