For more than a century, the American professional sports industry has been built on a foundation of fan loyalty, through a franchise’s good times and bad. Consumers buy sports tickets based on a long-term commitment, not because they feel entitled to see a win every time they go to the stadium or arena. Look no further than fans of the Chicago Cubs, which haven’t won the World Series since 1908. Being a sports fan has always meant the possibility of paying hard-earned money to watch your team fail.
As Darren Rovell from CNBC reported this week, the Seattle Sounders, a Major League Soccer team, recently decided to go against this model and issue refunds to all 32,000 season ticket holders after a lackluster loss to the L.A. Galaxy – in the form of a credit for the cost of season tickets in 2011.
Refunds certainly happen in other parts of our economy, but rarely like this. Often when a product is recalled – like a car or pharmaceutical drug – it is following public outcry or pressure from government agencies. In these economic times, a for-profit organization intentionally forfeiting revenues without strong external pressures to do so appears on the surface to be ill-advised.
But as Rovell points out in his article, offering refunds to fans for a team’s poor performance doesn’t have to be a bad thing. Another team, the River City Rascals of minor league baseball, have turned it into an opportunity by partnering with an insurance company to offer “winning insurance” each night.
Beyond the possibility of offsetting financial losses by rolling them into renewal plans and creating new sponsorships, there is the potential benefit of positive public relations that comes from a move like this. Some fans, especially those who never fully believed that being a fan meant life-long loyalty, will view sports teams that guarantee wins or their money back more favorably. To them, even if their favorite team loses, they keep their money.
This approach may work for sports teams, especially ones struggling to get noticed, but would you ever consider giving refunds en masse to your customers as a way to get positive media coverage for your business?
