|Friday, October 25
Updated: October 26, 4:23 PM ET
Playoff-or-payoff guarantees back after layoff
By Darren Rovell
Tom Rooney thought his boss was crazy.
After all, there is a difference between marketing and magic. But when Pittsburgh Penguins owner Ed DeBartolo Sr. decided to raise ticket prices despite the team's five-year playoff drought, Rooney faced the challenge of selling the price hike to season-ticket holders.
Days later Rooney, then the Penguins' vice president of marketing, had dreamed up a solution. Instead of hoping the 5 percent increase would be enough to absorb the expected revenue losses generated by season-ticket holders who decided to cancel their orders, Rooney proposed to sell the ticket price increases with a "playoff or payoff" guarantee.
That was 15 years ago, when the Penguins claimed "We'll put your money where our mouth is," with the promise that if the Penguins failed to make the playoffs, fans would be refunded the difference of the ticket increase.
"Ed really loved the idea," Rooney said.
He wasn't alone. Despite the fact that those Penguins failed to make the playoffs with a 36-35-9 record, Rooney's marketing strategy has become a model of sorts. At least three current professional sports teams -- the Florida Panthers and Nashville Predators, two NHL teams that didn't even exist during the 1986-87 season, and the NBA's Atlanta Hawks -- are using the incentive to help sell season tickets this fall.
Executives for all three teams say the tactic, combined with other marketing initiatives, have kept season-ticket renewals up despite the teams' disappointing previous seasons. Given the current economy, teams have explored creative ways of securing additional revenue streams, including the implementation of variable ticket pricing. "The immediate payoff of having a strong season-ticket base is that you have guaranteed revenues, you don't have to spend as much on advertising and you're not as much at risk with bad weather or losing streaks," said Rooney, who is now the Penguins' president.
The Florida Panthers, despite missing the playoffs four of the past five seasons, have promised a 5 percent rebate for season-ticket holders if the team fails to reach the postseason again this season.
"We're under a new ownership group and we wanted to tell our fans that we're going to be better, and if we're not, there's something in it for (them)," said Jeff Cogen, the Panthers' chief operating officer. Cogen said renewals are up 11 percent, but team officials contribute that success to the playoff-or-payoff guarantee, combined with ticket upgrades and the offering of other new amenities.
Although the Panthers will only allow their season-ticket holders to credit the difference to season-ticket purchase for the following season, both the Hawks and the Predators will start writing checks should their teams not make the playoffs.
The Hawks have pledged a $125 rebate to each season-ticket holder, who pays between $1,000 and $3,500 per seat. Should the Hawks, who haven't made the playoffs for three straight seasons, fail to reach the postseason again, the additional loss could be approximately $500,000.
"This doesn't work in (just) any situation for any team," Kasten said. "Since the gesture came from our coach it was truly organic. It's possible some team executive could say, 'We have a bad team, we'll just jack up prices high enough so that a guarantee won't cost us anything,' but that wouldn't be meaningful."
The Hawks have been the most brash about their playoff guarantee. There are playoff-bound Atlanta Hawks T-shirts, bumper stickers and billboards. The bus that brings underprivileged kids to games has "This bus is playoff-bound" written on its side. The team's receptionists have been instructed to answer the phones, "Thank you for calling the playoff-bound Atlanta Hawks."
"We definitely believe it and you can tell our fans believe it," Kasten said. "It's really energized people and we've gotten a very positive reaction both in spirit and in season-ticket renewals."
Predators owner Craig Leipold might have the most money to lose from the guarantee. Leipold is on the hook for about $1 million in rebates if his team can't make it into the postseason. The Predators have not made the playoffs in their four years in the NHL.
"We asked 500 season-ticket holders what it would take to keep them aboard if we raised tickets by 6 percent and the playoff idea came out of that," said Gerry Helper, vice president of communications for the Predators, who are winless in their first five games this season. "We're not trying to say, 'We're so darn good, we're going to make the playoffs.' We're just trying to make a statement that we believe in the plan that we are selling the fans on."
