Here’s my commentary on what Derrick Hall and I discussed last week. Contrary to the knock down affair I joked about, Hall set a very relaxed, friendly tone – and as his guest I felt it appropriate to follow that lead. He did most of the talking, which I’ve tried to accurately highlight here, but I’ve also fleshed out the discussion by adding after the fact perspective (ie vitriolic, blindsided "potshots"), characteristic of Diamondhacks. Seriously, if I’ve mischaracterized any of Derrick’s thoughts, it’s unintentional and I trust he (or his highly trained force of musclebound henchmen), will let me know.
I first asked the Team President why his pricing model is so distinct from the other 29 MLB teams, ie Arizona’s largest price gaps (by far) are between season tickets and the 64 individual (non premier) games, whereas the rest of MLB positions its largest hikes between individual and premier games.
We agreed it partly stems from Arizona’s ST rates themselves, among the lowest in the game, but Hall also divulged that single games were priced so that "visiting" fans (ie Cubs, LA, Giants) would pay closer to what they’re accustomed to in their home ballparks when they "invade" Chase Field. Wow. This is as close as I’d ever expect a club offical to extol local ticket suppression without actually uttering the word – and seems predicated on the view that low income Phoenix (apart from season ticket holders) doesnt represent enough of a market to seriously meet half way on price. Perhaps elasticity data supports this unique strategy (we didnt get into that), but as a local supporter who often feels gouged trying to purchase decent single game seats in a half empty stadium, I remain unconvinced that inflating single game prices with an eye towards sticking it to free spending Cub or Dodger faithful best maximizes short term revenue (tickets plus concessions). And it sure doesnt foster a lasting bond with local fans.
Derrick also repeated his mantra that single game prices were among MLB’s "most affordable", whereas my best guess is they’re nowhere near that and closer to league average. Readers are encouraged to check out individual game prices in Atlanta, Cincinnati, Pittsburgh, Milwaukee, Colorado, Florida, Oakland, Cleveland, Tampa Bay, Texas, KC, Minnesota and the LA Angels and make their own judgement.
I acknowledged this spring’s 10 pack promotional upgrades as reasonably attractive, flexible alternatives for those uninterested in seasonal commitments who may also feel priced out of individual games, and complimented Hall’s 2008 ST structure, which better reflects market demand than it did in 2006 and 2007. He acknowledged prices in the middle deck had been too high.
SEASON TICKET BASE
Hall claimed that the ST base has grown from approx 12K to 15K, presumably due to last year’s exciting playoff run and the highest retention rate (94%) in franchise history. This implies 25% growth, however less than a year ago Hall repeatedly presented the base as 14K, which is troubling because 94% of 14K is nowhere near 12 thousand – it’s more like 13,160. If he’s talking apples to apples, then at least one of the following must be true: Either the 2007 base figure(14K) was overstated, retention (94%) was overstated (which I doubt), or the extent of "new" sales (15k-12k=3k) has been overstated.
A potential net ST sales increase from roughly 14K to 15K would be disappointing, given several circumstances conducive to sales spikes: 1) a small originating ST base, affording more room for growth, saturation, 2) the 2007 squad held first place for several months and swept the Cubs in the NLDS, 3) the 2008 team is more talented than last year, by virtually all accounts , 4) 2007 ST prices were already considered MLB’s lowest by the leading industry publication, and 5) many ST pricepoints were slashed even further in the face of that on field success.
If one already offers baseball’s lowest ST prices, with your team clearly on the rise, and you’re still lagging behind ST sales targets (Hall’s shooting for 20K in 3-5 years), what lessons can be learned from that? One lesson might be to reduce ST prices even further, although I’d argue they’re already giving them away in some sections. Another strategy might be to abandon MLB’s most imbalanced pricing model in favor of attracting more of whom constitute the vast majority of baseball fans (that is to say single game purchasers) with market driven pricing tied to MLB’s lowest per capita income market.
For example, three clubs (Cincinnati, Toronto and Atlanta) with more traditional pricing models drew more fans ( and presumably more concession revenue) than the Diamondbacks while equaling Arizona’s $43M in gate revenues*. The Braves charged higher ST prices and lower single game prices than Arizona – and drew almost half a million more fans – many of whom presumably solidified visceral connections with the franchise.
