As a longtime New Yorker and someone that self identifies still as a NYer, I want to take a moment to acknowledge the 19th anniversary of the September 11th terrorist attacks on the US.
Now that we’ve hit the unofficial end of summer, how is everyone?
I’m fine! I’m fine!
I’m going to wrap up the Talking Tickets survey on 15 September to put together my findings. If you have about 2 minutes, I’d appreciate your feedback.
This is newsletter 50! Almost a year ago when I started the newsletter…and what a year it has been.
An early birthday present? Why not share this with someone you think would find it valuable!?
If you’ve enjoyed the newsletter, thank you for being here. I guess we can celebrate the 1-year anniversary in two weeks!
You know, I’m promoting the idea of voting this year. So make sure you find out if you are registered and find out how to vote if you are an American. Go to www.ivotedconcerts.com
To the tickets!
I don’t know if I mentioned it here, but over the last few weeks, I read a pretty interesting book on the rise of consolidation and monopoly power in the United States called Goliath.
I bring up the book in conjunction with the idea of deconsolidation because the hypothesis of the book is that the American economy has become more unstable over the last several decades due to the consolidation of economic power in fewer and fewer hands.
If we look at American history, we will see that in the States, there are swings in the economy where America swings back and forth between being entirely in the control of monopoly power and then there is a reaction that shatters that and we spend 60-70 years going back the other way.
Why have I spent so long writing about the background?
Because I think we may be seeing an end of the march towards greater consolidation in the ticketing industry and this could open up a lot of opportunities for folks going forward.
If you read the article above, you’ll notice that so many of the markers were moving up at extraordinary rates. Rates that I’d say were unsustainable and likely being supported by continued corporate entertainment budgets, brokers and consolidators working with the secondary platforms to push more folks to shop online, and the fact that for a while people were prioritizing buying experiences over stuff.
The pandemic has shown that this business model might not have been sustainable and that a lot of it was also driven by debt.
Sportico reported the NFL’s debt numbers and they were high. We have seen so many teams and organizations struggle because 30-40%+ percent of their revenue comes from fans in the stands and they had no rainy day fund.
What does all of this mean?
Three things I’ll keep an eye on:
First, I think you’ll see that there is more opportunity for smaller businesses.
The challenge in a lot of cases with these big businesses after mergers is that they struggle to respond to their markets, have pricing structures that hinder them, and they become easier targets for smaller more nimble competitors.
Second, the ability to market and sell a product is going to be even more important.
I have spent a lot of time over the years talking with y’all here and other places about the need to get more effective at marketing and selling.
Reading about deconsolidation and seeing the struggles that a lot of places are dealing with to communicate and generate revenue during a pandemic shines an even brighter light on the need to focus on revenue, marketing, and a change of strategy to give these businesses a bit more stability.
Third, the recovery is likely to take a little longer than any of us wish for.
I believe from conversations I have had that we aren’t anywhere near completely hitting rock bottom yet.
Until we do, we won’t be able to really recover.
I’m going back to school on the 22nd to work on a certificate in marketing, but after the last few weeks, I’m thinking I should consider studying up on finance.
I’ll admit that corporate finance and the ways that folks use debt facilities and such are not my number one area of expertise.
What I have learned over the last few years is that the private equity model isn’t one that typically lends itself to long term stability for the businesses that the private equity firms invest in.
A few months back, I mentioned Serie A and how they were investigating selling part of the league to private equity, and as this Bloomberg article says, “private equity took over everything.”So, at the time, I was a little skeptical of the idea, but the further we get into the pandemic…I think I’m more skeptical of the idea of taking the private equity money, but also more cognizant of the position so many organizations find themselves in.
These stories the last few months are pretty alarming because they point to a large amount of instability in the world of sports and tickets because of debt on these organization’s books. Further, the business models that these businesses were operating before the pandemic weren’t exactly holding up that well to begin with either.
We were seeing more and more empty seats at baseball games, concerts, college football, and more. And, TV ratings had been sliding, then rebounding, only to move downward again.
I bring this up because as we keep working our way through the pandemic, we’ve seen a lot of leagues, teams, and organizations be put on the ropes or worse by the virus and the economic fallout.
The deconsolidation article above talked about growth in ticket prices of above 30%. Spoiler alert, loading up more debt onto companies and hoping to pass it off to consumers isn’t going to be sustainable at those prices because the data had already shown that the average American hadn’t received a raise in close to 40 years and as the pandemic has shown, many Americans were living paycheck to paycheck and wouldn’t be able to weather a $400 emergency.
Those are long-term trends that were impacting us and with millions of tickets and viewers to try and get to give you their attention, expecting to double down on that strategy doesn’t seem like a wise decision.
What can this story point out to us?
Two quick ideas:
First, we probably need to question our relationship to financing our programs and our businesses.
It is surprising how much debt colleges, leagues, and organizations were carrying to begin with.
There is totally room for using debt and loans to help drive business growth, but at a point where your debt is 50% or more of your operating income, that seems dangerous to me.
Again, check out the book I highlighted above. It is pretty eye-opening about the relationship between the financialization of our economy and the inability of businesses to successfully innovate and grow with any stability.
Second, we likely need to take a hard look at the monetization model of our businesses.
I’ve pointed to the band, Pearl Jam, many times before because they have a dedicated fan club, they run a great touring business, and they have numerous streams of income.
You can also check out the Grateful Dead, the Man City football club, or the Australian Football League for multiple streams of income examples if you’d like.
