Tuesday, June 21, 2011

Pepsi Can Promotion a Positive One for Royals

Here at Royal Intent, we have been discussing various ways the Royals could improve ticket sales by offering fans discounts for tickets which we feel are too expensive and thus hurt ticket sales, particularly those in the upper deck where a View Level Infield ticket is $18 at the gate.

One thing the Royals did back in 2002 and 2003 was offer coupons inside 24-can Pepsi cubes which were $3 off any ticket.  The Royals have offered a similar promotion this year -- properly marked Pepsi cans are good for Buy 1 Get 1 ticket to any Monda-Thursday non-premium game to any seat in the upper deck!  Fans can bring the cans to the gate and avoid the silly online processing fees, or buy oneline at royals.com/pepsi.

This is EXACTLY what the Royals should be doing and is a wonderful promotion.  Fans don't have to buy 5 games or 10 games, or buy online -- they just bring the can to the gate and get two for the price of one.

For a seat in View Box, that amounts to being $10/ticket, which is $2 less than they were in 2003, about where they should be for Monday-Thursday games.

Hats off to the Royals for this promotion -- we hope they continue it next year!

Friday, June 3, 2011

Cases in Point on Why the Royals Should Lower Prices

We've written a lot on this blog about why the Kansas City Royals need to lower ticket, parking, and concession prices.  Some may think we're beating a dead horse, but in our eyes, the horse is not dead nor has it ever been. 

We've covered all the reasons why, of course, but this week more evidence emerged on why the Royals business office needs to completely re-think their approach to pricing, particularly in light of news that the economy is not recovering, that unemployment is up, and that half of the nation's job growth came from a hiring spree at McDonald's. 

Put simply, in a McDonald's economy, the Royals are not going to sell many $18 seats to the last row in the upper deck.  Yet, the vast amounts of empty seats in the upper deck should not signal that there is little interest in the Royals.  There is a ton of interest in the Royals -- it is just when prices to park, buy a ticket, and eat at a game are high, and all the games are on television, attendance will be low. 

However, when games pop up that are affordable with significantly lower prices, there is ongoing evidence that the stadium gets an attendance spike.  Take a look at this week:

On Monday against the Angels, after a terrible road trip by the Royals, they drew over 24,000 people for a 3 p.m. game on Memorial Day.  Much of that attendance spike came as a result (we know because we were there) of the $5 "Royal Nite" discount for any non Hy-Vee Reserved area of the upper deck, a $13 discount per ticket...enough to bring out a number of families and other folks who wouldn't have otherwise made the trip.  Not only did those people spend $5/ticket on seats that otherwise would have been empty, they paid $10 a car and paid ample amounts in concessions -- a revenue boost to be sure.

Then, from Tuesday - Thursday, the Royals had NO discounts, and attendance ranged between 12,000 fans and 14,900, not cracking 15,000 once.

Then, Friday comes -- Buck Night -- which increasingly a great deal given the the price of a hot dog is now a ridiculous $4.75 and the pride of a soda is $4.00, so you're again talking about 75% savings.  Tonight, the Royals drew 32,000.

So, in two nights with substantial discounts on either food or tickets, the Royals drew a combined 56,000.  In the three nights with normal prices, they drew a combined 42,000.  Hmmm....

A puzzling side note to this is that Saturday night's game against the Twins is for some reason a "premium priced" game, usually reserved for games against the Yankees, Red Sox, Cardinals and Cubs.  Yet, no other games against the Twins are priced this way -- a price increase of $5/ticket.  Thankfully, there is a Mizzou discount available for some parts of the stadium -- though the discount, when you add in the insane internet fees, is quite modest over what is a normal game.  A View Level Infield ticket, with fees added, is $14.75 a ticket (advertised as $11), when it's normally $17 or $18, though it's $22 for this particular game.

All this goes to further our argument that pricing in baseball is completely out of whack.  In an economy that is absolutely in the crapper and with a zillion options for entertainment choices, the Royals need to be lowering prices dramatically in order to get people in the gate.  Yet, the Royals business office stubbornly refuses to address this issue.  A friend of this blog actually received an email from a Royals employee touting their game packs advertising $5 seats if you buy 8 games -- the think is, the $5 seats were ONLY available in the Hy Vee View Level -- the far ends of the upper deck, 20th row and up -- and only if you bought 8 games.  (Hey Royals, some fans don't want to commit to 8 games -- just sell them at $5 period!) This email also mentioned the Monday Royal Nites -- a nice deal, to be sure -- but the problem is there are only like 4 or 5 all season. 

