Premium is the Most Challenging Sale…Will Clients Have the Funds in 2021?
Budget cuts at companies will challenge premium sales in sports.
Happy New Year! With the calendar turning to 2021, I hope everyone is feeling refreshed and ready to tackle any challenge thrown your way- I know I am. And challenges there will be.
With the vaccine rolling out throughout the country, the light at the end of the tunnel for sports executives - with days of full buildings of paying customers - seems within reach. While the end of the pandemic-altered sporting event is getting closer, in all reality, there are still some big hurdles to get to the place we all want to be.
Fans will be back- no question. Whether you are watching the Cowboys easily bringing 30,000 plus people to games in a virus-soaked Dallas Metro area to watch a 6-10 team or any of a large number of colleges welcoming large swaths of fans to their last few football games, it is easy to see the pent up demand is there for live events. Sports teams will be able to sell tickets.
While sponsors are missing the eyes of spectators in-venue to deliver on partnership goals, teams have, and continue to find, innovative ways to “make good” on those agreements. It may not be exactly what the sponsor envisioned when agreeing to the partnership but teams are still delivering incredible brand recognition for the brands that choose to align with them.
What is missing? Premium ticket clients. The vast majority of people who have historically purchased club seats and suites are businesspeople. You may find a real estate mogul or the founder of a software company that sold to Google last year mixed in, but, in my experience, 90+% of premium sales are made to corporate buyers. As a reader of this newsletter, you are probably familiar with what we at the Strategic Sports Group preach. Premium salespeople are the businesspeople of a sports organization and need to understand how business is being conducted to gain the respect to be in the conversations needed to close high levels of premium products.
So how are businesses reacting to the virus these days?
At first in the Spring, everything seemed simpatico. Teams were pushing contracts back and clients were patiently waiting for the threat of bringing guests to events to disappear so they could fill their suites with prospects. Things have taken a lot longer than many people expected.
As time has progressed and we have welcomed a new year (and budget cycle), the dollars that had been allocated to hospitality are being reassigned. In the past, companies have had the option to drive results through sponsorship or hospitality and could choose the option that fit best. Now, the “hospitality” budget where many of the premium purchases have been held have been reallocated or greatly reduced due to lack of use.
It is simply how budgets work. Companies look at what was spent last year and adjust accordingly. If the suite that your team sold XYZ company is excluded for too long it will simply drop out of the budget.
With social distancing requirements keeping suites empty (or greatly reduced) and inclusive clubs closed for the foreseeable future, premium sales are going to keep getting pushed back and will suffer this fate. The longer it goes, the more challenging it will become to fit these premium products back into a corporate ticket budget.
Do not get me wrong, companies will still need sports to impact their business. It’s just that the competition between ad dollars and premium ticket dollars will disappear because the hospitality contestant dropped out of the race. As companies see value in these sponsorship spend, premium will become even more challenging as a value proposition for salespeople.
Sounds pretty bleak- what do we do?
Teams are most likely going to need to build premium sales back up in pieces rather than continue to look for long term contracts. Expect to see more success selling packages, one-year deals, and single-game tickets. Spend more time chasing wealthy individuals instead of relying solely on companies. Could this approach hurt our long term ability to sell the most exclusive spaces we have to offer? Absolutely, but it might just be a necessary evil.
Premium salespeople- I do not tell you this to bring doom and gloom to your start of 2021. Instead, I want you to understand what you are up against so you can be prepared. While it may be discouraging to see your counterparts in the season ticket sales department celebrating another record week selling to a rabid fan base or disheartening to see a sponsorship rep close a partnership with a former suite holder, stay true to your craft. Premium sales was the hardest job in sports before the pandemic and finding ways to succeed through these new circumstances will make you that much of a better seller. If it would make you feel better, go back and read our post from a few months back urging sales leaders to toss sales goals for the foreseeable future.
It is going to be tough but you can do it. The best salespeople I have seen are the ones that can bring relevant experience to any given situation. Use the challenging environment of 2021 to push yourself to greater things in the future.
To your success!
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Evan Gitomer is a contributor to The Strategic Sports Group newsletter.