Operations and Quality Issues within the National Football League

Table of Contents

1. Introduction

2. Ticket prices
2.1 Issue
2.2 Recommendation

3. Parking
3.1 Issue
3.2 Recommendation

4. Concessions
4.1 Issue
4.2 Recommendation

5. Conclusion

6. Bibliography

7. Appendix
Appendix 1 - Speed Parking
Appendix 2 - Failure Mode and Effects Analysis

1. Introduction

The National Football League is a professional sports league featuring American Football. Within the season, which lasts 17 weeks, 32 teams complete 256 games, making the National Football League a continuous series of events (NFL Enterprises LLC 2012). With over 50.000 attendees per game on average for all teams in the professional league, National Football League games are major events (ESPN 2012). At the current stage, the National Football League is the most lucrative and popular professional sports league in the United States (Fischer 2010). Even though the author is aware that there are many operations and quality issues that can be explored when looking at the National Football League, such as event design, event planning, forecasting and capacity planning, it is beyond the scope of this paper to do so. The core service of the National Football League is the American football game. Its quality and outcome cannot be controlled by management representatives. However, secondary services that support the core service and contribute to the overall game day experience can be controlled by utilising operations and quality management measures (Yoshida and James 2010). Hence, this paper will focus on the following secondary services: ticket pricing, the parking process and service quality at concession stands at National Football League games and venues. The issues within each of the aforementioned topics will be discussed and analysed, incorporating different operations and quality management theories and models. By doing so, practical recommendations as how the operations and quality performance of the National Football League could be improved are provided.

2. Ticket prices

Ticketing and pricing is a major source of revenue for the National Football League. In 2008, for instance, the professional American football league generated $1.68 billion in gate revenues (Fisher 2010). Ticketing within the National Football League is a strategic process with the objective to generate ticket sales revenues, as well as revenue which is drawn from stadium parking, merchandise, and concessions. Consequently, one can say that teams with good box office sales similarly perform well in overall stadium revenue (Reese and Mittelstaedt 2001). The aspect of revenue making is especially important due to the global recession and the deriving need for revenue (Schwarz, Hall and Shibli 2010). Hence, pricing of tickets is an important aspect within the operations process and a significant management decision within the scope of the National Football League.

2.1 Issue

In 2007, National Football League attendance was 99.9 per cent. In 2008 98.4 per cent, in 2009 95.5 per cent and in 2010 94.6 per cent of available tickets were sold. With a gradually sinking attendance at professional football games, capacity and demand management become more important to the National Football League (Gaines 2011). This is especially true when aiming to encourage repeat visits, as fans are more likely to return, when they perceive the sporting facility to be crowded (Hill and Green 2000). While attendance numbers are on the decline, prices are seeing steep increases. A small number of National Football League teams made major pricing modifications and tickets were up circa 1.1 per cent to an average price of $77.34 for the 2011 season. In the 2010 season, the typical ticket price increased sharply by 4.5 per cent (Team Marketing Report 2011). When comparing the Fan Cost Index, which represents the cost of a household of four to attend a game, there have been increases up to 163 per cent in the time period from 1991 to 2009. The average league price represents an increase of 75 per cent beyond inflation during that period of time, significantly lessening the purchasing power of game attendees (Fountain and Finley 2010). The English Premier League has seen a similar problem. With a cumulative 77.1 per cent inflation rate over twenty years a declining attendance could be observed. This can be traced back to the fact that traditional supporter groups of middle-class people, who are now struggling to afford tickets, are not attending games anymore or not as frequently (Conn 2011). To overcome such problems, a clear pricing strategy has to be introduced in the National Football League as expenses related to buying tickets, purchasing concessions, and paying for parking are the main reasons that keep fans from attending professional games (Howard and Crompton 1995). However, due to its stable, high attendance in the past, the common approach toward pricing was rather passive. Recently, more proactive ticket pricing approaches have been implemented. However, it seems as there is no systematic approach within the National Football League when it comes to establishing ticket prices (Reese and Mittelstaedt 2001). Academic literatures has identified that there are mainly two criteria that have an impact on the decisions for ticket pricing strategies. These are, firstly, the perceived revenue need of an organisation and, secondly, the management’s assessment of what the market will bear (Howard and Crompton 1995). A research study has revealed that pricing decisions are mainly based on the team’s performance and the revenue needs of the organisation. Those were the most frequently used and important factors for pricing strategies by ticket operations managers. However, with other decision factors such as fan identification, market toleration and average league price, no consensus could be reached about their importance by the questioned subjects, implying that there is no standard approach to ticket pricing within the National Football League (Reese and Mittelstaedt 2001). This depicts that the ticket pricing decisions should receive a higher degree managerial attention as it is a rather arbitrary process at the moment.