So, what would we do?  We've talked about this before, in great detail, but for now we'll focus on the specific issues mentioned in this blog:

1. Royal Nite should be expanded to at least Mondays and Thursdays, as it was many years ago.  Thursdays are usually a down night for the Royals attendance wise, as many fans who are holding off for a weekend series may not go, and it would be a good way to get in some folks who want a bargain.  However, we'd actually advocate all Sunday-Thursday games against teams not named the Red Sox, Yankees, Cardinals and Cubs be $5 for any Hy Vee Level seat that isn't Hy Vee Reserved, with the Hy Vee Reserved (old View Box) seats being $10.

2. The Royals need to evaluate their concession pricing for standard ballpark items like Hot Dogs, Regular Cheese and ChipsNachos, Small Sods, Cracker Jacks, and Peanuts -- and sell all these items on a special "$2 menu".  Almost like a discount menu for standard ballpark fare.  If you want to charge $10 for a brisket sandwich, go ahead -- but don't charge Joe Fan $4.75 for his dog.

These two things are simple things the Royals could do that wouldn't be a huge drag on their revenue. 

However, we do want to note one great thing the Royals did regarding tickets.  They were giving a voucher for a free ticket to certain games through July 22 or any fan who gave at least $5 to the Joplin relief effort.  That's a great way to fill up the stands, STILL make revenue off parking and concessions, and help a great cause in your own state.  The Royals haven't been doing ticket vouchers like that for a while now, and it was great to see, and a great way to fill up some of those vast empty seats in the upper deck.

Tuesday, May 17, 2011

The Future is On Its Way

First Eric Hosmer, now Danny Duffy.  May the next guy be Lorenzo Cain, who is dominating in AAA ball, and doesn't deserve to have Melky Cabrera in his way.

Saturday, May 14, 2011

Royals Need To Make Ticketing Simpler

Just a few years ago, purchasing a ticket to a Royals game was very simple.  You'd go up to the gate and there were these distinct sections:

All 100's
------------
Dugout Box (Area between first and third, below sidewalk concourse)
Dugout Plaza (Area between first and third, behind sidewalk concourse)
Field Box (Beyond first and third, below side walk concourse)
Field Plaza (Beyond first and third, above sidewalk concourse)

Club Level (2nd Deck, anywhere) --- 200's
View Box (First 12 rows, upper deck) --- 300's
View Level (13th Row and up, upper deck) -- 400's
General Admission (outfield) -- 100's

Club Level was always the highest, then Dugout Box and Dugout Plaza, then Field Box and then Field Plaza, then View Box, View Level, and finally General Admission.  No Upper Deck seat was more than $12 and the highest ticket in the stadium was about $25.

Parking was $5 for season ticket holders, $6 for non, and it stayed that way for years.

However, in recent years, the Royals ticketing system, at the same time prices have gone up, has gotten incredibly complicated.

First of all, when they did the renovation, they decided to redo the entire numbering system.  Now, the upper deck is 400.  Second of all, what was View Box (now HyVee Reserved Box) is now like the first 20 rows, instead of the first 12, making some upper deck seats 20 rows up an absolute rip off for $20, on what used to be $10 just a few years ago.

Second of all,  they've added more sections of classification, and gotten rid of GA, as everyone knows.  There are now SEVENTEEN different classifications, which is okay in theory if the pricing made sense.  What used to be an outfield seat for $7 in the late 90's is now a $25 rip off.    In the upper deck, they've got an odd system where the last row of the upper deck behind home plate is $3 more than a seat in the first row just a bit beyond third base.  In the lower deck, a seat that was just about $20 around 2001 is now $84, or in some cases, $48.  The added sections isn't necessairly a bad thing, but the prices are too high for the value in some sections.  Generally, the upper deck prices are a rip off, particularly when you consider the most valuable seats -- the first 8 rows or so right behind home plate -- were eliminated in the renovation, an absolute indefensible decision by the Royals to add a few suites that forced the press box to go higher.  Rather than tipping their hat to fans relocated by this renovation through a price reduction, the Royals, since the renovation, have hiked up seats in the remaining areas of View Box by 33%.

