NC trend: Money ball

 In NC Trend

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By Spencer Campbell

Until this past season, the Charlotte Hornets (formerly Bobcats) have subjected their fans to some fairly terrible basketball over the last decade. However, there’s one area in which the franchise has always hovered around the NBA league leaders: low ticket prices.

According to Chicago-based Team Marketing Report Inc., the average cost to see a Hornets home game increased just $1.50 (to $30.60) between 2006 and 2015. By comparison, tickets to Los Angeles Lakers games increased by $17.89, to $103.27, during the same period.

In fact, North Carolina’s pro franchises — the Hornets, the Carolina Panthers and the Carolina Hurricanes — each charge less than the league average. Why?

“The generic answer is that you have a very limited number of seats and a very limited number of events” in larger cities, says Craig Depken, a sports economist at UNC Charlotte. “Somehow you have to allocate these seats to individuals who want to watch the game. One way to do that is to essentially allow individuals to engage in an auction.” North Carolinians, it seems, are less willing to shell out for sports than, say, New Yorkers or Californians who have more people competing for fewer seats.

Still, the case study for this economics lesson might be the Tobacco Road rivalry between the UNC Chapel Hill and Duke University men’s basketball teams, which serve as de facto pro franchises in the Triangle. Befitting one of sport’s most venerable brands, UNC ranked fourth nationally in average ticket price last season at $131.93, according to New York City-based TiqIQ. The Blue Devils were first at $198.02. Those numbers are a bit misleading because Duke plays in the 9,314-seat Cameron Indoor Stadium, while the Tar Heels occupy the 21,750-seat Dean E. Smith Center. To be eligible for season tickets, Duke and UNC require fans to make annual contributions of at least $7,000 and $6,000, respectively.

Tickets to Panthers games have risen 45% since 2013 in tandem with Cam Newton’s improved performance. But the Hornets — fresh off the most successful year since the franchise returned to the Queen City in 2004 — kept the cost flat for season-ticket holders who renewed by mid-February. “We’re only a few years removed from a 7-59 season,” says Pete Guelli, the team’s executive vice president of sales and marketing. Plus, the excitement for owner Michael Jordan’s “Buzz City” is tenuous. “We need time to resonate with fans,” Guelli says. “We’re still trying to grow, and we don’t want any attrition.”

The opposite seems to be happening in Raleigh, where the Hurricanes have raised ticket prices nearly $20 to an average of $61 since the team last made the postseason playoffs in 2010. One reason could be that the state started collecting sales tax on live entertainment in 2014. Another, more cynical cause might be the nature of hockey fans themselves. While fewer in number than professional baseball, football or basketball supporters, hockey fanatics are renowned for their loyalty. In short, they are less likely to bail on their team when prices escalate. “I wouldn’t say that fans are being punished for their loyalty,” Depken says, “but they are being asked to pay for their loyalty.”

In the end, demand remains the most important factor guiding pricing. How franchises measure demand, however, is changing with technology. The Hornets use analytics to measure the historical cost of individual seats, not only through their ticket office but also checking secondary markets such as StubHub. If interest rises in a particular contest — for example, Kobe Bryant’s final appearance at Time Warner Cable Arena — ticket prices automatically rise, too. The practice is called “dynamic pricing,” and airlines have been using it for years. Let’s hope this is the only airline pricing practice mimicked by our state’s sports teams.

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