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The Score - Anthony Schoettle

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Sports Business

How long can Pacers afford steep ticket discounts?

December 8, 2011
KEYWORDS Sports Business

The Indiana Pacers sales staff is coming out of the gate firing this season.

For the team’s home opener on Dec. 26, the Pacers are offering tickets for $5.

As some of The Score’s Twitter followers pointed out, that’s cheaper than a minor league baseball or high school basketball game.

The Pacers are offering good seats for $15 and really good, lower level seats for $40 for the home opener against Detroit.

With the fans still smarting from the lockout it’s a smart move. Fans have to know they’re appreciated. The fans also have to know that part of what the NBA owners are saving (a combined $280 million annually) with the new collective bargaining agreement is going to go to them.

But many sports economists doubt whether the new agreement governing NBA player salaries will result in long-term ticket price reductions, especially in small markets like Indianapolis.

The poorest NBA teams are losing $17 million—or more—annually.

Once you take the $280 million and spread it over 30 teams, teams like the Pacers aren’t going to get all their annual losses back.

The owners are supposed to sit down in the next few weeks to hash out a more generous revenue sharing plan.

But league insiders said the likely best scenario for a team like the Pacers is bringing them near break even while allowing them a slightly better chance to compete against large market teams for star free agents.

“Though this deal is viewed as a win for owners, many of them didn’t get what they wanted,” said Marc Ganis, president of Chicago-based sports business consultancy SportsCorp Ltd, which counts several NBA teams as clients. “Teams like the Pacers may have barely got what they needed.

“This deal may help [the Pacers] be more competitive and financially sustainable, but only with excellent management. These owners wanted a 7 percent to 8 percent operating margin. With this new deal, the best case scenario is break even.”

As the Pacers have worked to rebuild their roster into a playoff contender, the team’s sales staff has been among the league’s most aggressive in promotions and price discounts. But as the team starts to play better, those steep ticket discounts will likely evaporate.

“Long-term ticket price reductions is a fairy tale, but I think NBA owners realize they have to show fans some appreciation for bearing with them through the lockout,” said Notre Dame sports economist Richard Sheehan.

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