Third of all, the Season Ticket discount, not a bad thing in theory, is so low that is it of little value.  $1 off a $20 ticket?  Do the Royals really think this will encourage people to buy a seasont ticket?  If one is to buy just a 21 game package, that only amounts to one free game in the package.  It's not enough.

Fourth, now they have instituted a confusing system where Single Game Tickets purchased in advance are cheaper than those bought at the gate.   Given the Royals are likely to benefit from walkup crowds over any other kind of source, this isn't a good idea - if the Royals can take the cut on fans buying in advance, they should just lower the price to what it would be to buy the ticket in advance.  In addition, unless you're at a game already, the cost of the online fees -- $4.50 if you're just buying one -- makes the cost of buying a ticket in advance not worth it if you're buying online.  You'd do better to show up and buy a ticket at the day-of-game price.

Fifth, while you can at times, find discounted prices through one of the Royals occasional deals for 1/2 price tickets, the online fees remove a great deal of the benefit of the discount.  Take the Royals Drury Inn Discount recently offered in a mailing to various homes in the city.  Only offered online, this discount theoretically reduced the price of a ticket from $19 to 9.  The problem is, $4.50 in fees later, the price was $14.50.  Still a discount, but not the 50% discount advertised. 

Sixth, while the Royals like to talk about all the deals they offer, too many of them involve buying multiple games and/or they are not offered in enough sections.  For example, the Royals have cited their "Value Pack" which is 8 games at a reduced price.  The problem is, if you go through the system, the 8 game price is only offered in Hy Vee View Level -- the far reaches of the upper deck on both ends, above Row 20 -- for $40 -- or in Field Box, where it is hard to see much of the stadium -- for $130.  Note, both of these prices are probably what the prices should be anyway -- but they are not bad deals.  The problem lies in the fact the deal is not available for View Level Infield, Hy Vee Reserved Box, or Hy Vee Box.  So, most of the upper deck is not available for this special deal, rendering its value lower than it should be.

A similar problem arises in the package that allows you to buy 10 promotional games.  While in theory the deal is nice, forcing people to buy 10 gamesis not wise.  They should offer 5 and 3 game packages at the reduced rate as well.

In our view, the Royals need to make some major reforms to their ticketing system that makes it easier to understand and more beneficial to the fan living on a budget, or even the fan not living on a budget who still would object to being nickeled and dimed to death. 

Ideally, this would be our system:

Pricing  (setting side special boxes)
----------------------------------------------------
Diamond Club -- $60  ($50 season ticket)
Dugout Box -- $30  ($25)
Loge Box -- $28 ($23)
Loge Outfield -- $26 ($21)
Dugout Plaza -- $25 ($20)
Field Box -- $20  ($17) season ticket
Field Plaza -- $18 ($15) season ticket
Hy Vee Reserved Box (First 12 rows, between bases) -- $15 ($12)
Hy Vee Vox (First 12 rows, outside of bases) -- $12 ($10)
View Level, above 12th - 20th row --  $10 ($8)
View Level, 20th and Up -- $6 ($5)
Outield Plaza (all) -- $13 ($10)
Fountain Seats --  $5 (day of game only)
SRO -- $10 (yes, with all the walking room, the Royals should sell 2000 SRO tickets for $10 a piece -- the rule is you have to stand until the 3rd inning, at which point you can sit anywhere that is not Loge Level or the Diamond Club -- but you have to move if the ticket holder comes up)
Parking -- $10 on Fri/Sat night, $5 on weeknights, Free on Weekday day games and Sundays.

No Advanced Purchase Discount on Tickets -- it discourages walkups.

Online Ticketing
$1 max online fee, per ticket
For discounted tickets, allow for printed coupons that people can take to the gate.

Ticket Deals
Make Season ticket discounts as follows:
10 game package -- 15%
21 game package -- 20%
40 game package -- 33%
81 game package -- 50%

In special multigame deals such as the Value Pack, increase the flexibility by increasing the sections available or allowing people to buy 5 games instead of 10, for example.

