It may have been the understatement of the year when I told some colleagues that LeBron James' return to the Cleveland Cavaliers would have a positive impact on ticket sales. It's fair to say that no lightning bolts shot down from the sky and certainly I was not dubbed the office messiah. However no sooner did I utter those words, then did the available season tickets vanish, again not surprising. With that said, having it happen in roughly eight hours was somewhat surprising in the sense of not knowing exactly how Cleveland fans would react, or in this case how quickly they would react.
Cleveland fans and the Cavaliers organization are truly excited about the return of "King James" but there may be one employee that is just slightly more excited than all others. Dionna Widder was hired in mid-June as the new VP of ticket sales and service, I guess timing is truly everything. Although it seems that with season ticket sales so high that her job is done but there are still many challenges ahead in the management and pricing of the remaining tickets.
LeBron James has and will continue to have an impact on Cleveland Cavaliers ticket sales. The true financial impact will come with the 8,562 tickets that will be sold for each individual game having already sold the 12,000 tickets allocated to season ticket holders. Many of those remaining seats will be sold as single game seats and be part of the dynamic pricing model.
NBA teams -- in an effort to grab a share of the highly lucrative secondary market -- have set up dynamic pricing to keep in play the principles of supply and demand. As games become more popular the ticket prices move up, and as games become less popular the prices go down. The factors driving this fluctuation are varied but can depend on opponent, day of week, injuries, etc. to name just a few. In the case of the Cavs season tickets selling so quickly, it's inevitable that individual game seats will increase as it gets closer to game night. This will encourage fans to get tickets as early as possible before the dynamic pricing model moves prices up due to demand.
Many are speculating on the financial impact of LeBron's return but there are many pieces to the total financial equation. As it relates simply to tickets it will certainly be a revenue gain with what will likely be close to a 41-game sellout. To put that into perspective, Cleveland has only sold out (98 percent plus capacity) 11 games in the last two seasons combined and averaged 687,202 fans. During LeBron's final season with Cleveland they sold out all 41 games with a total 843,042 tickets sold. The Miami Heat with LeBron sold out every game, a perfect 156 out of 156.
At an NBA league average of $52.50 per ticket (2013 Team Marketing Report) the Cavs will see somewhere in the neighborhood of an additional 13 million in additional ticket revenue. This assumes any increase without LeBron would have been offset by the league average increasing by the same amount. We assume 41 sellouts at just the 2013 league ticket average and that is probably very conservative considering Miami was over $25 more than the league average as well as not factoring in the impact of dynamic pricing.
Miami, under the Big 3 was not only sold out but also able to drastically reduce secondary market ticket sales. Losing LeBron will not only have an impact on season ticket renewals and cancellations, but this move will also impact their primary single game ticket sales and create pressure from the secondary marketplace like they haven't had to deal with in the last four years. However in the case of the Heat, it will not be as drastic as it was when LeBron left Cleveland since they still have big name players in Wade, Bosh and Deng. There seems to be far less animosity in Miami than there was in Cleveland. That combined with the roster should translate into much stronger sales than were seen in Cleveland during the years following his departure.
There are many other factors that play a role in the revenue possibilities for Cleveland. The Team Marketing Report factors costs associated with tickets, drinks, food, programs, parking, and merchandise to create what they call the Fan Cost Index (FCI). Cleveland was estimated down (-5.5 percent) vs. prior year, mostly driven on ticket prices. It's difficult to say what will happen with those other non-ticket costs but it's probably another big leap for me to say that they will likely not decrease. Time will tell but historically the Cavs management has always been good to their fans.