Happy Meals and Ticket Sales

 This week the Sports Business Journal reported that Major League Baseball teams dramatically increased their use of in stadium giveaways in the 2010 season in the face of drastically reduced consumer spending and the worst economic conditions since the great depression.  According to SBJ,  Major League Baseball clubs combined for 719 giveaway dates this season, a 16 percent increase over 2009 and a 25 percent jump compared with 2008.   Meanwhile the City of San Francisco, whose World Champion Giants were the very first baseball team to offer a bobblehead giveaway, became the first city to ban free toy giveaways in “unhealthy” kids meals.  What can we learn from all this you ask?  Premium “giveaways” work! 

While consumers and lawmakers will now debate the merits of government intervention and regulation of fast food kids’ meals, few can argue against the effectiveness of premium items  – whether to sell a “Happy Meal”  or a ticket to a sporting event.

What’s a premium?

Premiums are items that are given away for free in exchange for a consumer action (buying a kids’ meal or a ticket to a sporting event) .  McDonalds introduced the Happy Meal in 1979 and currently sells 2.5 million per year.  In addition to boosting fast food sales, Happy meal toys are sought after by kids and collectors alike and include games, watches and figurines with tie-ins to popular brands like Star Wars, Hot Wheels, Barbie, Batman, Avatar,  Spiderman and others.  Other major fast food chains and smaller independent chains and restaurants alike use toy premiums to promote children’s meals.

Sports marketers have traditionally used premiums to increase sales for lower-demand games such as weekday games and games against lower drawing teams.  Years ago popular sports premium items were low cost items like pens, pencils calendars and notepads.  Today sports premiums are an integral marketing component in all professional sports but with 81 home games and large capacity stadiums, Major League Baseball is truly “The Bigs” when it comes to sports premiums. 

Sports Premiums Today

Today professional sports teams utilize higher perceived value premium giveaways including bobble heads, t-shirts, caps, blankets, towels. lunch tins, backpacks, and bags to sell excess ticket inventory.  The incremental ticket sales revenue generated goes directly to the bottom line along with additional parking and concession revenue resulting from higher attendance.   Teams have developed fairly sophisticated models to accurately measure the incremental revenue generated by a specific premium item giveaway while accounting for other variables such as strength of opponent, weather and game date; they know what works.  The Sports Business Journal reports that professional teams are now including giveaways for weekend and higher demand games even where there are much smaller potential revenue gains from tickets sales.  The reason is that aside from the aforementioned revenue increases, premium items also create stadium atmosphere and provide an effective source of advertising at a relatively low cost per impression.  Sports marketers are beginning to view premium items not only as a means to move the ticket sales needle, but also as an integral part of experiential marketing - creating a memorable event that builds brand awareness and loyalty.   Often times, the cost of the premium item is shared or paid for by a corporate sponsor such as a consumer products company, insurance provider, health care company or a bank looking to reach a large targeted audience, increase its brand recognition and co-brand with professional team.   In stadium sports sponsorship allows sponsoring companies market directly to fans in attendance while simultaneously reaching a much larger television audience.   Savvy marketers often choose higher visibility items such as T shirts, banner signs and caps to capitalize on televised games.

Sports teams are unique in that they have a combination of very high fixed operating costs and finite, expiring revenue potential.  Each game is a scheduled event that is going to take place whether the seats are empty or filled and facility overhead, player salaries and other expenses are largely fixed expenses regardless of gate attendance.    If 10,000  $30 seats aren’t sold for a game, that’s $300,000 in ticket sales revenue plus considerable additional concession revenue that is lost forever.  As a result, teams are highly motivated to sell excess inventory and rather than devalue ticket prices by discounting, they use premium giveaways to add value, boost sales and simultaneously promote their brand and improve the fan experience.  In an era with ever-more competition for sports consumers including home theater and 3D television sports premiums aren’t going away and guess what… neither is the Happy Meal.

By:

John Tulchin

Partner, In Stadium Promotions

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