Discounting NBA tickets like airline seats
An entrepreneur helps pro sports teams fill stadiums more efficiently, using new technology that tracks ticket sales.
(FSB Magazine) -- As the NBA season gets underway, experts predict a tough slog for the Boston Celtics. Last year's team finished with 33 wins and 49 losses, and the roster this season is filled with younger players and few big names. The bottom line? Senior management has to rely on something else to help attract fans: StratBridge, a 15-person firm based in Cambridge, Mass.
A technology company that started out providing financial analysis to large firms such as Deloitte and McDonald's (Charts), StratBridge has created software that allows pro sports teams to sell more tickets faster.
Previously when team executives tried to analyze how customers were buying seats, they had to wait as long as two days to receive paper reports. The documents came in a clunky format that had to be deciphered, and each covered just one or two days.
Meanwhile, opportunities were passing by, as seats that might have sold at a discount instead went empty. StratBridge, which created its StratTix technology for the Celtics three years ago, offers the first software to give teams live updates on how seats are selling and at what prices.
"Ticket sales are the lifeblood of our organization - they represent about 80 percent of our total revenue," says Shawn Sullivan, a vice president of the Celtics. "In terms of time spent on decision-making for our salesmen, this technology is making us a more efficient organization."
Halfway through last season, when the Celtics had already been eliminated from the playoffs, Sullivan needed a way to fill certain sections - especially the few hundred spots behind each basket. Hours before game time, Sullivan used StratTix to pull up demographic and sales data, which showed him that the few customers buying so close to tip-off tended to be couples or families.
Within an hour Sullivan dropped the price, bundled a four-ticket "family pack" with concession coupons for that night's game, and sent the offer to an e-mail list of local families. Every seat sold. "If we'd done our usual newspaper ad, there'd have been no return at all," says Sullivan. For their remaining 14 home games, the Celtics filled every seat in TD Banknorth Garden.
Today 87 pro sports organizations, including 24 of the 30 NBA teams, use StratTix to analyze ticket purchases. In November the NHL announced that 26 of its franchises had started using it. While pro sports clients make up 60 percent of StratBridge's business, in 2007 the company hopes to start working with NCAA teams and live concert and symphony venues.
"Anyone who sells tickets intrigues us," says Matt Marolda, 33, StratBridge's CEO and founder. "Every market is different, and even the best promoters have to use a little mojo to gauge the right pricing."
To help teams understand ticket-buying habits, StratBridge uses yield management, a marketing concept that allows enterprises to adjust the price of tickets to make sure seats don't go empty. Airlines have used it for decades, monitoring how seats are reserved, then offering discounts as the departure date draws closer. But the concept is new to sports, where little variable pricing existed prior to StratBridge.
Marolda founded the company in 1999 after a stint at Braxton Associates, a consulting firm where he helped clients visualize complicated data. He left three years later to create a new data-mining technology, which he marketed to large corporations such as Hewlett-Packard (Charts).
In 2003, Sullivan and the Celtics' vice president of technology - a former work colleague of Marolda's - asked Marolda if he could create a visual tool that could display ticket-sales reports to the Celtics' owners at weekly meetings.
"There was nothing in the current system that gave us the ability to show the arena on a screen and punch up whatever the COO or owner wanted to see," says Sullivan. Marolda's first version was a Web-based color-coded map of the Celtics' arena that gave live updates as the seats were bought. For the next two years Marolda and Sullivan met every week, building out the tool.
On a routine visit to the Celtics' offices in early 2005, NBA senior vice president Scott O'Neil was mesmerized by the 42-inch plasma screen in the sales room, which displayed a huge version of StratBridge's digital seating chart for TD Banknorth Garden. Colors on the screen shifted every few seconds as the status of seats changed.
"They were telling me that this thing was going to change the way we look at pricing," says O'Neil, "that this system would take the place of a consultant hired to do analytical work." The Celtics called Marolda, telling him that O'Neil seemed to like the system. Marolda showed up at Boston's Logan airport with coffee, intercepting O'Neil before his flight out. The two came to terms in the airport, and a few weeks later 19 NBA teams fired up their versions of StratTix.
For an annual licensing fee of about $30,000, each club receives the same functionality. StratBridge hosts the program, but team employees can zoom into their section of the arena from their laptops.
By clicking on a seat, they can find out how much money it went for, whether it was sold as a group or individual ticket, and whether the same spot remained empty for several games in a row. Because StratTix captures all types of data, management can gauge the performance of its sales reps, pinpointing parts of the arena that are selling slowly and even tracking metrics such as how much time is spent on one phone call.
StratBridge charges as much as $50,000 for each additional software module that can perform more complicated tasks. The projecting module, for example, examines more esoteric variables, such as an opponent's performance and how weather affects ticket sales, then estimates how many fans will attend a game.
"Someday software will predict how tickets will sell based on local economic trends," says Marolda, who works with a Major League Baseball team (which he declined to name) to evaluate how an opposing team's losing streak and a certain player's past performance might influence fans. StratBridge, which has been profitable since the end of 1999, makes about $5 million in annual revenues.
As for the Celtics, StratTrix has become a short-term solution as everyone waits for the team to regain the championship form it showed in the 1980s. Says Sullivan: "I'd say that in our current situation, a tool like this is very valuable."
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