These are some basic changes the Royals could employ to make it more attractive to come to games.

Tuesday, April 26, 2011

The Business of Baseball -- Are Prices Too High?

First of all, apologies to those who followed this blog in the past, for the lack of attention the past year. Yes, we're still Royals fans, and yes, we follow the team, but the time required for detailed postings has not been available, but we're hoping to increase the number in the future.

Second of all, on that note, we look forward to some more posts about various aspects of the Royals, from the team now to the team that will be coming in the future, and hope that you enjoy.

In the next few posts, however, we're going to talk about a subject that we addressed the last time we posted a year ago, and that's the issue of ticket prices, and with it, the overall business of baseball and indeed, sports themselves.

In doing so, let's take an overall look at the economy itself. Unemployment is high and has stayed high. Even those who are employed are often underemployed, which means they have less to spend on entertainment. Even those who aren't underemployed are fearing they will be soon, and thus have less to spend as well. Food prices are up, gas prices have skyrocketed with little sign of stopping. None of this is good, in itself, if you're a franchise like the Royals or an entity like Major League Baseball and you're trying to convince fans to come to the ballpark.

Of course, people still do spend money on entertainment, even poor people. Those without much money may elect to get cable every month, but not much more. Those with modest amounts of extra money, but who aren't poor, may elect to go to dinner, but not spend as much on dinner. They may eat at home, now, and then go to a movie. The point is, people are cutting back more than ever before.

That puts baseball, and all sports, in a difficult position. Because, as with all major sports, you're not talking about just a 1-2 hour experience, but a 3-4 hour one, at least, when one considers the time to get to and from the event, and the necessity in arriving early. You're also, unlike with most entertainment options, also talking about paying for parking, in addition to an articifically hiked cost for concessions, and the need to sell merchandise -- all are required to pay the bills.

Baseball is in a particularly unique position becuase unlike football, which has, in the case of pro-football, 8 or 10 (if you include pre-season) dates to sell, or even unlike the NBA, which has 41 dates to sell, it has 81 dates to sell. To a stadium, in the Royals case, which has 38,000+ seats.

And, as anyone who has been to just a few Royals games can tell you, at least half, it not more, of those seats sit vacant on any given night. 20,000, in fact, is considered a good crowd -- a night in which 18,000 seats empty.

What's interesting in the case of the Royals, and most baseball teams, is that despite those attendance issues, they are making money. The reason is TV revenue in addition to the increase in premium seating -- in the Royals case, which is just a refurbished, and not a rebuilt, stadium -- you see such seating throughout the ballpark. In the past, the premium seating was the Club Level -- now, it's actually on the low end, price wise, of the premium seats -- with areas such as the Dugout Box taking the cake. The result is more revenue for the Royals -- a very good thing, no doubt.

However, despite the fact that the taxpayers paid for those renovations and despite the fact that attendance has not gone up (other than a small blip for folks to see the renovations), despite the fact the economy sucks and Kansas, a good portion of the Royals market, is LAST in job growth, and despite the fact the Royals have been awful every single year, the Royals have increased ticket prices across the board, even from 2010 to 2011.

Now, those defending this will say they have to keep the value of their product high. Others will say its the reality of the game, that the advent of MLB.tv and 140 games being on television makes attendance not as important financially. Others will say it doesn't matter at all, and that those who argue for lower ticket prices are thinking with a 1960's mindset. Still others will argue that they are setting what the market will bare.

On each front, we sharply disagree -- and would argue that the Royals, and baseball as a whole, should explore the pricing of their game -- not only from a financial "bottom-line" perspective, but from an overall "good of the game" perspective as well, with the core point being that baseball (and other sports too, but baseball particularly, with its unique qualities) is on the verge of killing itself long term if it doesn't adjust its approach to pricing today.

