Premium Seats and Suites Boom Amid General Admission Ticket Slump
Teams across the sports ecosystem are struggling to sell general admission tickets. Tim Statezni (VP for business operations, Legends) told Sportico’s Jacob Feldman, “There’s not a team I’ve talked to that has not had challenges with moving tickets.” But for all the trouble clubs are having with general admission seats, it has been a different experience selling premium seats, suites and boxes on the back-end of the sports hiatus. Utah Jazz chief revenue officer Chris Barney explained that the dichotomy stems from a variance in supply, the recent wealth accumulated by fans in the 18-34 demo, and the shifts in consumer priorities, routines and habits over the last 20 months.
JWS’ Take: For clubs in some leagues, premium seating is the main driver of ticketing revenue. While every team and market is different (think: inventory varies by venue, amount of disposable income varies among fan bases), Barney guessed, “If you talked to any random team in the NBA, premium seats make up somewhere between 60-70% of [their ticketing] revenue. It is a huge percentage.” (League sources put the average at around 50%.) That is despite premium seats and suites making up less than 20% of total inventory.
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In the NHL, premium makes up a much smaller percentage of ticketing revenue. “Here in our market, we’re looking at closer to 15-20%,” Sara Daniel (VP of Ticket Sales, Carolina Hurricanes) said.
Historically speaking, premium seating has largely been marketed to a B2B demo. So, it would have been logical to assume sales were down with so many companies still working remotely; if employees aren’t being asked to go to the office, they’re probably not being asked to host prospective clients either. But as noted, that has not been the case. DePaoli said most organizations across the big four leagues are “operating at 90-plus percent [sold].”
Remember, a large portion of premium inventory comes with contractual obligations that span multiple years (club seats are often the exception). And as Sara Daniel (VP, sales, Carolina Hurricanes) said, “Typically only 15-20% [of the contracts and leases] come up for renewal each year.” With teams re-upping premium seat and suite holders at a high percentage—the Jazz have renewed at a 95-98% clip over the last five years; the Carolina Hurricanes have renewed at 90%—there is little inventory to sell relative to the number of season and single-game tickets available.
But it’s not just a lack of supply responsible for the strong premium ticketing market. Demand is high, too. In Utah, the Jazz “sold more full-season suites this year than [the club has] in years past. We didn’t keep as many rentals as we normally do because the demand was so strong…. If we had 500 more club seats, they would be sold,” Barney said.
A similar dynamic is playing out in North Carolina. Daniel said sales of Hurricanes premium club space “is up about 15% through seven games…. The demand there has been significantly higher [this year].” The team has also sold more leases on suites and loge boxes than it has in years past.
Clubs across the NFL have also found demand for premium inventory to be strong. Collectively, teams renewed over 90% of club seats for the 2021 season. “New club seat sales are up 45% versus 2019, total club seat sales are up 10% versus 2019 and revenue is up 23% overall on club seats versus 2019,” Bobby Gallo (SVP, club business development, NFL) said. “On the suites front, [we were tracking] above average renewals and strong new sales for the 2021 season.” While the league does not collect suite data as often as it collects ticket sales data, it does expect new sales to be up at least 5% and likely more when you factor in new stadium revenue from SoFi and Allegiance [this year],” he added.
The rise in demand is a byproduct of the increasing number of wealthy individuals—particularly those under 40—now in the market for premium seats and suites. “People have more cash on their balance sheets than ever before. And more and more, [they] are interested in having a unique experience when they go to a sporting event,” Barney said.
That may mean enjoying the game in a more intimate environment (particularly if they are highly concerned about the ongoing threat of COVID-19). “Usually speaking, people in your suite you invited or in a club setting, there are less people than there would be if you were in a general admission seat or [on] the general concourse,” Gallo said. “Given the world dynamics that we live in today, I think that, along with Clubs becoming more creative and differentiated in their premium product offerings, has probably driven the uptick to some extent on the premium side.”
The competitive labor market may also be a factor. “Every advantage that [a company] can give itself in retaining employees [is being explored] and premium seats, that’s one of the main drivers for a company to buy them; it’s for employee rewards and employee retention,” Barney theorized.
The one area of the premium ticketing business that has failed to bounce back since fans returned to venues, however, is group hospitality. “The company who does a one-time outing—they buy a couple of suites or the party suite—those [inquiries] have seen a significant decrease across all sports,” DePaoli said.
The decline in group sales impacts teams across the ecosystem differently. While it may represent just a small portion of the ticketing revenues for some (think: NFL teams have relatively few group sales since such a high percentage of their seats are sold as season tickets), for others it can be “the lifeblood of their business,” DePaoli said (many MLB ballparks have group hospitality areas built into the design).
There isn’t a great short-term solution for those teams—particularly ones without an ability to slice the group hospitality space up to accommodate smaller groups (which some new venues have). As a result, DePaoli said most teams are simply doing what they can to get the most out of the real estate. “If you have a space designed for 100 people, but a group of only 20 wants to take it, in the past you would have said no thank you. At this point, you might say 20 is better than 0, and look to upsell that client in the future.”
If the group business does not return, there could be reconfiguration of larger spaces in venues across sports. But teams are sitting tight for now waiting to see how behavior changes long-term. “It’s not worth trying to make a radical change now and spend a bunch of money on CAPEX for something that may only be a short-term problem,” DePaoli said, adding that he expects the group sales business to slowly start to come back during the 2022 MLB season.
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