Cheaper tickets will come at a price
T he financial challenges facing the country's three largest sporting organisations came into sharp focus last week.
There were job losses, cost cutting and ticket price reductions at the FAI, ticket price reductions and belt-tightening in the GAA and a large dollop of humble pie -- in the form of ticket price reductions -- at the IRFU.
No-one for a minute presumed that sport could be immune from the financial crisis crippling the country -- although the IRFU's pricing structure for the November internationals certainly made them look out of kilter with the real world and was a massive own goal for an organisation which has generally been skilled at putting its best foot forward in public.
The three associations won't sustain direct hits in Tuesday's budget, which will be of some comfort, but with everybody's disposable income certain to be reduced in 2011, this will most assuredly have an impact.
Everything now is price sensitive and if fans think an event is overpriced, they will not buy into it -- no matter how attractive it may be. The cheapest seats for the recent visit of New Zealand to the Aviva Stadium were initially priced at €100 by the IRFU and although they did change that belatedly after the negative public reaction, it was too late and a crowd of 46,302 turned up. In sheer marketing terms, New Zealand are the single most appealing brand in world rugby and when they last visited Ireland in November 2008, 77,500 piled into Croke Park. The failure of last month's game to ignite public interest should not only have set alarm bells ringing in the IRFU -- which it clearly did -- but also in the FAI and the GAA.
The recent experience of the FAI is a further case in point. Through aggressive marketing -- spearheaded by discounted ticket prices of €5 and €10 -- over 36,000 attended the FAI Cup final between Sligo Rovers and Shamrock Rovers. That's 6,000 more than showed up for Ireland's final November international against Argentina last month.
Ticket pricing is an emotive issue at the moment in that supporters want to attend major sporting events, especially in these times when sport can be, and is, something of a distraction from the general air of doom and gloom, but they need to be affordable. The IRFU and the FAI certainly got their sums wrong for their recent games, possibly gambling that the attraction of a new stadium would override the wave of despair sweeping the country.
Striking the right balance between getting the maximum revenue from every event and, in an ideal world, filling your stadium is not so straightforward. At least both organisations should now have a better understanding of what the right price for their games is. And judging by the remarks of GAA president Christy Cooney last week, they have learned by observation too.
But Cooney (pictured), in confirming the GAA was looking at its ticket pricing for 2011, also noted: "Like everything else, we have to produce a budget for next year and we have to balance the books. If the association reduces the prices in regard to tickets, and that includes the provincial councils, something else will have to suffer, with the amount of money we have available for the clubs and the county boards."
It is an important and timely point for Cooney to make. In all the furore in the last week about ticket prices, there was little said about what the knock-on effect of reduced income from the turnstiles will have.
Of course the economic climate dictates that there must be some movement on prices, but the point then is that consequences are inevitable. Less money coming in means less money going out.
The simple fact is that gate receipts are still the largest source of income in sport, despite the proliferation in sponsorship and media rights over the last decade. A report earlier this year found that the value of the global sports industry in 2009 was $114bn and that 38% of that was generated by ticket sales, way ahead of sponsorship, media rights and merchandising.
The report, by PricewaterhouseCoopers, also analysed future trends in sports revenue up to 2013. It determined that sponsorship, which currently accounts for 26 per cent of income, would be the fastest growing source of revenue for sport but that it still would not overtake ticket receipts in the next three years, even though ticket prices will drop. Translate that to the Irish market and there is no reason to presume those conditions don't apply here. Which is where striking the right balance comes in. The IRFU were off target in achieving a balance last month and have now moved to correct that for the Six Nations.
Aside from the revenue implications, a half-empty stadium causes other problems for sports bodies. For example, a lack of atmosphere at games is a real turn-off when it comes to live tv and so there is a knock-on effect when negotiating media rights.
It is only right that the cost of attending sports events in Ireland will come down in 2011, but like everything else, we must adjust to the idea that there will less money in sport than we have been used to. Professional sports won't be able to pay their players enough, which will have implications on the field, and organisations like the GAA will have less money to distribute to counties and clubs.