In doing so, we'll mainly focus on the Royals, as they are here in our market, and what we know the most about. The Royals are, in essence, an ideal fit for this kind of study, as they are a team with decent, but not outstanding, tradition and history (they aren't the Red Sox or Cubs, but they aren't the Mariners), a good fan base (we're not the Cardinals, but we're not the Marlins), and a team with terrible recent on the field performance, but with tremendous hope for the future. They are, though in a small market, a market that has tremendous potential -- they can, with Omaha, Des Moines, Wichita, and Fayetteville/Springfield all within 3 hours, be a regional power, and, with the growth and income levels of Johnson County and some Missouri suburbs, have the potential at a loyal, suburban, fan base that can continue to grow and fit its image -- family friendly, easy access to the game for cars, etc. They are, in essence, the kind of team and franchise that has plenty of room to build and the kind of franchise MLB needs to succeed.

Yet, despite these pluses, we are concerned that the current ticket price structure at the Royals, particularly when coupled with the recent status of the economy, partiuclarly in Kansas, that the Royals are limiting the opportunities for young sports lovers to become fans, for average fans to become super fans, and for super fans to attend as many games as they otherwise would.

In our last post a year ago, we highlighted the differences between 2003 pricing and 2010 pricing -- a 7 year difference. Those prices have gone up a little again in 2011. So again, we are not talking about comparing 2011 to 1960, we're talking about the same decade period, where prices have increased anywhere from 50 to 300%, while income has gone down or barely stayed the same, at a time when the Royals have been bad on the field, at a time when revenue-generating seats were added, and at a time when the taxpayers that pay for those tickets are paying a special tax to fund the stadium that they barely can afford to get into.

This post, we want to bring back those arguments but also add into it some broader arguments about the uniqueness of baseball and why high ticket prices are not sustaintable nor wise, both economically (lost potential revenue, both short term and long term) and culturally (for the health of the game itself).

Looking at the uniqueness of baseball for a moment, consider these points:

1. Baseball has 81 games. For the Royals, at 38,000 seats, that's the potential of around 3,100,000 fans attending in any given year. Compare that to football -- look at the Chiefs, who have the potential of just, regular season only, 624,000 fans in any given year. Or KU football, which has the potential of just 300,000. The point is, the Royals capacity should dictate, at least for upper deck and non-premium seating, much lower prices that would encourage fans to come to more games. The Royals need fans to come 5-10 times in a year, not 1 or 2. Yet, if you look at the realistic cost to attend one Royals game, the Royals have -- as other teams in baseball have -- priced even upper deck tickets to the point where fans can not expect to attend more than a couple games, let alone buy season tickets.

2. Baseball is a unique experience. Attending a baseball game is different than football, hockey, or basketball. Going back to point 1, with 162 total games, not every game is a huge deal, whereas in football, it is, same as in college fooball and college basketball. Even in the 82 game NBA season, the regular season game is twice as meaningful as in baseball. But it's also the nature of the sport -- those other sports are nearly all action, all the time -- whereas in baseball, there is a lot of downtime, even during play. An at-bat vs. one play in football for instance, is one measure -- an at-bat can go on for 10 minutes, with numerous foul balls. Baseball is the game where you leave for a half inning to grab a beer and peanuts and you do not care, as that is part of the reason you came, whereas in football, you tailgate before so you don't have to grab the beer, because the play you miss could be the season. Baseball is the game with unique sounds - like the crack of the bat or the smack of the mit. It is the one game that isn't timed. It is the one game where players object is to essetially make it around in a circle, rather than go across a goal line. It's the one game where people go just to go, not because they care who is playing. It's the one game, where, due to its minor league system, we remember when a player broke in, and we truly can develop a connection to that player, due to the number of times we see him, whether it is on TV or in person.

3. Baseball is not, due to its nature, made for TV. This is partially related to point 2, but the TV doesn't always capture the guy stealing second, the left fielder moving in, the way the wind is blowing in or out. It usually just captures the pitcher throwing a ball to the batter. It's the kind of sport where you turn away for an inning and come back, and you barely notice. Also, again due to point 1 and the number of games played, it's also not conducive to people watching it every single game, like they do in football or even other major sports.

4. Baseball was made for the regular guy. It was made for the stat geek who follows every walk and every strikeout. It was made for the anti-stat geek who loves to simply "feel the game" and watch the intangibles of a player, from the way he carries himself in the on deck circle to how he runs out to the field. It was made for the new couple who is looking for a fun date or the single guy who is looking for something to do or the married guy who wants to get out of the house or the father and son who want a time together at the park they will remember forever. It was made for the fan who on a whim goes out the park and lays down a few bucks to park and a few bucks for a ticket. It was made for the family looking for something to do together on a Friday night that will empahsize family but also is fun as well.

