In the past few months there have been many examples of businesses that realize the economy is tough and react by doing the right thing for sales and human decency. Hyundai created its Assurance Guarantee to protect car buyers who feared losing their jobs. JetBlue, Walgreens, and Virgin Mobile have provided similar coverage. Even sports teams are offering more protection and value for their fans. Last summer the minor-league baseball Birmingham Barons sold tickets for the price of a gallon of gas, the NHL’s St. Louis Blues offered a promotion that would pay your mortgage for a month, and the NBA’s New Jersey Nets offered free tickets for unemployed fans. But one sports business is able to ignore the pleas of financially ravaged fans: The NFL is moving forward on its plans to black out TV coverage of games in cities that fail to sell out their stadiums. It’s a brazen move for these times, which I strongly believe will put the country’s most popular spectator sport on a slippery slope downhill.
Yesterday the sports talk shows were abuzz about the news that as many as 12 NFL teams might not be able to sell out their home games within 72 hours, meaning that the league will choose to black out the games’ local television coverage. It goes without saying that the economy is the main reason for the lack of sellouts. The Jacksonville Jaguars and San Diego Chargers have been particularly hard hit, and both are suffering greatly from the housing bubble. My own Cincinnati Bengals say it is “too early to tell” if games will be blacked out after 44 straight sellouts. Only 3 teams suffered any blackouts in all of last season.
While unsold tickets are an economic reality, the decision to prevent local fans from cheering their team on TV is entirely the NFL’s fault, and it is just plain poor marketing. Look, there is a clear difference between the audience for game attendance and TV viewership. Let’s start with the price. It costs more than $100 per person to attend an NFL game, including tickets, parking, and snacks, which compares to $0 for sitting at home in front of the television. Fans who can’t see the game at home are not going to rush off in their cars to the game Sunday afternoon. Some will spend $100-plus for NFL Sunday Ticket, the pay-per-view TV option, but those are actually the people with higher incomes who are more likely to go to a game in person.
Offering “free” viewership at minimum should be considered the most meaningful marketing investment by the league, as it feeds fan frenzy and loyalty. You could even consider it a free sample that helps excite people enough to eventually buy a ticket, and maybe even season tickets when their incomes rise over time. This “free sample” also leads to huge advertising revenues and sales of sports merchandise at huge margins. Why cut off the fans who feed you? Why cut off the most powerful form of marketing you have when you need it the most?
It’s not only bad for business, but it is a dishonorable way to treat its customers. People grow up in these cities and entire families rally around the home team. Fathers and sons sit on the couch and cheer for the local hero in a rite of passage, maybe hoping to attend one game per year. This freezes out the poor and middle-class households, who, quite frankly, could use a little entertainment. What’s worse, many of these cities have put up hundreds of millions of taxpayers’ dollars for brand-new stadiums that sit idle for all but eight days of the year (only $500 million for the stadium across from our office in downtown Cincinnati). Now the tax bill can’t even get you a free picture on the local TV network.
For years now the NFL has been called the “No Fun League” for its many rules that seem to make the game less interesting for fans and players alike. It has banned hard hits and end-zone celebrations. Most recently it banned players from Twittering during games. The league even banned cheerleaders from stretching near opposing benches. And tailgating has been banned at the Super Bowl. This time it might be facing a “perfect storm”: Consumers are angrier at businesses than ever, and they dislike seeing high ticket prices and highly paid athletes behaving badly. They also have many more media options to keep them busy, and college football is just as exciting with the added plus of being a little more pure and innocent. And before the beginning of the 2011 season, the NFL and Players Association will have to come up with a new collective bargaining agreement. Many say a lockout or strike is a strong possibility. Together these negatives could add up to strip away decades of fan passion, and revenues and more blackouts will surely follow. Just ask Major League Baseball how it feels.
The lesson here is that businesses must recognize that they exist for more than short-term revenue maximization, especially when they are extremely successful and powerful like the NFL is today. Because the customers whom you take advantage of when you are strong won’t be around when times inevitably get tougher. I’ll be switching to the NCAA on Saturdays. What about you?
UPDATE: the NFL has caved a wee bit by putting up delayed broadcasts of its games up on NFL.com. Still, it’s far from the experience that their customers want, and it frankly doesn’t make sense to the masses. If anything, it looks like the NFL is using this build up an online audience at the expensive of TV networks and their local affiliates (and advertisers).