The biggest factor driving all of that is the fact that they drove folks into the top of their sales funnel early on and they have been relentless in their focus on renewals and keeping the customers they have over the long-term.
I don’t have numbers on their fan club, but I do know that they have now reached a point where they have a third generation of fans buying their music, tickets, and merchandise.
Not nearly enough teams, colleges, and performers have anything even close to the set-up Pearl Jam has, even when they should be in a stronger position.
So we have to work to bring folks more to the Pearl Jam model of business.
How do we take action on this?
First, you have to look at the business model you’ve developed.
Where does the money come from?
How often are folks buying?
What is your active customer base?
What does your sales funnel look like?
We can go on here all day.
Second, think about what you need your business to look like to be successful.
Where does the revenue need to come from?
What areas are you not getting the maximum revenue from?
How can you increase the maximum revenue spent?
How do you get people to spend money with you even if they can’t come to your events?
Again, we can go on and on here. But get started on the idea of focusing on monetization and creating opportunities to trade value with your audience.
This article from the Washington Post lays out all the challenges facing Broadway and NYC coming back to life.
In a way, this is also true for the West End and any major arts center.
Tourists drive a ton of traffic to the arts, but so do locals.
The same goes for sports, concerts, and entertainment in general.
How do we get the arts and entertainment back online has been a popular topic around the world.
In Europe, we are seeing packages in many countries with billions of dollars, pounds, and Euros being injected into the industry to help encourage folks to go to a show.
In Australia, we are seeing their government recognize the importance of the arts and offering government support to the arts. Though how the money is being distributed is still a bit of a debate.
The important thing to keep in mind here is that the work that folks like Derek Palmer and others are doing with Save Our Stages and other initiatives is very important because the path forward will be long and difficult.
There are a number of initiatives that are ongoing. If you have a chance, participate in one of them. Even an hour can help a lot.
The SuperCup match between Sevilla and Bayern Munich may not be a marquee matchup for a lot of folks, but with over 11,000 fans, potentially, it will be one of the biggest events in the northern hemisphere since the pandemic started shutting down events in March.
The protocols that have become standard for entering a lot of places now will be on full display in Hungary with a negative Covid-19 test upon entry to Hungary, masks in the stadium complex, and social distancing on display.
To add to the excitement, FC Copenhagen has sold 12,500 season tickets for the upcoming season. As a point of comparison, last season it took the team half the season to achieve the 12,500 number. This year, 23 days.
These are all great signs and also provide a roadmap forward for a lot of places that are still working towards having fans in the stands:
You need a plan for testing, tracking, and tracing that is comprehensive.
You need clear expectations of your visitors and your fans.
You need to communicate effectively.
You have to be comfortable with the idea that you may have to change direction due to circumstances outside of your control.
If you want to check out a webinar on what lessons Americans have learned having fans at their games so far, there is one coming up next week…check it out!
As I’m finishing this up, we also saw the NFL kick off with fans at Arrowhead Stadium, capped at around 14,000 fans. They didn’t sell everything they had on hand, but the process seemed orderly and potentially a lot of lessons will have been learned that will be able to be applied in other venues.
Watching what is happening in MiLB and in small towns all over the country is sad.
I’ve pointed out some of the challenges of the MLB business model and how MiLB has been a model of innovation, customer focus, and smart business practices for a long time.
While in too many places, MLB hasn’t always done those things.
The deal that MLB can impose after the contract with MiLB expires on 30 September is a bad deal for the MiLB teams and fans of the game of baseball.
A few things:
MLB will take over and run the minors out of the NYC office. The MiLB team in the Tampa area had proven to be commercially successful while being fan-focused and innovative. With operations moving to NYC, it is likely that MiLB will take a backseat.
MLB will take over merchandising and other aspects with a more aggressive revenue split. This is likely to make the quality of the products and merch decline and it is going to strain many successful teams’ business operations at the MiLB level.
I’m certain we will see prices rise. That’s really the only lever that MLB has seemed able to push the last few years to keep revenues up and growing while real attendance has been on a steady and rapid decline.
What does this tell the folks in the industry?
There will be less jobs.
There will likely be a changing business model of minor league teams.
And, there will almost certainly be less chance for the minor league teams to outdraw the major league teams.
I guess 2020 is going to 2020!
I’ll be in DC this week.
Check out the Talking Tickets Slack Group.
I posted a great episode of the podcast this week with Dorie Clark. Dorie is a friend of mine and the author of a trilogy of books on professional reinvention. We discussed how to reposition yourself professionally now and a lot more.
If you haven’t already, subscribe and/or leave a review of the pod!
Check out the blog.
I’m running another mastermind on 24 September at 1PM EDT. I’m going to limit it to 12 folks and it will be $100 per person. Each session includes a 90 minute group discussion, coaching video call, access to me after the session via the email, and a pre-session questionnaire and discovery process to help prep you for the event. Want to come, email me.
Check out some of my friends:
Go to the Booking Protect site and find a bunch of resources about recovery and rebuilding trust after the pandemic. Cat wrote a great piece on rebuilding trust that y’all should check out and if you have been thinking about adding refund protection coming out of the pandemic, talk to Cat, Cath, Simon, or someone else from the Booking Protect team.
Check out the We Will Recover project put together by Einar, Martin, and the team at Activity Stream. This is a great resource to help get your organization back on its feet with classes, checklists, blogs, and other ideas from folks around the world…including me!