Season Ticket Holder Angst

Perhaps we need a new section of Clips Nation - or even an entirely new blog - dedicated solely to the rants of season ticket holders over the current situation with the Clippers.  In case you've missed it (and it's hard to imagine that you could have), we've had passionate and extensive Fanposts and comments from several citizens of Clips Nation in recent days. 

I mostly sit on the sidelines of these discussions.  Why?  Well, I just think fandom is too personal a question, I guess.

I am not a season ticket holder - never have been.  In my current situation (a wife who doesn't like basketball, two kids who are in bed before 10 PM) it's not realistic.  But it's disingenuous to suggest that I would buy season tickets otherwise.  I wouldn't.  I don't like subscription models.  I enjoy going to the Ahmanson - but I wouldn't consider buying a season of five plays, because I just don't know if I'm going to feel like driving to downtown LA when that date comes around.  And I've never much seen the downside in not subscribing; I go see the plays I want to (certainly less frequently than I might, and I suppose that's lamentable to some extent) and I go to many Clipper games throughout the year - more than the ClipperWidow would prefer, that much is certain. 

And by the way, the Ahmanson's productions aren't broadcast on live TV in HD. 

Does it make me less of a fan that I am not a Clippers season ticket holder?  If you measure fandom by the money funneled directly into the coffers of the team, then I am a terrible Clippers fan.  On the other hand, I think I can categorically state that over the last three years, I have written more words about the Clippers than anyone on the planet.  Does that make me their biggest fan? I can assure you, the Clippers want all of their fans, even the ones who don't buy tickets.  The NBA champion is crowned at the end of the playoffs.  But there is no competition to choose the best fan.  So do what you want to do - and please don't criticize others for doing what they do.

The question of whether the Clippers should be lowering season ticket prices for next season is interesting - I'm sure it would engender some lively debate in a B-school classroom.  The economy is in recession, bordering on depression.  The team has fewer wins over the last two seasons than any other team in the NBA.  And the team has been offering deep discounts for empty single seats for months.

This last point would certainly be recognized by the MBA students.  If discounts become the norm, you train the customer base never to pay full price.  It's why no one pays sticker price for american cars (among other reasons); consumers know that sooner or later, big rebates will be available again, because they always have been in the past.

By the same token, I don't think you can point to other teams lowering ticket prices and conclude that the Clippers organization was flat wrong to not do so.  (Actually, let's change the wording a bit - you certainly can't conclude that yet, not knowing the outcome of the policy.)  There are only 30 teams in the NBA, and each one is in a unique situation.  The Pistons are lowering ticket prices?  Well, that's not very surprising is it?  Given the economic situation in Detroit, and the fact that the Pistons have been to the Eastern Conference Finals or beyond for six consecutive seasons but will be below .500 this season.  Milwaukee is lowering prices?  Well, the Bucks franchise is in dire financial straits and may not be able to survive much longer: desperate times call for desperate measures.  LA remains a great market and the Clippers franchise is rock solid financially - those are significant factors in this decision, not just the simple fact that the team has been terrible.

The Clippers clearly know how many wins they have, they know the economy is in the tank, and they nonetheless decided to sell season tickets for the same price next year.  Will that strategy work?  We'll see.  There's little question that renewals are going to be disastrous this summer, certainly if the situation remains more or less status quo.  But they may well have looked at the data and concluded that renewals would be disastrous even with discounts.  Maybe they're confident that those that are lost are irrevocably lost, while the diehards will renew with or without discounts.  

Was the letter from Roeser tone deaf?  Perhaps a little.  But if that's the decision that has been made - if indeed ticket prices aren't being lowered - the only way to spin it is to say "great news, prices aren't going up."

I think it's safe to say that the Clippers organization has more data points on this decision than we do.  And while I don't think he's a good person, or that he's particularly smart about basketball decisions, Donald Sterling has been pretty adept at making money during his career.  Put it this way - if the case were cut and dried that the best way to maximize profits was to cut ticket prices, don't you think he would have done that?

This isn't the first year the team has been bad.  It isn't the first year that single seats have been discounted.  It isn't the first year that fans of the opposition have flooded Staples Center.  Far from it.  In fact, the Clippers default advertising campaign for as long as I can remember has been to promote the stars of the other teams.  So I think we can safely assume that Donald Sterling and Andy Roeser don't really care who the butt is rooting for, as long as the butt is in the seat. 

Donald Sterling is one-of-a-kind.  There is no other owner in professional sports like him.  It's basically impossible to predict what he is going to do, or even to comprehend his reasoning after the fact.  But unlike many other NBA owners, he has zero debt (which positions him well to weather the economic storm) and he has turned a profit for nine consecutive years, despite his team having a losing record for eight of those years. 

Back in the day he faced operating losses as Clippers owner - big ones.  So when the numbers are in assuming he is back in the red which he surely will be (if not this season then next), it's hard to say how that will effect him.  It didn't seem to have much impact in the past.  The value of the team is set at $297M; not bad for an investment he paid $13M for.  While I admit that I don't understand him, I think he's a buy and hold guy and he's in it for the long haul.  As such, it's possible he's feeling OK about everything despite the recession.  He's no doubt snapping up new properties at depressed prices as we speak, looking at the current situation as an opportunity for his real estate business if not for his basketball hobby.

Perhaps the bigger question regarding renewals is the coaching situation.  If the Clippers were smart business people, they put together at least four different financial models -

  • A - renewals with current pricing and status quo;
  • B - renewals with current pricing and a coaching change;
  • C - renewals with lower pricing and status quo;
  • D - renewals with lower pricing and a coaching change.

Obviously, there are myriad other permutations, but there is a point of diminishing returns.  You can't forecast everything, and the quality of the model is going to suffer the more changes you make.  There's also the question of what you can control.  You could try to model what would happen if you acquire a new superstar, but you can't necessarily accomplish that.  Firing MDsr is fully within the control of the team, and they'd be derelict in their duties if they didn't at least look at how that would impact the business.  Bill Simmons wrote in a recent mailbag that someone within the organization is trying to make the case that retaining MDsr will cost between $8 and $10 million in renewals.  If we believe Simmons on this, it means that indeed someone is looking at these models.  Maybe the conclusion was that model B above was the best.  We don't know.  But hopefully we'll find out soon enough about the coach's fate.  (By the way, if someone really did make a case that it will cost $8M to $10M and the case is realistic, then of course Sterling will fire MDsr - the conventional wisdom says he won't do it because he's cheap, so why would he keep the coach if it's costing him money?  Of course this is just a rumor, and the case may not be credible even if it exists.)

If indeed the financial case has been made, there would be no reason to wait beyond next week to fire MDsr.  The sooner the announcement is made, the sooner the message can be sent to the fan base that they are serious about trying to improve, the sooner a search for a new coach can be undertaken.  Historically, taking the 'one more chance' approach has not worked; even if coaches are fired early in the following season, the season is usually already a lost cause as the new coach scrambles to put in his own system.  If you want to conduct a proper search for a replacement (including top assistants around the league as candidates instead of just former coaches who happen to be available) and give that new coach a chance to shape the roster (even a little) and put in his system during a month of training camp, you have to make the decision sooner rather than later.

Regardless of what happens, I assume that season ticket renewals will be dismal for the Clippers, as indeed they deserve to be.

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