In January 2014, we were excited to welcome Dr. Nels Popp to the EXSS faculty. Nels is an Assistant Professor in our department, with a focus in Sport Administration. Prior to joining our faculty, he spent five and a half years as an assistant professor and graduate program coordinator for the sport management program at Illinois State University.
His research interests include revenue generation for college athletic departments with a particular emphasis on sport ticket sales at both the collegiate and professional sport levels. Nels’ work and expertise has been referenced in ESPN.com, Street and Smith’s SportsBusiness Journal, and the Chronicle of Higher Education, and his research has been published in a variety of academic journals. His research and teaching expertise are a perfect match for our expanding programs in Sport Administration. This week we highlight Dr. Popp’s research where he examines factors influencing ticket sales in Division 1 college sports.
Why we did this study?
Have you ever attended a college sporting event and wondered why there are so many empty seats? For many college sport marketers and college athletics administrators, a lack of live attendance (perhaps due to the increased popularity of watching games on large high-definition televisions at home) has implications both in terms of in-game atmosphere, but more importantly, in terms of needed revenue for the athletic department. Ticket sales represent one of the biggest, if not the biggest, slices of the revenue “pie” for college athletics. Most NCAA Division I athletic departments derive nearly a quarter of their revenue from the sale of tickets, while at some schools with large football stadiums, that percentage can be upwards of 40 percent. (At UNC, for example, ticket revenue equals roughly 28% of athletic revenue.)
Yet after spending time studying the structure of NCAA Division I college athletic departments, my colleague and I were stuck wondering why so few programs invest in staff whose specific job it is to sell tickets. In many other industries which rely on the sale of products to generate income, whether it is insurance, computer software, or heavy machinery, sales professionals are employed to help move the product being produced. This is also true in the realm of professional sports, where most major league teams employ between 15 and 50 outbound sales professionals whose job it is to build relationships with fans and sell products that meet their needs, such as group outings, season tickets, or premium seats. In fact, if one were to look at a staff directory of any major league team, the largest percentage of front office employees would be found under the sales umbrella. Yet, when we looked at the make-up of college athletic departments, we consistently found far more employees performing other functions such as media relations, compliance, event and facility operations, or equipment management, than dedicated to the job of selling tickets. In many athletic departments, the job of selling tickets might fall under the supervision of marketing, box office operations, or perhaps development (fund-raising), however none of these positions have the single task of prospecting for potential buyers, developing relationships with those buyers, and selling them ticket packages. To us, this just doesn’t make sense for departments concerned with bringing in more revenue than they are spending.
How did we perform the study?
To perform our study, we wanted to understand a couple of things. For starters, why don’t more college athletic departments hire full-time sales professionals? Second, for those schools that do hire a sales team, are they effective at generating more revenue? And third, we wanted to know what these sales teams looked like; who was being hired, how were they being compensated and trained, and how many contacts were they making with potential ticket buyers. To find the answers to these questions, we developed a survey which we sent to every Division I athletic department in the country. We had a strong response rate of 39.5%, which gave us a pretty good snapshot of the current environment. Here is what we found.
What did we learn?
The biggest reason many college athletic departments don’t hire sales representatives is because they are unable to get additional positions funded or they are not able to pay commission, which is the typical form of incentivizing sales professionals. Among schools which did commit to hiring an outbound sales team, we examined the difference in ticket revenue they reported the year before introducing the team and the year after. While we are still collecting data to answer this question, our preliminary findings revealed that schools introducing an outbound sales program saw, on average, a bump of nearly $1 million in ticket revenue. Some of this revenue can be attributed to improved team success and some of the schools in our sample actually generated less revenue after instituting an outbound sales team. However, we feel quite confident that, on average, there is significant return on investment for departments that invest in a sales team. Perhaps the most surprising or interesting finding, however, is the answer to our third question. Our results were all over the map. Some schools hired teams of five or six full-time professionals, while others staffed their sales team entirely with undergraduate work-study students. On the high end, some schools reported making over 2,000 sales calls a week, a volume typically seen in professional sports. On the low end, some departments reported making fewer than 20 calls per week. (In professional sports, typical close rates are in the 3 to 5 percent range.) Perhaps most alarming was the fact that 78.2 percent of schools reporting that they started an outbound sales team indicated they spent fewer than 20 hours a year on sales training. In fact, 32 percent said they spent no time at all on sales training. Sales is a difficult profession, and spending such little time formally training employees is virtually unheard of in many other industries. It certainly impacts the effectiveness and efficiency of sales professionals.
How can these findings impact athletic departments?
The trend of college athletic departments utilizing sales professionals to sell their ticket inventory is quickly gaining in popularity. And from our preliminary results, it appears this trend can be very beneficial for athletic departments. However, college athletic departments have significant improvements to make before these efforts will match the proven productivity levels seen in professional sports. While the primary beneficiaries of our research are college athletics administrators, our research also has an impact on any fan of college sports. Outbound ticket sales teams are a proven way to increase attendance at college sporting events and produce increased levels of revenue, which allows athletic departments to be more competitive.
Intercollegiate sports is often referred to as the “front porch” of a university because of the high profile visibility and foundational core for campus spirit. Research examining ways to enhance attendance at college sporting events provides important information to maximize the positive impact of college athletics. These findings show the importance of hiring professionals with training and education in sales to enhance college sport attendance through improved ticket sales. Our Sport Administration programs, at both the undergraduate and graduate levels, play an important role in developing future leaders in college sport administration who may apply these evidence based practices to improve the overall intercollegiate athletics experience for all constituencies.