The point of all this is to say that baseball, more than any other sports, requires attendance to not only survive financially, but to emphasize what is uniquely great about baseball -- attending the game itself. If people aren't attending games, and in good numbers, and more than once or twice a season, the game is not healthy. And baseball isn't healthy, in our view, at the present time.

In the next few posts, we'll examine the cost of attending games, looking at realistic, real life scenarios families face, why the Royals and baseball should care about attracting fans in such situations, and the potential revenue the Royals and baseball are losing out on in their current structure, and creative things they could do to attract those fans back to the park on a consistent basis.

Thursday, April 15, 2010

Royals Prices: 2002 vs. 2010

Kauffman Stadium is a beautiful ballpark, full of wonderful sightlines and just a general nice atmosphere for those who want to relax, even when the Royals are playing poorly.

Unfortunately, while the Royals play has not improved during the last 8 years, the Royals prices have dramtically increased. While some increase is to be expected over that same period, the level of increases is so dramatic it is no wonder that a trip to Friday night vs. the Red Sox, a premium game, resulted in a dissapointing crowd. While Saturday's jersey day/Greinke outing was sold out, the Royals surely were looking for more than the modest Friday night crowd. It will only get worse for games against teams like the Mariners, Devil Rays, and Orioles.

It is our feeling here at Kaw & Border that the Royals are on the verge, if they haven't already, of outpricing their product. No longer can a family of four head out to the park more than a couple times a year. No longer can a couple go out for an affordable date in a reasonable seat at the ballpark. And while the Royals will point to HyVee View Level ($9) and the Fountain Seats ($7) anyone knows those seats don't provide a really good view of the game, either way down the line or so far in the outfield you can't see the video board OR see the outfielders when they are up against the wall.

In our view, the combination of ticket prices, concessions, and parking increases have put the Royals very close to being too high for the market. While we have no objection to expensive preimum seating or premium food, way too many aspects at the K have increased beyond what they should have, particularly given the economy and the poor performance on the field.

To illustrate this, here is a comparison (with percentage increases in price) from 2002 to 2010:

2002
-------------
Club Box $22
Dugout Box $21
Field Box/Dugout Plaza $18
Field Plaza $16
View Box $12
Outfield Plaza/View Level Infield $10
Hy-Vee View Level $5
Parking: $6

2010:
--------------
Club Level (now Loge): $37 ($44 for premium games) -- 68% - 100% increase
Dugout Box: $43 ($50 for premium) -- 105% - 138% increase
Field Box: $33 ($40 for premium -- 83% - 122% increase
Dugout Plaza: $36 ($43 for premium) -- 100% - 133% increase
Field Plaza: $26 ($33 for premium) -- 63% - 106% increase
View Box: $18 ($23 for premium) -- 50% - 92% increase
View Level Infield: $16 (21% for premium -- 60% - 105% increase
Outfield Plaza: $25 ($30 for premium) -- 150 - 200% increase (yes, prices have TRIPLED for premium games)
Parking: $10 (66% increase)

We won't even go into the concession increaes, other than to say a hot dog used to be $2 in 2002 and is now $4.50, and a small soda was $2, and is now $4.

These aren't modest increases -- these are dramatic. Skyrocketing prices, without a doubt -- and not sustainable for the Royals -- and you can bet if the club went .500, the prices would continue to go up and up and up.

And as the "New K" wears off, the attendance will go down and down and down.

Monday, June 15, 2009

A new ray of hope?

With the Royals sweep of the Cincinnati Reds over the weekend, they earned themselves a new ray of hope for a successful season. With the state of the AL Central, a solid contending season is still within their grasp, but they must continue their winning ways these week against the Arizona Diamondbacks and the St. Louis Cardinals. Anything less than 4-2 in this stretch would be a dissapointment, particularly given the Royals past success against the National League.

This week should bring some big crowds too, with Greinke T-Shirt Tonight tomorrow, the special "throwback price" day on Wednesday, and the Cardinals series over the weekend. Of course, for that, a good portion of the crowd will be Cardinals fans.