LeBron’s Impact on Your Wallet

LeBron’s impact on your wallet
July, 7, 2010
by Peter Keating

Today’s winners in Stats & Analytics:
LeBron James, ticket brokers, cable companies

Today’s losers:
You

Amidst the endless parade of LeBron James free agency coverage, here’s an angle I haven’t seen yet: How much will you pay for LeBron?

That’s right: you. If your favorite team signs LeBron, its owners aren’t going to just pull his paychecks, his luxury suite, his private jet and his new house — not to mention his wingmen’s contracts — out of their pockets. First they’ll squeeze you and your fellow fans for as much extra cash as you’re willing to pay to see the best basketball player on the planet.

And as it turns out, that’s a huge wad of dough.

Consider: By the Fourth of July, the Nets had already sold 1,800 season tickets, their most ever by that point in the year. The team says fans have a lot of reasons to be excited: new ownership, a new coach, a new arena, Derrick Favors. Yes, and one good meeting with LeBron, plus a cheeky Manhattan billboard!

Knicks fans, who have none of those reasons to celebrate, have gone even crazier in anticipation of King James, lapping up more than 3,400 season tickets so far this year, which is more than the team sold during all of the 2009-10 season. And here’s the real key: Fans who already had Knicks season tickets are renewing at a rate of more than 90 percent, up from the mid-80s last year. That means there’s real competition again for Knicks full-season ticket plans, which means the team can already jack up prices. So imagine what will happen if they actually sign LeBron.

LeBron will probably have an even bigger effect on individual game tickets, where fans can splurge to see him once or twice a season. Last year, for example, tickets to Clippers home games sold for an average of just $56 on the secondary market, but went for $181 apiece when James and the Cavaliers came to town, according to a fascinating analysis by FanSnap, a ticket search engine.

Even that impressive increase is dwarfed by what happened in Chicago. The average price of Bulls tickets was $126, a figure that dropped to $87 when Chicago played Cleveland without LeBron in March, but zoomed 226 percent to $411 when the Bulls faced the Cavs with James in the lineup in April. Now you know why Chicago fashioned itself into such a serious contender for LeBron’s services: Their fans will pay through the roof to see him.

These are not just isolated phenomenas. LeBron boosted ticket prices everywhere among the teams bidding for him: Nets tickets went from an average of $25 to an average of $104, Heat tickets from $66 to $78, and Knicks tickets from $128 to $192, according to FanSnap. He also had a far bigger impact than anyone else the company examined, including Kobe Bryant, Carmelo Anthony or Dwyane Wade. At the moment, the “LeBron Effect” is both unique and universal.

OK, I can hear you saying, what if I just stay home, enjoy LeBron from a distance and let other fans carry the freight? Even then, you won’t quite escape the ripple effects of his new contract. When James debuted with Cleveland, the Cavs’ TV ratings zoomed nearly 300 percent. And from 2003-04 to 2009-10, they climbed another 87 percent, from 4.6 to 8.6. Last year, the Cavaliers drew about 50 percent more viewers than the Knicks and Nets combined, even though Cleveland is about one-fifth the size of the New York TV market. Sign James, and New York or New Jersey or Chicago or Miami will see their ratings soar, allowing their regional sports networks to charge cable and digital phone companies higher subscription fees. I hate to break it to you, but that means your bill will go up even if you never leave your house — and worse, even if you never watch a game.

So how far could a team go in raising prices? I’m not sure; when it comes to LeBron, we really are in new territory. I do know that without changing owners or coaches or adding any new superstars, the Dallas Cowboys used their new stadium to ratchet up fan costs by more than 75 percent last year, the highest annual increase we’ve seen in the eight-year history of ESPN’s Ultimate Standings. Whatever team signs LeBron, I think that’s the envelope it will try to push.