Pricing Helps NBA set Record for Gate Revenue

NBA

(from Sports Business Journal, April 29, 2013) The NBA and its franchises set a record for gate revenue this year.  League officials reported that teams earned more per-game gate revenue in 2012-13 than any previous season.  The league did not release the specific numbers, but they have reported a 6 percent increase in average per-game gate revenue.  The previous record was set in last year’s lockout-shortened season.  While attendance has risen, television viewership has declined.  The NBA reported a decline in television viewership on its nationally televised games.

The total gate revenue increased well past the $1 billion mark this year, and also boasted a season-ticket renewal rate of 88 percent.  Twenty of the NBA teams reported an increase in average per-game gate revenue, as well as over $100 million in revenue generated from the sale of new season tickets.  “Full season tickets drive the gate, and we are better at pricing up on the highest-demand games to capture revenue, and we are better at pricing down on the lesser-demand games to drive additional sales,” said Chris Grange, executive vice president of team marketing and business operations for the NBA.

Almost all of the NBA’s 30 teams have implemented variable and dynamic pricing strategies.  The positive effects of the transition to dynamic pricing are shown in the increase of average regular-season attendance across the league.  Team sponsorship revenue also increased by 4 percent this season.  The drop in television viewership is concerning, but isn’t considered to be a long-term issue according to David Stern, NBA Commissioner.  “The ratings are down a bit because they were super-juiced by the lockout in a way, but most important is that the story lines are great,” Stern said.

The increase in gate revenue is a positive sign that shows the NBA can remain competitive regardless of the circumstances.  This shows the controversial dynamic pricing in a positive light, and demonstrates the ways in which it can be successful.