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Portland Trail Blazers UV2971 Rev. Apr. 17, 2017 This case was prepared by Ronald T. Wilcox, Professor of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2009 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to
[email protected]. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Portland Trail Blazers We have a new group-sales operation in place and we’re looking for dramatic results there. —Steve Patterson, President Portland Trail Blazers Less than a month after the 2005 National Basketball Association (NBA) All-Star break, the Portland Trail Blazers were in upheaval. On the court, they had just fired their coach of the past four seasons and were 22–36, in danger of one of the worst seasons in franchise history. Off the court, the Blazers organization was facing considerable challenges as well. The team’s home arena, the Rose Garden, had filed for Chapter 11 bankruptcy and was being run by the building’s creditors. The arena, a virtual lock to sell out just three seasons before, had seen attendance numbers fall more than 15% since the 2003 season (Figure 1). During the same time, the organization had only been successful in renewing 9 of the 46 luxury-suite contracts that came due in 2005, and 42 of the 70 luxury suites sat empty during the season.1 Television interest also declined, with a Portland-area Nielsen share of just 5% when the Blazers played the Minneapolis Timberwolves (weather coverage generally received up to 20%).2 1 Todd Murphy, “Have Arena, Need People,” Portland Tribune, August 10, 2004. 2 Pete Schulberg, “Blazers Start Losing with Viewers, Too,” Portland Tribune, January 21, 2005. For the exclusive use of R. Grandhe, 2021. This document is authorized for use only by Ram Grandhe in GSMPR 625 (SU21) Portland taught by Jameson Watts, Willamette University from May 2021 to Oct 2021. Page 2 UV2971 Figure 1. Average home attendance, 1996–2007. Data source: All table and figure data provided by the Portland Trail Blazers. A similar story was occurring in the sale of the team’s “club seats”—special seats for Blazers games that were sold on a multiyear contract and came with club perks. Of 1,800 club seats in 2005, 700 remained available, most of them because subscribers had dropped their contracts during the previous season. The Portland Sports Market The Portland Trail Blazers had a monopoly on the professional sports market in Portland, Oregon. Without a dominant university sports program affiliated with the city, the team competed only with minor league baseball and hockey for its share of the city’s sporting dollars. At just under two million people in the metro area, Portland was the fourth-smallest market in the NBA. Each year, the Trail Blazers management tracked Portland-area residents’ general perception of the team (see Figure 2). The historically strong relationship between the team and the city had soured over the past few seasons, with the percentage of people perceiving the team negatively having increased tenfold since 2000. Fan support had dwindled due to a number of widely publicized player transgressions, including marijuana use, fighting among teammates, and an incident involving animal cruelty.3 3 Andy Giegerich, “Beleaguered Blazers Play by the Numbers,” Portland Business Journal, October 29, 2004. For the exclusive use of R. Grandhe, 2021. This document is authorized for use only by Ram Grandhe in GSMPR 625 (SU21) Portland taught by Jameson Watts, Willamette University from May 2021 to Oct 2021. Page 3 UV2971 Figure 2. Portland-area residents’ general perception of the Portland Trail Blazers. Multigame Ticket Packages One of the more successful Blazers promotions during the past few seasons had been multigame ticket packages. This program allowed fans to purchase tickets for a number of games at once, and usually included at least one marquee opponent, a game for which individual tickets were difficult to find. The Trail Blazers management saw this program as an effective tool to: 1. Increase ticket sales for less popular games (typically bundled in the package with tickets for hard-to- find games) 2. Increase overall ticket sales because the multigame packages acted as an effective incentive for those who planned on attending only one or two games during the season to increase the number of games they attended 3. Develop more of an ongoing relationship with fans who could potentially become future season ticket holders Despite the program’s relative success, management wanted to explore all potential packages and better understand which options were most popular with fans. The program’s goal was to offer a multigame ticket package that had a high appeal to fans while being profitable to the team and not undermining current pricing policies. Designing the Research