Spartans hiring consulting firm to fill stadium seats
Originally appeared in the Silicon Valley/San Jose Business Journal Feb. 25, 2011
By Eli Segall
Spartan Stadium can hold tens of thousands of people, but for years, the home field of San Jose State University’s football team has struggled to fill seats.
School officials want to lure more fans — and more money — by hiring a sports consulting firm to sell SJSU tickets.
The proposal comes as universities nationwide face steep budget cuts and as some eliminate sports teams, including the University of California, Berkeley, which plans to cut baseball and men’s gymnastics.
SJSU earns about $1 million a year from ticket sales, and the added effort could also bring more sponsorships to the school and more people to the downtown area for leisure activities.
University officials are currently in talks to sign a multi-year contract with IMG College, a division of New York-based IMG Worldwide. Terms of the deal could be finalized by early March, said John Poch, SJSU deputy director of athletics.
The university issued a request for proposal this past December seeking an outside firm to sell tickets for football and men’s and women’s basketball. In the request, SJSU said it would grant a three-year contract with an option for an additional two years.
According to Poch, IMG would sell tickets for all of SJSU’s ticketed sports.
Ticket sales are currently handled by SJSU Athletics Department employees, but there are no full-time salespeople. Under the deal with IMG, up to five company employees would work out of the SJSU athletics office selling tickets full-time, Poch said.
Mark Dyer, senior vice president of Winston-Salem, N.C.-based IMG College, did not return a phone message seeking comment.
Poch said the Bay Area is a “very saturated pro sports market” that includes two professional football teams and competing programs at Stanford University and UC Berkeley. This heightened competition means SJSU has to be “more aggressive” with ticket sales, he said.
Among other things, he said there are about 120,000 SJSU alumni in Santa Clara County alone, and salespeople could target them and local corporations.
Ticket sales generated about $936,000 of revenue at SJSU in the year ending June 30, 2010, down 22 percent from $1.2 million a year earlier, according to the most recently available data.
Outside help
The deal with IMG would not be the first time SJSU hired an outside firm to generate sports revenue. The university has used outside consultants since the late 1990s to sign sponsorship and marketing deals.
Learfield Sports, based in Plano, Texas, currently performs that work through a unit called Spartan Sports Properties. Learfield has two employees working full-time out of the SJSU athletics office in San Jose and signing deals for the school.
Steve Borland, general manager of Spartan Sports Properties, said increased ticket sales could help the university land more sponsors.
SJSU had roughly $256,000 of revenue from royalties, licensing, advertisements and sponsorships in the year ending June 30, 2010, compared to $266,000 a year earlier, according to the university.
“The more fans there are,” Borland said, “the most interest corporate America has.”
Big bucks in football
Spartan football brings in the most money of any sport at SJSU and accounts for 86 percent of the university’s ticket sales. Altogether, the team had roughly $2 million of operating revenue in the year ending June 30, 2010, but it also had about $5.3 million in expenses and posted a $3.2 million deficit.
The team’s largest source of revenue, about $808,000, was tickets. The largest expense, at $1.85 million, was coaching salaries, benefits and bonuses.
Meanwhile, the football team has had one winning season since 2001 and posted an average home game attendance of roughly 14,460 in that period. Spartan Stadium holds about 30,500 people.
Sports programs eyed at some schools
It’s not uncommon for university sports teams across the U.S. to post operating deficits, but some programs have been eliminated recently amid campus-wide budget woes. UC Berkeley, for instance, announced last September that it would cut five teams in a move that would save $4 million per year. The school had been criticized for providing up to $14 million of annual subsidies for athletics.
In early February only two of those programs were cut after supporters raised up to $13 million.
Roger Noll, a Stanford economics professor who focuses on sports, said universities in general have found ways to earn more sports revenue in recent years, such as expanding a facility’s concession areas or adding luxury boxes. However, he said, expenses rose too quickly at many of those schools.
Among other things, some universities now pay their head football coach several millions of dollars per year or spend heavily on stadiums. UC Berkeley, for one, is in the midst of a $321 million project renovating Memorial Stadium, which was built in 1923.
“They have not gotten the costs under control,” Noll said of schools in general.
Eli Segall can be reached at 408.299.1829 or esegall@bizjournals.com.