ATLANTA — When Arthur Blank rolled out his “fan-first pricing” in connection with the opening of Mercedes-Benz Stadium two seasons ago – a 50 percent across-the-board chop on certain food and drink prices – you could just imagine the cringing rage of the Falcons owner’s fellow NFL overlords: What? Leaving concession money on the table? But soaking fans for bad hot dogs and watery beer is one of our most cherished traditions!
“We had a number of owners who weren’t understanding the dynamic, the reasoning, the logic,” Blank said at a news conference Wednesday afternoon. “[They were asking], ‘Does this make good sense economically?’ We never justified it in terms of economics, but today we can.”
Blank’s move toward cheap eats – which, against all standard practice, is still in force for the Super Bowl and other major events – gave the NFL something it couldn’t buy, no matter how hard it tried: good press. It seems a little absurd &ndash: and an indictment of how off-kilter the fan experience has gotten in the last 20 years – that the idea of cheap pretzels can mitigate against the many problems, both external and self-inflicted, the NFL has faced. But that’s exactly what’s happened. Blank indicated that 15 teams across a range of college and pro sports have followed the Falcons’ lead, and he added that The Falcons’ “books are open” for any team wanting to follow in Atlanta’s footsteps.
Granted, for fans the numbers aren’t quite as glittery as they seem once you factor in all the ancillary costs of going to a Falcons game, plus the psychological impacts that lower prices have on purchasing actions. But nonetheless, it’s like the old business-school maxim says: a $2 hot dog buys you more goodwill than a 7-9 season ever could.
The Falcons’ cheap-eats pricing covers all the ballpark basics: soda, water, pretzels and hot dogs are two bucks; nachos, waffle fries and pizza are three; beer and cheeseburgers are a five-spot; and chicken tenders and fries are six. It is, then, realistically possible to feed a family of four at a ballgame without having to take out a second mortgage.
“It’s working in terms of economics, but we didn’t do it in terms of economics,” Blank said. “We did it because it’s the right thing to do for the people who are supporting our business.”
But Arthur Blank didn’t become a billionaire by slicing prices 50 percent without expecting something in return, and it’s here that we note the caveats to the fan-first pricing. Not every fan is going to go with the two-buck hot dog option; once you’re in the door, savvy marketers know you’re a lot likely to spend more than you expected. You know this as the “$100 Target run” effect, and according to the Falcons, it played out to perfection: during the 2017 season, even though prices dropped by 50 percent, fans spent 16 percent more than they had at the Georgia Dome.
And if you know anything about the economics of food service, you know that restaurants turn phenomenal profits on soft drinks, somewhere on the order of 60 percent to 75 percent. You’re not getting those free refills out of the kindness of the restaurateurs’ hearts; you’re getting them because they’ve already turned a profit on you. A souvenir cup and a few shots of syrup and carbonated water don’t cost four dollars.
Plus, to even get into the stadium for a standard Falcons game without hitting the secondary market, you’ve got to pay for a Personal Seat License that runs from $500 for the highest levels to $45,000 for club levels. The Falcons don’t offer any single-game tickets for sale; everything’s controlled by those PSLs.
And hey, from the Falcons’ perspective, you get them in the door and you can get them opening their wallet for pricier markups like merch. A fan that’s spending less on food and drink has more to spend on merchandise; Falcons president Rich McKay noted last summer that the Falcons saw a 90-percent increase in merchandise sales from 2016 to 2017.
The Falcons’ maneuver, then, is less about the bottom line – that’s going to be just fine – and more about winning the ongoing battle between the stadium and the couch. The Falcons ranked first in fan experience surveys for 2017, in part because of the food and beverage element, and Blank expects the same kind of high ranking for the 2018 season.
“The idea came from the commitment, the notion, to continually find a way to say ‘thank you’ to our fans,” Blank said. “All the facilities and arenas across the country need to acknowledge that in any way we can.”
With fan-friendly promises like that, Blank might not want to close the door on politics. Cheap beer is always a winning slogan.
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