Study The Trail Blazers management team hired Acuity Market Research, a Portland-based research firm, to help design its multigame package study. Together, they determined there were six aspects of the multigame ticket packages that drove a customer’s decision to purchase: 1. The team the Blazers were playing 2. The day of the week the game was being played 92% 71% 56% 68% 63% 54% 43% 5% 24% 42% 29% 37% 46% 57% 40% 49% 53% 51% 47% 60% 0% 20% 40% 60% 80% 100% Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Favorable Unfavorable For the exclusive use of R. Grandhe, 2021. This document is authorized for use only by Ram Grandhe in GSMPR 625 (SU21) Portland taught by Jameson Watts, Willamette University from May 2021 to Oct 2021. Page 4 UV2971 3. The number of games included in the package 4. The location of the seats 5. The price (per seat) of the package 6. The promotional item included in the package The project team designed a study utilizing conjoint analysis to ascertain the importance of the individual attributes, as well as the likely response of the market to specific multigame ticket packages. Some things were givens: (1) the high number of teams in the NBA (30 including the Blazers) and (2) the dates of the games included in the package could not be changed. Those attributes would not be included as part of the conjoint products. Instead, questions pertaining to favorite teams and days to watch a game were asked individually, after the conjoint portion of the survey. An e-mail went out from the Blazers’ director of database and Internet marketing to 960 fans who had purchased multigame ticket packages or season tickets in the past but were not current season-ticket holders. The project team decided it was more important to get feedback from people who had already expressed some level of commitment to purchasing Blazers tickets, rather than from general fans of the team and knew it had current e-mail addresses for this group. Although new fans were always purchasing multigame or season-ticket packages, Blazers management believed past purchasers were likely the best prospects for new multigame packages. The initial e-mail explained the purpose of the study and asked fans to participate. One week later, a reminder e-mail was sent in hopes of increasing the overall response rate of the study. Both e-mails contained a link to an online conjoint-based survey, which included 20 different conjoint choice tasks (an example is included in the Appendix), Blazers-specific questions, and a battery of demographic questions. Most respondents took between 10 and 15 minutes to complete the survey. Participants were given a chance to win free tickets to Blazers games, as well as autographed Blazers items, such as jerseys, basketballs, and posters, for taking part in the survey. Study Findings The e-mail solicitations received a total of 204 valid responses (a 21% response rate). Summary statistics regarding demographics and past Blazers-game attendance are located in the Appendix. Acuity began its analysis of the multigame packages by computing the attribute-level utility scores to help better understand the stand-alone preference of each of the individual attribute levels. The utility score data are shown in Table 1. For the exclusive use of R. Grandhe, 2021. This document is authorized for use only by Ram Grandhe in GSMPR 625 (SU21) Portland taught by Jameson Watts, Willamette University from May 2021 to Oct 2021. Page 5 UV2971 Table 1. Utility score data. Utility Number of Games 0.03257 3-game create-your-own pack, including 1 elite team and 2 very good teams 0.24383 6-game create-your-own pack, including 2 elite teams and 4 very good teams –0.2764 10-game create-your-own pack, including any combination of teams. Utility Ticket Price 0.65646 $15 per seat per game 0.22011 $25 per seat per game 0.126 $35 per seat per game –1.00257 $60 per seat per game Utility Ticket Location –0.73169 300 level, behind the baskets –0.43716 300 level, on the corners 0.15736 300 level, midcourt 1.01148 200 level, midcourt Utility Promotional Item 0.12511 Priority for home playoff tickets 0.17428 Hot dog and soda with each ticket 0.00158 Trail Blazers apparel (hat, jersey, etc.) 0.01689 $20 gift certificate for popular local restaurant −0.31786 No promotional item While the conjoint study allowed all the attributes and levels to be randomly assigned, in reality, Blazers management was unwilling to allow certain price and seating combinations—no matter how well received they were—due to the cost structure of the arena. It disallowed: 200-level seats for less than $60 300-level midcourt seats for less than $25 Cost of Multigame Packages While the fan preference was extremely important to Blazers management, any multigame packages the group designed had to be financially attractive and