The business model of FanRally, the start-up “sports-as-a-service” software provider, is based on the premise that offering traditional season tickets alone is insufficient if the aim is to attract younger spectators.
When COVID-19 restrictions are eased, allowing fans of major league sports across the globe to return to stadia at their will, this notion is only likely to be amplified. A recent poll by the Sharkey Institute at Seton Hall University’s Stillman School of Business found that 61% of Americans will not return to a live match before a vaccine to counter the novel coronavirus is available.
With uncertainty hanging over league restarts and the likelihood of reduced capacities, it is inevitable that season ticket sales, which have underpinned franchise and club ticketing strategies for decades, will nosedive.
However, for San Francisco-based FanRally and its CEO Chris Giles, shifting towards a more flexible membership-based approach – allowing fans to pick and choose games and exclusive benefits rather than forcing them to commit to attending matches week in, week out – is a strategy that teams should be exploring, regardless of the current predicament.
“The rate of people buying season tickets is declining, and yet teams continue to sell them even when they increasingly aren’t viable products for many fans,” Giles tells our sister site TheTicketingBusiness.com.
“Also, in 2019 there was about $26bn spent on sports tickets, but the teams were only capturing about $18bn of the total, with the rest going to intermediaries and secondary providers. Teams have no idea who their younger fans are, because they’ve established their relationships with the secondary markets.
“Our research has found that the ‘same-seat’ experience continues to carry a lot of value for those over the age of 50, but when we look at millennials and Gen Zs, they find the concept of sitting in the same seat twice totally unacceptable. It’s a fundamental shift of priorities in what they are looking for, and they want flexibility.
“It is about empowering the teams and members to make choices that they never really had before. Teams should be able to define what elements are transferable in memberships, and what aren’t. Currently if a ticket is resold on a secondary market, the privileges transfer with the barcode.”
Privileges can range from seat location options to in-seat food and drink delivery, as well as optional additional perks that provide significant upselling opportunities for the franchise.
Before the launch in January 2020 of Greenfield Sports Group, which rebranded as FanRally last month, Giles was well aware of the challenge of attracting younger fans, having served as chief operating officer at the Oakland A’s for two-and-a-half years.
Giles helped to spearhead a subscription-based membership programme that helped the A’s to buck the trend in Major League Baseball, where teams have struggled to attract younger spectators and halt decreasing attendances for years.
“We built the first sports-as-a-service platform at the Oakland A’s and we doubled our membership base and increased membership revenues by almost 50%,” says Giles, who is also a former director of business operations and vice-president of sales and strategy at the San Francisco 49ers NFL American football franchise.
“We reduced the average age of our members by 11 years and reduced year-on-year churn by around 20%.”
The spirit of the A’s lives on amongst FanRally’s team of co-founders. Alongside Giles, vice-president of strategy Taylor Lien is a former director of strategy and business operations at the franchise.
FanRally CTO Daren Jackson, who founded machine learning and artificial intelligence-focused Leapforce, is set to be joined on the technology side by a fourth unnamed key executive in the coming weeks.
COVID-19 has provided a stormy backdrop to the first few months of life for FanRally, but Giles expects the company’s pre-seed funding round to close within a month.
FanRally’s first product – offering a straightforward “Netflix-type membership” – will launch early in the fourth quarter of 2020, while a “smart voucher” product that gives fans the chance to manage their own suite of benefits will also give teams “a little more control over their programmes,” Giles says.
So far, 46 professional teams have signed up for FanRally platform demonstrations, which are beginning this month.
“It has been a tumultuous period, but teams are open to innovation and how to attract the next generation of fan more now than ever,” Giles says.
“The teams that have more sellable inventory will be more open to innovation. But we are developing membership capabilities on our platform that go far beyond the ticket-holder so teams can better monetise their fan base.
“We are looking at things like helping teams to develop membership tiers that give access to late-release tickets, for example, or exclusive content.”
Giles acknowledges that season tickets are unlikely to die out in the near future. However, teams increasingly have an “appetite to try” something new and are seeking to “determine what is the right mix,” he says.
“Our vision is to fundamentally shift the core business model of live events from selling products to selling a service,” Giles adds.
“If you take a look at other forms of entertainment, there has been a shift away from product bundles to à la carte offerings to service-based subscriptions. For example, in music we used to buy CDs before then purchasing songs on services like iTunes, and now we all subscribe to streaming services. We are simply providing the next evolution in ticketing.”