* according to Forbes magazine, based on 2006 figures
Derrrick hinted, as he has elsewhere, that the franchise is trying to establish an identity that it lacked for five years prior to 2007. This is where I picked up the baseball bat. No, seriously, I reflexively bristle when an FO that unilaterally chose to aggressively rebrand the franchise and has yet to attract as many fans as it’s predecessor (even in a 111 loss season), complains of inheriting a longstanding "identity problem". Five years prior to 2007 is 2002 – how can the roots of an "identity problem" be in a team still glowing from a cathartic World Series triumph and drawing like mad?!
Derrick made some pertinent clarifications. First, he emphasized the roster continuity and fan recognition inherent in building from within. That’s especially fair given he’s just starting to realize benefits of that strategy. And he cited the 2005 revolving door of Glaus, Green and Ortiz in terms of how not to build an identity. I agree on both points.
Second, we had fun debating the colors. While I dont think it trumps other considerations, I volunteered that divisional differentiation from the purple and suddenly relevant Rockies was the strongest argument for rebranding, and Derrick volunteered that vendors have actually struggled to match up the new red consistently. I really appreciated that he shared that, because a) he didnt have to and b) it’s significant, given the historical justification of shifting from purple to red.
In terms of time frame, we agreed to split the difference and say 2004 was when a significant loss of identification with the team began in earnest.
Unlike ticket prices, which I view as more of a Diamondbacks problem, I see concession prices as an MLB issue, where each park’s prices are set by contract rather than true competition. Any vendor could blow the doors off "the competition" if allowed to independently compete on price, but this has never been about providing fans with value – it’s about businesses maximizing profit in a captive market, via consistently enforced price floors.
At any rate, concessions are a big dissatisfier, so we talked about it. Hall portrayed the Diamondbacks as victims of what he called the "worst" concession deal in history – with Levy’s – that runs through 2020. I wasnt clear if he meant the Dbacks, or all MLB teams, were victims, but if you’re looking for significantly cheaper Red Ropes in the next decade, you might as well hang yourself now.
Derrick assured me that $1.50 kids items (hot dog, corn dog, milk, popcorn,etc) he’s been touting for a year will actually be displayed on menu boards this spring, after I mentioned I’d never actually seen the discounted prices. Let’s hope there’s no secret password or access code for parents hoping to save a couple bucks on junior’s corn dog and milk ;-)
For anyone interested in the discontinued McDonalds contract, Hall briefly touched on it but asked that his comments remain off the record.
When I characterized last September’s $5 United Way donations as a "marketing ploy" to sell tickets, Derrick acknowledged the campaign was designed to enhance corporate image (in addition to helping those in need, of course), but he seemed genuinely taken aback that I suggested it was designed to generate sales. When I then asked, "Why were the donations tied to ticket sales? Why couldn’t Mr Kendrick have just written a check, no strings attached?", Hall flashed his winning smile and confirmed "Well, I’d be for that, too!"
Hall and I have both expressed disappointment over ticket sales generally and we’d both like to see this franchise remarried to the valley. So there’s common ground. We both want the same thing, but like uneasy second engagements, we’re kinda stuck on the terms. Ticket prices (ie "Money"). Defining "loyalty". Being refreshingly forthright with one another. Despite Mr Hall’s outstanding customer service skills and personal warmth, nothing about our meeting specifically changed those overarching policy disconnects.
And yet, there are changes; positive changes. The dramatic reduction of many ST prices after such a successful season will draw additional fans. Single tickets in the less attractive Diamond Level areas have finally been reduced, at least in spirit. The franchise’s still popular patriarch was cajoled into throwing out the first ball of the NLDS, and the 10th anniversary of the inaugural purple team will be celebrated in a couple weeks, with a big song and dance. Good stuff.
If I were king, however, fielding a competitive team, I could draw 33K each night to Chase Field in my sleep. Colangelo did. It’s hardly the hand-wringing challenge this FO has made it out to be for three years running. Field competitive teams, charge reasonable prices for the best available empty seats, and re-establish ties to franchise heritage damaged by Mr Kendrick. That’s all people want. People who enjoy baseball and are serious about attending games.
The baseball side of things appears to be ahead of schedule, thanks to intelligent, methodical planning concurrent with the incredibly fortuitous, dual self destruction (to date) of the division’s 800 lb resource "gorillas". Pricing and culture have been slower to come along, but markets are inexorably shifting corporate policy, and fans will ultimately dictate the terms of this marriage. It’s just too bad the terms are taking so long to iron out, when the valley is an eager bride and her biological clock is ticking.