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Could A Freemium Model Work For A Professional Sports Team?

Brian Litvak, Director of Business Development HKSCKPVIamp; Marketing, Sportsvite.com
Monday, 24 May 2010 | 3:27 PM ET

Darren Rovell is on assignment and unable to post today - but Sports Bizlives on. Today's special Sports Biz Guest Blogis fromBrian Litvak, director of business development and marketing for Sportsvite.com

Guest Blog: Could A Freemium Model Work For A Professional Sports Team?, by Brian Litvak

In digital media, Freemium is a business model that allows consumers to utilize a core product or service at no cost (aka Free!). The business then charges a premium for advanced privileges or incremental features.

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With a substantial portion of professional sports teams revenues shifting from events to media, perhaps a freemium model (and other digital marketing tactics) could be effective.

Professional sports teams in major US sports have always experimented with innovative ticket promotions to get fans into the seats.

Recently, one popular promotion has been “all you can eat” tickets at certain venues.

Other traditional promotions include price discounts, promotional handouts and pre- or post-game stadium entertainment. But to date, no major sports franchise has implemented a sustainable business model where they give away a substantial portion of their tickets away for free to all of their home games.

Here are the reasons why I think it could work.

Fill Empty Seats

Only the top quarter of teams in each pro sports league actually sell out on a regular basis. That means that most teams often have empty seats to fill. Free admission would increase attendance. Once a fan is at a game there are multiple ways to generate revenue from souvenirs, parking, concessions and alcohol sales. This is the same principle as “all you can eat” in reverse. Fans can come to unlimited games (all you can root) and that would increase all other stadium revenues.

Increase Fan Base

Professional sports has increasingly become a media business as broadcasting rights fees and advertising revenue surpass event revenue. The most effective way to drive more media revenue is to increase the size of the audience. Free tickets will make a team more accessible to its community and should lead to new fan acquisition. New fans may first be drawn to the live experience but, as they become real fans, will then consume the teams broadcasting and media coverage.

Community and Public Relations

The first team to employ a free tickets policy would have a first mover advantage and would probably realize the biggest community and public relations benefit. But any team that decides to go free will have a great story to share. In an era of escalating ticket prices, the respect and admiration for the fan will be a unique angle and positive story that will ingratiate a franchise with the city it calls home. It’s up to the team to keep the product strong and interest high so that fans see real value in their free seats.

Sponsorship Platform

A franchise could offer the free seats up as a sponsorship opportunity for its brand partners. Free seats for each game could be sponsored by a corporate partner. It sure beats current corporate promotions such as the hat that doesn’t fit or a refrigerator magnet.

Of course, all of these benefits would have to offset the lost ticket revenue for this model to make sense. Perhaps a more feasible option would be for a team to give away a specific allotment of tickets or for a specific section within the stadium (the bleachers or upper deck). The tickets would be awarded to the most loyal fans or for new fans that have never previously attended a game.

A loyalty program can also be implemented to build connections with the fans that attend the most games. The more games they attend the bigger fan they will become. This leads to them spreading their passion for the team to friends and building a direct connection to their favorite team.

There are enough geniuses, statisticians and now Harvard MBA’s in sports to develop a financial model to see if this could work. I think it can and I believe we are close to seeing it happen soon. If it ever does occur, here’s to hoping I can snag some free Legends Tickets at Yankee Stadium!

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Brian Litvak is the director of business development and marketing for Sportsvite.com http://www.sportsvite.com. He also blogs about digital, sports, life and other topics at http://blog.littyhoops.com.

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