In case you did not already know, the multi-year contracts will be your life line during this difficult time
As COVID-19 threatens to eliminate gate receipts from the revenue mix for professional and college sports – teams, leagues, and franchises are hustling to find alternative sources of cash and fan engagement.
As exemplified by the NFL Draft this past weekend, teams will continue to allocate resources in ways that allow virtual engagement with what has long been considered the “life blood” of their income statement: season ticket holders.
BUT let’s take a bit of a deeper dive, holding onto the assumption that even IF fans are allowed into stadiums this year, they still will need to overcome their own fears about public gatherings – a pretty tall task given that 79% of responses in this recent SAP Qualtrics poll indicate they would feel uncomfortable attending sporting events again.
Let’s walk down a very real if not over-simplified hypothetical:
- A professional team has a new stadium built
- That stadium is privately and publicly financed
- The private money is backed by a large financial institution
- The team pledges future revenues to the bank to pay off their loan
- Coronavirus has effectively removed a large chunk of local revenues through gate receipts, merchandise, food & beverage, and other experiential events
- Banks will always need their money…
So, as we sit here today, teams will be looking to hedge their losses through long-term contracts that guarantee cash flow. Those contracts come in the form of personal seat licenses (PSL) for season ticket holders AND through multi-year corporate contracts around premium hospitality and marketing sponsorships.
Today, we focus on the latter, where corporate partners maintain newfound leverage for a scenario in which teams are scrambling to find “make goods” through value-in-kind trades and contract extensions.
Teams will need to focus on the fact that these corporations are more than just fans of their product. Their livelihood is being compromised in similar ways to what the teams themselves are going through. Organizations across the globe have furloughed or downright let go of millions of workers – to the point that unemployment applications have blown by all-time records.
It is time to get creative. It is time to collaborate. Businesses must self-sustain for fans to enjoy sports, so there is a win-win solution to be had under each specific set of circumstances.
As we advise our corporate clients at Best.Day.Ever., when contract line items are not delivered, leverage is created. Most teams should and will push against a refund when negotiations take place, but there are other options that deliver a win-win for both sides. Consider a future credit against other years, a heavily discounted contract extension, or additional access and collaboration on marketing initiatives that help your corporate partners move product and / or relay important messaging.
Recognize that your corporate partners want this to be just that, a partnership. Your organization still commands eyeballs – perhaps more now than ever. Leveraging those eyeballs to prop up the value of your corporate contracts, even if there is little attribution to be had, demonstrates your aptitude and determination to putting your corporate contemporaries first during a time of crisis.
And if there is one message to champion through all of this… it is putting others first.
Interested in booking a free consultation with Best.Day.Ever. to discuss innovative fan engagement options?