There has been plenty of change at the top of US Soccer recently. Most notable was last week’s resignation by President Carlos Cordeiro. A sexist court filing* in the Federation’s lawsuit against the Women’s National Team Players’ Association was the end for the executive.
We’re going to go back a little further, though, and look at the departures of a couple other execs in the Federation: Chief Executive Officer Dan Flynn (whose health-related retirement was long-planned, and came about in September) and Chief Commercial Officer Jay Berhalter (who resigned his post – reportedly after it became clear he would no longer be considered to succeed Flynn). This is not a grave-dancing blog, but I’ll contend that neither of these guys valued the appropriate aspects of their respective positions, particularly as it relates to the MNT, and particularly as it relates to ticket pricing in the wake of the team’s failure to qualify for the 2018 World Cup.
*As a legal strategy, the court filing was probably a winner. As a PR move – a charity should be more concerned with doing the right thing than winning lawsuits – it was unconscionable.
An attendance problem
It should come as no surprise, given what I’ve just said above, what I think the solution to an attendance problem may or may not be. First, though, let’s establish that there was one.
Here is a chart that should point it out in fairly plain terms. Here are the home friendlies (i.e. the games for which USSF fully controlled pricing) between the team’s official elimination from the 2018 World Cup and today. The y-axis is how full the stadium was (as a percentage of capacity).
Five games were played in stadiums filled to under 50% capacity. Only three were filled to more than 75% capacity. That’s not good!
Certainly under Flynn (whose resignation story from the Federation includes the following: “Starting in 2000, Flynn overhauled U.S. Soccer business framework, creating a strategic plan that catapulted the organization’s financial growth and providing a substantial reserve for future endeavors.”) and Berhalter (whose duties under the USSF Org Chart included “Brand & Fan Services” and “Event Operations & Revenue”), filling the stands was not priority No. 1. Making money was.
What should USSF be valuing?
As noted above, you can prioritize whatever you’d like in terms of the Federation’s purpose and goals. I would contend that building a nest egg – though important, particularly when you can’t stop getting sued because you ignore all your other responsibilities to focus on revenue – should not be No. 1.
Particularly for the Men’s National Team, in the wake of missing the World Cup, there was a need to rebuild some fan loyalty. That should have been the top priority in my estimation. Obviously no amount of fan-service was going to change the result in Trinidad and Tobago that knocked the Americans out of the World Cup, but minimizing the damage to the brand within the fanbase was a responsibility totally ignored by the federation.
Filling stadiums for friendly matches should always be a priority, but particularly when the team needs a pick-me-up after failing the fanbase.
Again, reasonable people can disagree – and Flynn and Berhalter quite obviously did – but when you’re focused on “what is best for the Federation” rather than “how can I squeeze one additional dollar out of everyone*” this is the result. Empty stadiums, poor atmospheres, fewer long-term fans, and literally everybody other than your banker coming away less happy than they would have otherwise.
*This mindset is not exclusive to USSF. However, I’ll demonstrate below that it’s financially irresponsible for the Federation, for college football programs, and applies in basically any industry that relies in large part on brand loyalty almost as much as the product itself.
What should have happened?
Thanks to the miracles of the associative and commutative properties of multiplication, we know that a completely-full stadium at x% of the price-per-ticket generates the same revenue as full-price tickets in an x%-full stadium. For example, if the Jan. 27, 2019 match against Panama had crammed 63,400 fans into University of Phoenix Stadium (or whatever it’s called now), rather than 9,040, the average ticket price could have been 14.3% of what it was, and the revenue generated would have come out even.
Of course, there are operational/facility costs associated with opening a greater proportion of the stadium: more ushers and security for parts of the facility that are going to be closed off with a smaller crowd, more concessions staff, greater cleaning costs etc. etc. There are other potential marginal costs per ticket distributed (though printing isn’t part of that, with fully-digital distribution nowadays), so it doesn’t necessarily turn into a wash financially in practice. And of course, you can’t assume that reducing the price would fully fill the stadia proportionally.
We’re obviously dealing in hypotheticals here, but the larger point remains that the Federation didn’t necessarily have to take a bath financially to fill the crowds out more. Indeed, the most expensive tickets – suites, club seats, etc. – have much less price elasticity of demand, and also make up an outsized proportion of game revenue (math lessons! econ lessons! all here on your fav soccer blog!), so leaving those prices relatively static while reducing the cheap* seats closer to reasonable levels keeps the revenues high while increasing the attendance.
*For some games – including the one here in Nashville – “cheap” still meant 86 bucks for non-AO members.
The big picture is that the USMNT burned through plenty of goodwill in the fanbase by failing to make the 2018 World Cup. It may be unfair to say that USSF owed it to fans to re-earn that goodwill, but by choosing not to… well, the Federation made its own decisions about what it valued. As shown above, there’s a pretty good chance they could have made the same ticket revenue or close to it while not insulting the fans, too! They made some really bad decisions!
By opting to make the short-term buck rather than making approximately the same amount of money (while writing off any increased operational costs as, essentially, an advertising spend) while winning over some of the fans lost in Couva*, the future of the fanbase takes a major hit. From a cold-hearted economic perspective, that also means lost future revenue. As noted at the very top, there’s even an argument that, as a charity, the USSF shouldn’t be concerned with maximizing profit, anyway: its mandate is to promote the game in this country. Mandate failed.
Given that many of the fans who can’t afford $86 to watch the team play are also those that the Federation has been (rightly) criticized for ignoring from a fanbase and even talent0identification perspective, the error of their ways is compounded.
Hopefully the Fed’s legal battles can be cleared up soon, because it’s clear that plenty of attention is needed on the more day-to-day aspects, even just as it relates specifically to generating revenue.
*These fans did not die in Trinidad. I’m talkin’ figuratively lost here.