Jazz offers fans chance to sell rights to tickets

A new and interesting concept for college and pro teams to generate revenue while offering a new mechanism for season ticket holders and potential buyers.  Today's Sports Business Journal delves into the first team in the NBA, the Utah Jazz, as they announce a deal with STR Marketplace (a new TL Sports Marketing LLC client):

By JOHN LOMBARDO
Staff writer
Published January 11, 2010 : Page 01

The Utah Jazz is the first NBA franchise to unveil a bold new product that allows season-ticket holders to sell their “seat location rights” to buyers, creating potential new revenue for season-ticket holders and the team.

While personal seat license transfers are common in the NFL, no NBA team offers PSLs. But now, in a partnership with STR Marketing, the Jazz will allow fans to sell rights to their season tickets at a premium set by the market.

Here is how it would work: A customer in Utah who chooses not to renew his or her season tickets can create a listing to sell the “location rights” of the seats to the highest bidder on the team’s Web site. The rights are a separate transaction and do not include the costs of the full-season-ticket package. The seller sets the asking price of the seat location and buyers submit offers. The seller has 48 hours to accept an offer. If refused, the listing goes back on the market. STR handles the transaction for the team, and the team takes a 40 percent cut of the rights sale.

For example, if a fan paid $10,000 for the rights to a prime courtside seat location from a fan who is giving up his or her season tickets, the team would see $4,000 in new revenue. The seller would get $6,000 — also new money — for the value of the seat location. The team has final approval of the transaction, but does not control the price of the seat location, allowing the market to dictate the value of the rights.

The transfer of the season-ticket location from seller to buyer is permanent and the team’s ticket office will then bill the buyer for the season tickets.

Participation for season-ticket holders is strictly voluntary, and fans who want to buy season tickets are not obligated to buy them through the site. But the process allows fans to buy or upgrade in better locations than otherwise would be available from the team’s inventory, while enabling those selling their season tickets to generate a return.“We were approached by STR, and after we heard about it, we wondered why we didn’t do it sooner,” said Jim Olson, senior vice president of sales and marketing for the Jazz. “It is very simple, there is nothing hidden or deceptive.”

Olson sees it as a win-win. “We are creating additional value for season-ticket holders and it’s a chance for the team to recapture revenue while allowing the public to get seats that they normally wouldn’t be able to get,” he said.

He would not disclose how much the team is paying STR to run the seat location microsite, which is accessed through the NBA.com/Jazz Web site.

The Jazz currently has seat location rights for choice lower bowl seats priced at $7,000 each. But there is no minimum or maximum to the rights fees. The price will be solely dictated by demand in the market.

“You are unlocking the value from something that has never existed before,” said Kyle Burks, president of STR Marketplace. “We are coming up with a brand-new revenue stream and the key for the NBA team is that there is an incentive for season-ticket holders to find someone to buy their locations.”

STR already sells personal seat license transfers for a host of NFL teams, including the Chicago Bears and the Baltimore Ravens, but this is the company’s first deal in the NBA.

According to Burks, the program stands to generate the most revenue potential in high-ticket-demand NBA markets like Utah, Los Angeles, Boston and Cleveland.

One downside is that it undermines the seniority process for fans unwilling to pay to get better season tickets, said Bill Sutton, a former NBA executive who runs his own sports consultancy.

“It is an interesting new revenue stream, but it takes away from the guy with tenure sitting four rows behind the guy who is selling the better seat,” Sutton said. “But if it is successful in Utah, everyone [in the NBA] will imitate it.”

The Jazz and STR are banking that some season-ticket buyers will not want to simply wait for those choice locations to become available.

“I think this can change the future of the renewal process and the rights that fans have in it,” Burks said. “This monetizes something that before was worth nothing.”

The Jazz isn’t saying how much revenue it expects to generate from the seat location sales because the process is so new to the league.

“So far, it’s been positive, but the heavy transaction time will be during our renewal period,” Olson said.

The Jazz did not have to win approval from the NBA to adopt the new sales approach, but the league undoubtedly will pay close attention to the success or failure of the new program.

The Jazz has more than 10,000 season-ticket holders, a strong figure. But it has no waiting list, which could lessen demand for fans paying seat location rights fees.