Last Wednesday’s batch of daily deals from Groupon had one offer that was not like the others. See for yourself:
• “$30 for a 60-Minute Reflexology Session at Happy Feet Reflexology ($60 Value)”
• “$25 for $50 Worth of Services at Facelogic Spa”
• “$70 for a Facial Analysis, Illuminating Peel, and Retail-Sized Sunscreen from Dr. David Green ($179 value)”
• “$37 for a Washington Wizards Ticket (up to an $80 value)”
Groupon has become the website du jour by offering prices so low consumers can’t afford not to buy goods or services they won’t ever use. “Feet reflexology” and a “retail-sized sunscreen” seem like perfect fodder.
But, straight-up NBA tickets?
We’re not talking about nosebleed seats for an exhibition game, either. The pitch declared that the Wizards’ Groupon deal “is valid for any 2010–11 regular-season home game, excluding those against the Miami Heat, Boston Celtics, Los Angeles Lakers, and Orlando Magic.”
By my count, the Groupon offer covers 36 games at the Verizon Center. I clicked and was offered a seat for the Nov. 2 Philadelphia 76ers game in Row H of Section 209 for $37. No Kleenex or binoculars required.
The Wizards have this year’s model of the Can’t Miss Kid in John Wall, the top pick in the 2010 draft. Wall leads the team in scoring thus far during the preseason. His highlight reel has been singular. And he’s been even more impressive off the court, using interview after interview to showcase the sort of likability you can’t teach—but can market.
Yet, before the Wizards have even lost a game, management goes halfsies on nearly a season’s worth of single-game tickets?
Ticket selling is a tough business these days. The Redskins get rid of unsold inventory using slippery methods: Dan Snyder still won’t own up to dumping tickets to scalpers, which The Washington Post uncovered last year; every week this season, the team announces both that the game is sold out and that thousands of tickets are available thanks to “player returns.” The Wizards, however, are doing everything out in the open. Ted Leonsis, an owner so transparent he could be a spokesmodel for Saran Wrap, promoted the deal on his personal blog, Ted’s Take.
“Here it is,” Leonsis wrote. “Click away and buy away. Enjoy the savings. Experience a game. Thank you Groupon. Tell your friends about it too.”
And when the Groupon site crashed hours after the offer was made, those who contacted the Wizards were assured that they could get the exact same discount by buying directly through the team.
Leonsis has been publicly saying since at least last spring that the NBA business model isn’t as strong as the NHL’s. He was fined $100,000 last month by NBA Commissioner David Stern after one such speech. He was speaking specifically about the NBA’s lack of a hard salary cap when he got in trouble. But now, through the Wizards’ Groupon deal, he’s also trumpeting the fact that demand for his hoops product isn’t as robust as his ice show. The Washington Capitals, after all, aren’t on Groupon. Leonsis has said his hockey team will sell out every game this year—without discounting.
Leonsis has strong ties to Groupon: According to Jim Van Stone, who handles ticket operations for all of Leonsis’ teams, the owner is a member of the discount site’s board of directors.
Leonsis is also an Internet pioneer who enjoys being among the avant garde in ticketing. This status puts him squarely in the tradition of his predecessor, Abe Pollin. In the 1970s, Pollin became the first arena owner on the planet to offer computerized ticket selling; he got in on the ground floor of what is now Ticketmaster.
Legend holds that Leonsis took the wizardry a step further after buying the Washington Capitals, innovating an online tactic to prevent opposition fans from attending home games by restricting sales to customers from, say, Pennsylvaniaish ZIP codes. Last year, Leonsis formed an alliance with OptionIt, an oddball Chicago outfit that sold options on tickets to sporting events, including Stanley Cup playoff games, the way a trader on a commodities exchange would sell pork futures.
But when I saw Leonsis’ blog post about the Groupon offer, I was immediately reminded of the marketing strategy used long ago around these parts by an electronics retailing chain also called The Wiz. That company, which was founded, owned and operated by the family of D.C. megadeveloper Douglas Jemal, flooded local airwaves with “Nobody Beats the Wiz!” ads that positioned The Wiz as the bargain basement alternative.
Ticket buyers, at any rate, seemed elated by the Wizards sudden discounting scheme. Katherine A., a poster on Groupon’s message board, reveled in the 200-level tickets she bought on the site for $37: “Ticketmaster was charging $108.20 for tickets in Row G of the same section to the same game,” she boasted.
But sports marketers say Leonsis is wading into dangerous territory—not because he risks positioning his affordable Wizards product against his pricey Caps product, but because the plan risks pitting regular-fare Wizards season ticket holders against half-price Wizards single-game buyers. That’s a lose-lose battle.
“I think making a Groupon offer is OK if teams are selling tickets at that same cost to season ticketholders,” says Rob Tuchman, executive vice president of Premiere Global Sports, a New York firm that markets ticket packages to sporting events. “But it’s a disaster if you get some season ticket holder who sees the tickets that they just bought for one price are going for half that price. But if you’re going to do it, you’ve got to be transparent. And you’ve got to deal with the season ticket holders.”
D.C. United has a lot of tickets to get rid of. Stephen Zack, executive vice president of United, says the organization has avoided throwing its standard tickets on services such as Groupon for fear that short-term gains would be offset by long-term pains.
“This is a tough period for us,” says Zack, “but we haven’t gone out because of the [losing] season or the economy and said, ‘Hey, 50 percent off!’ You don’t want to upset your season ticket base, and they already believe they’ve paid the lowest price. Also, you have to be careful that you don’t devalue your product. Once you discount tickets just to get people in the building, it’s hard to get them ever into the building paying full price again.”
Katherine A., in other words, would have trouble paying $108.20 for a Wizards ticket after her $37 Groupon score.
Van Stone says Wizards management considered all such negatives. The Groupon offer, he said, was aimed at “people who would never touch the Wizards product, so they could come in and test drive it.” Management plans to keep Wizards season ticketholders satisfied by providing them with a slew of perks, such as periodic “chalk talks” with coaches, teleconferences with ownership and management, and invitations to exclusive parties, including a soiree with players and team officials at Six Flags last Friday. Goupon’s tire-kickers aren’t invited.
“With us, if you’re a season ticketholder, it’s not just a 41 game experience; it’s a 365-day experience,” says Van Stone. “We want to be a big part of their lives, we want to create memories.”
Plus, the Wizards tickets on Groupon aren’t a commodity that would have otherwise all been sold at full-price, Van Stone conceded. Whereas the Caps are on track to live up to Leonsis’ preseason boasts about selling out every game, Van Stone says that even with a tremendous response from the Groupon promotion, the Wizards “aren’t ready to make that prediction.”
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