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Buy one ticket, get one free: Bulls bearish economy

by John Templon
Jan 29, 2009

A severe recession and struggles on the court have led to a 4.5 percent drop in attendance at Chicago Bulls games this season, five times the league average. To get fans back in the stands the team is giving tickets away for free.

The National Basketball Association is one of the first professional sports leagues to play its season as the economic crisis has become more broad and deep.  For teams struggling on the court, such as the Bulls, the worsening recession is showing up in flagging attendance and millions of dollars in unrealized revenue.

A little more than halfway through the current season, NBA attendance is down 0.9 percent league wide. The drop is sharper in Chicago, but the Bulls still rank second in the league behind the Detroit Pistons.

The United Center, with a basketball capacity of 21,702, is one of the largest arenas in the NBA. For the past two seasons, games have been sold out on a regular basis, but this year’s 96.7 percent of capacity is the lowest attendance level since the 2005-06 season.

The drop in attendance is potentially a big financial hit for the Bulls. The attendance shortfall multiplied by the average ticket price from Team Marketing Report’s most recent study shows that the decrease would mean approximately $2.6 million in unrealized revenues from ticket sales, a figure the team declined to confirm.

Steve Schanwald, executive vice president of business operations for the Bulls, said the drop in attendance was due to two things: “The economy and team performance.”

The recent slide in attendance has coincided with a slide down the standings. The Bulls won 49 games during the 2006-07 season as the team played to standing-room-only crowds. Chicago lost 49 games last season and has only been marginally better this season, even with No. 1 overall draft pick Derrick Rose.

League-wide attendance has a strong correlation of .43 between team attendance and winning percentage. “I think especially now, competitive success is what’s driving attendance,” said Joseph Terrian, the assistant dean of Marquette University’s College of Business Administration. The six-championship winning streak of Michael Jordan's Bulls may still have a lingering impact on attendance, he added.

The Bulls are stepping up marketing efforts. The team recently announced a buy-one-get-one-free ticket promotion for four different games: Tuesday, Feb. 10 against the Detroit Pistons; Thursday, Feb. 12 against the Miami Heat; Friday, Feb. 20, against the Denver Nuggets and Saturday, Feb. 28 against Houston Rockets.

Schanwald said that promotion is only a piece of the team’s marketing strategy. The Bulls are also doing “more discounting in the corners and ends of the upper level, targeted e-mail offers, targeted internet specials on and via, and targeted e-mail offers to fans in our data base.”

Discounting may be key in the current recession. So far in the 2008-09 season, the average price of a ticket has been a stronger indicator of attendance than a team’s success on the court.

Other NBA teams have also taken steps to stem the tide of declining attendance. The New York Knicks have sold tickets to home games at price club retailer Costco for the past three months.

Teams are trying other tactics to boost attendance such as increasing the entertainment value of their games for families. Chicago has incorporated into its games The Bucket Boys from Chicago’s South Side and the BullsKidz, a group of 12 boys and girls between the ages of six and 12 that perform upbeat dance routines.

“If anything [NBA teams] are more concerned about their customers right now,” Terrian said. “They are much more customer oriented. … There’s more pressure to get away from the court and make it an enjoyable evening.”
Schanwald also said that “entertainment value” has been the primary driver of the Bulls’ box office success over the past 10 years.

“Winning is important, but with a .367 winning percentage over the past ten years and ranked number one over that period of time in cumulative attendance, we have demonstrated that teams that do not win can still fill the building if well marketed and good entertainment value is provided,” Schanwald said.