https://www.forbes.com/sites/prishe/201 ... 4e7ed86399
Atlanta Falcons' 'Fan-First Pricing' Model Yields Numerous Unforeseen Benefits
When the Atlanta Falcons announced their "Fan-First Pricing" to accompany the opening of Mercedes-Benz Stadium in 2017, it was a revolutionary idea in the food/beverage world of professional sports.
And while many sports organizations may be reluctant to drop their F&B prices that severely, they may need to reconsider when factoring in the additional spin-off benefits that arose as a direct consequence of the Fan-First Pricing.
Last week, at Sports Business Journal's 2018 AXS Sports Facilities & Franchises conference in Detroit, Rich McKay (president and CEO of the Atlanta Falcons) presented an overview of the first-year success of the Fan-First Menu Pricing at Mercedes-Benz Stadium (home to both the NFL’s Falcons and MLS’s Atlanta United). To refresh your memory, these prices include $2 for a Coca-Cola in a refillable cup; $2 for a hot dog, a pretzel or popcorn; $3 for waffle fries, a pizza slice or nachos with cheese; and $5 for a Bud Light or a cheeseburger.
While the team saw direct monetary benefits from this innovative approach to food and beverages (in the form of a 16% increase in fan spending on F&B despite a 50% price reduction compared with their last season in the Georgia Dome), McKay identified five other tangential strategic benefits that were a byproduct of the Fan-First Pricing. And by his own admission, some of these were completely unexpected and unanticipated.
The spin-off benefits associated with Fan First Pricing in Atlanta at Mercedes-Benz included:
1. The Falcons ranked among the NFL’s top three in overall game-day experience rankings (something they never achieved when playing at the Georgia Dome).
2. The Falcons ranked second among all NFL teams in providing family-friendly entertainment.
A fed kid is a happy kid, and it's easier to feed the family if the prices are cheaper. So again, not a shocker here.
3. The Falcons ranked first in the NFL in security screening and second in Arrival Experience (they had over 6,000 more fans per game entering the stadium an hour earlier than in prior years).
Oftentimes, many fans either hang out at bars near the stadium or tailgate in stadium parking lots ... where the food and beverages they consume are much cheaper. By significantly lowering the cost of F&B, the Falcons enticed fans to enter the stadium sooner, thereby spreading out when fans entered the facility, avoiding the massive rush at the turnstiles just before kickoff, and in sum improving the ingress into the facility, which can be a major pain point for sports consumers attending events in person.
4. Because fans were in the building earlier to take advantage of cheaper food and beverage, they spent more on merchandise. According to McCay, merchandise sales were 90% higher in 2017 than in 2016.
Since people were entering the building earlier to take advantage of cheaper F&B, they had more time to buy merchandise. And psychologically, they might have felt they had greater overall purchasing power, thereby inducing an income effect that contributed to increases in merchandise sales.
And the fact the Falcons' 2017 merch sales were 90% higher than the year in which the team reached the Super Bowl is further evidence of the power of Fan-First Pricing.
5. Post-game event surveys revealed a strong intent to return for a future game, especially among families.
In sum, during an era when it is becoming of tantamount importance to create overall in-venue experiences for fans, Atlanta's Fan-First Pricing strategy accomplished numerous goals. Not only did it boost F&B sales, but it improved merchandise sales, improved ingress into the stadium, and enhanced the overall game-day experience to levels never before experienced in Atlanta.
While this model may not work in every market, expect more and more teams to at least offer "early bird" pricing right when their house opens on game days in order to replicate some of the positive externalities the Falcons created with their innovative pricing approach.
