Media Rights Revenue, Balanced Ticketing Revenues Across League Enable NFL to Roll-Out Uniform Refund Policy
On Wednesday (May 7th), the NFL announced that all 32 of its clubs would follow a uniform ticket refund policy guaranteeing that fans who buy seats directly from a team will receive a cash refund for any games canceled (or played without spectators present) during the 2020 season. They will also have the option of applying the funds towards the purchase of future tickets. The AP reported that Ticketmaster and SeatGeek have also pledged to refund NFL fans who bought ducats through their secondary marketplaces (StubHub only intends to return the fan's cash in the 14 states where it’s required by law). The NFL’s decision to tackle ticketing refunds at the league level - a 'no-brainer' - runs counter to the approach adopted by other three big four sports leagues. The NBA, NHL and MLB have all granted their teams permission to put forth their own COVID-related refund policies.
Howie Long-Short: It’s fair to wonder why the NBA, NHL and MLB would not handle ticketing refunds at the league level like the NFL has done. Doing so would have enabled the leagues to avoid the negative press that has come with some of their teams holding on to fan money in the midst of an economic recession (there's estimated to be "more than $1 billion in consumer capital tied up in tickets to games in limbo"). Patrick Ryan says that the three leagues really had no choice. “Unlike in the NFL where media rights drive profits, ticketing revenue is far more critical to the teams’ bottom line in the NBA, NHL and MLB" (and the league offices really don't want to be making decisions that negatively impact the P&L). The Eventellect co-founder explained that "there’s also a much slimmer margin between the NFL teams generating the most in ticketing revenue and those at the bottom (relative to the other big four leagues). That makes it harder to introduce a uniform policy that is equitable within the NBA, NHL or MLB.”
NBA, NHL and MLB teams have begun refunding and/or crediting fans for games impacted by the sports hiatus despite the hope they’ll be able to play out the balance of their season schedules (i.e. none of the games have been formally canceled). A lot of teams have made issuing credit (towards the purchase of a future seat) the default option within their ticketing refund policy and will only process cash refunds if requested. Ryan says that’s the right approach. “Teams that came right out and said they were not making refunds available have received strong backlash and with the early data showing the majority of fans accept the default option, they could have offered refunds as an option and still held on to 85% of their revenue.” While the negative fan response has motivated some organizations to change course there are “a handful” that still have no intention of publicly offering cash refunds (though they are said to be addressing financial hardships behind closed doors).
The reason people may be content with credit and are not be asking for their money back in droves - at least those in possession of NBA and NHL seats - is that season tickets renew at a +/- 85% clip and many teams initiated their renewal cycle for the 2020-2021 season before the true impact of Coronavirus was understood. Fans locked in for next season seemingly have little reason to spend the time requesting a refund when the team is going to be running their credit card for a payment sooner than later.
It’s not a coincidence that the NFL rolled-out their refund policy on the eve of the league’s schedule release. The NFL hoped by alleviating one of the fans' chief concerns that teams would be positioned to capitalize on the excitement of the upcoming season and sell single game seats. But if the data surrounding MLB and MLS sales were any indication (both have tickets available to games scheduled in late Q2 and Q3) the NFL knew it was thinking optimistically. “No one [has been] buying anything. There are no transactions taking place.”
Editor Note: Please note that joining our community (below) will entitle you to receive our free daily sports business email newsletter.