Is it really about baseball?
Baseball also could be losing out to news coverage of the serial sniper who has been terrorizing the suburbs surrounding Washington, D.C.
Officials at Nielsen Media Research could not confirm that a significant amount of viewers were watching sniper coverage by the multitude of cable news channels instead of the World Series, but Tom DeCabia, executive vice president of PHD USA, a national broadcast media buying firm, says it should be considered among the many factors.
"If there was any kind of inkling that they were close to catching the sniper, I'm sure many people switched the channel, scrambling for everything they could possibly get," DeCabia said. "When they announced they had the suspects (on Thursday morning), I'm sure less people were watching 'SportsCenter.' "
This week, Snow's representatives at the Beverly Hills Sports Council began pitching to snowcone flavor and machine makers the idea of having a "J.T. Snowcone."
"He has a great personality and I know he'd have fun with something like this," said marketing director Eric Burak of Snow, who was once an extra on "E.R."
Many Beverly Hills Sports Council clients have had their own food products. Pittsburgh Pirates catcher Jason Kendall had Kendall's Crunch (cereal), Seattle Mariners third baseman Jeff Cirillo had Senor Cirillo's Burritos and leftfielder Benny Agbayani had Benny Bean Coffee when he was with the New York Mets.
Snow's charity and fan club are called the "Snow Pack."
After last year's Division I-A national championship game, Sears ended its nine-year run as the trophy's sponsor. The company also withdrew from its support of the men's and women's college basketball trophies, as well as the Director's Cup, which is awarded to the top collegiate athletic programs.
"We really haven't marketed the sponsorship that much," said Grant Teaff, executive director of the AFCA. "We'll eventually find a sponsor, but we're not in a big rush. We don't want a short-range deal with some kind of dot-com company."
The Sears Trophy, made of Waterford crystal in the shape of a football, is valued at $30,000.
Success is contagious
The Notre Dame fan publication has benefited from the Irish's early success under new coach Tyrone Willingham with a 5 percent increase in subscriptions since the season started, according to its circulation director, Lisa Weisser.
"The better they do, the better season we generally have," Weisser said.
The publication costs $44.95 for 20 issues. Notre Dame was ranked third in the first BCS rankings.
One of the most interesting collectibles is high school yearbooks featuring people that became major sports stars.
A 1991 Western High School (Anaheim, Calif.) book is valuable because it has a freshman year photo of Eldrick Woods. A 1981 Serra High School yearbook (San Mateo, Calif.) features San Francisco Giants slugger Barry Bonds in the basketball and baseball team photos. The 1976 Long Beach Poly High School yearbook features Anthony Gwynn.
One of the most popular yearbooks being sold today is a 1996 yearbook from Lower Merion High School (Ardmore, Pa.) featuring Los Angeles Lakers guard Kobe Bryant. Lower Merion High School books have sold for more than $600.
Winning at racing
Two out of three horses favored in this year's Breeders' Cup stakes races, including 2002 Kentucky Derby and Preakness winner War Emblem (purchased as a yearling for $20,000) and early Juvenile favorite Sky Mesa ($750,000), who was scratched from the race Friday due to injury, were bought at public auction. Although owning a race horse is a risky investment, smart decisions and luck are what make the business profitable.
John Oxley, owner of Oxley Petroleum in Tulsa, Okla., has bought more than 200 horses over the past 30 years, including Sky Mesa and 2001 Kentucky Derby winner Monarchos. He paid $170,000 for Monarchos, who earned $1.7 million in purses on the track. Since January, Monarchos has commanded a $25,000 stud fee.
"Total purses are down, but those purses have gone up far more than the sales prices have over the last 20 years," said Oxley, who says he has made a profit every year for the past eight years.
Darren Rovell, who covers sports business for ESPN.com, can be reached at email@example.com