2.2 Recommendation

Price alteration can be used as a demand management tool to regulate demand to match the existing capacity. During phases of low demand, price reductions can be applied to propel the demand level. On the other hand, as soon as demand is higher than the capacity limit, prices could be amplified (Greasley 2006). The effectiveness of setting the price for tickets will determine the revenue and, thus, is important for the overall operation of the National Football League (O’Toole 2011). A more proactive method for pricing is yield management. Yield management is a pricing strategy that was originally developed by the airline industry. Its major aim is to maximise customer revenue in service- oriented companies and is mainly fitting for organisations that are operating with fairly fixed capacity and when it is possible to divide the market into different categories of target segments (Greasley 2006). Such revenue management is a practice which aims at maximising net revenue through the predicted distribution of available capacity to predetermined target groups at ideal price. This method emphasises the importance to sell the right experience to the right individual at the appropriate price to improve revenue (Yeoman et al. 2004). The management task is to recognise those differences within the attendee groups and find the prices that coincide with each cluster’s willingness to pay. Sports grounds and arenas’ prices tend to be fixed and expectable, yet if the pricing policy seems logical and feasible to customers it can be implemented and should be considered, as precise pricing through yield management has substantial potential (Heizer and Render 2011). In the German first soccer league teams are also trying to increase their revenues as well. When testing the applicability of yield management, it appeared that about 42 per cent of game attendees are price sensitive. For the others, the willingness to pay is determined by factors such as the opponent of a certain game and the location of the seat. This proves that a more market- research based pricing can be utilised to adjust pricing according to a customer’s willingness to pay (Chatrath and Wengler 2009). Such differentiation can be achieved by offering luxury (Masterman 2009). Aforementioned luxury seating can include premier food services, exclusive rest room facilities, concierge services and the like (Fried 2005). But pricing cannot only be adjusted with the means of product differentiation. Yield management also aims at price discrimination for different clusters of customers. In general, yield management can work for sporting venues. National Football League facilities can establish two price classes: full price and discount price. If the venue has 50.000 seats available for May 16, and the sporting venue can begin to take reservations for the game in September. The venue could sell all 50.000 seats at discount price, but it also is aware that an increasing number of fans will demand seats as May 16 approaches and that such fans are willing to pay the full price. Therefore, the facility has to decide how many seats they are willing to sell at the discount fare or put another way, how many seats shall they secure for the full price payers. On the one hand, if too many seats are sold at the cheaper price, the venue will experience a revenue loss.

On the other hand, if too many seats are reserved for full price payers, the stadium will not operate at its full capacity. Hence, forecasting demand is important for yield management to work effectively (Netessine and Shumsky 2002). Further, it has been proven that people who are not familiar with yield management find it more unfair. However, if such revenue management measures become more common in sport settings, the perception of unfairness will decrease. Deductively, there might be some frustration initially after implementation, which then will diminish over time. Hence, organisers should implement yield management to increase revenues but similarly invest in marketing campaigns to educate and inform the customers about the nature of the prices (Parris and Drayer 2010). Even though, introducing yield management for National Football League sporting facilities is a complicated process, it can pay off in the long run as this managerial method has proven to be a successful profit maximisation strategy in other areas of the service industry sectors such as hospitality and the airline industry (Donaghy, McMahon and McDowell 1995). Hence, it can be introduced as a proactive measure to counter the declining game attendance and generate additional revenue. As ticket pricing is important for organisations “pricing operations is an area where companies should assert control” (Sodhi and Sodhi 2008, p.10) and so should the National Football League.

3. Parking

Parking is part of the peripheral service dimension as it is a non-game supplement (McMahon-Beattie and Yeoman 2004). Such peripheral services support the core service, which is the professional football game for the National Football League. It is important that such services use venues efficiently and effectively. Focus on peripheral services is essential when looking at the overall satisfaction of the customer with an event. When managing such services, cost as well as productivity improvements are important. Hence, not only focusing on core services but also emphasising peripheral services is required to deliver a customer’s desired value experience (Hume 2008).

3.1 Issue

All service organisations face the issue of queues. Generally, customers do not like to wait for service. It has been proven that competitive advantage can be achieved by providing faster service with less waiting time. Overall, effective queue management will contribute to a higher degree of customer satisfaction, especially because queuing is in many cases the first service encounter at an event (Davis and Heineke 1994). Often, traffic-related issues lead to displeased customers as parking and exiting strategies for lots are dissatisfactory (Fried 2005). Hence, a parking operations plan that is implemented into the overall event-planning procedure is vital for sporting facilities (Schwarz, Hall and Shibli 2010). Two approaches are possible for increasing customer satisfaction in regards to queuing. Firstly, with performance improvements, wait time can be shortened actively. Secondly, the customers’ expectations of the wait time can be changed (Davis and Heineke 1994). For the purposes of this paper the performance improvements of the parking operations at the Texas Stadium of the Dallas Cowboys will be evaluated. Historically, the Texas Stadium had colour-coded parking lots with open parking, giving fans the opportunity to park wherever they wanted. Common problems were cars taking up more than one parking space leading to a shortage of spaces, vehicular pedestrian confrontations, rows that are not lined up accurately as well as automobiles parked hood-in or hood- out creating avoidable turning and congestion when departing the lot. Furthermore, most lots at the stadium required cash transactions at the driveway entrance leading to long wait times (Brooks and Torrance 2010). Such layout problems can influence a fan’s intention to stay for a full game or leave early to avoid congestions and crowding when exiting the venue. Consequently, this would affect the overall National Football League game day experience (Wakefield and Blodgett 1996).

3.2 Recommendation

When the Dallas Cowboys moved to a new stadium in the 2009 season, a new parking strategy, speed parking (Appendix 1), which was already tested in the last season at the Texas Stadium, was implemented to minimise traffic congestion and reduce wait times for game attendees (Brooks and Torrance 2010) . “Speed Parking is defined as organizing and parking two vehicles in tandem, one behind the other, in pre-striped rows, moving from left to right and then right to left until the lot is filled in a sequential manner” (Brooks and Torrance 2010, p. 2). This method offers suitable width and depth space for parking as well as a satisfactory drive aisle size to manoeuvre after the game. Further it removes the search for free spaces. When looking it safety aspects, it considerably lessens motor vehicle and pedestrian interactions within the parking lot as attendees will only have to pass parked automobiles, increasing the overall safety within the lot. With this parking strategy, the full capacity of parking lots are utilised as all vehicles only take up a single space. Moreover, pre-selling of parking spaces was introduced at the new stadium with hang tag transmitters to track the vehicles that have paid in advance. This reduced the processing time for each automobile at the entrances as well as the length of the queues respectively. Additionally, parking staff handle smaller amounts of cash due to the pre-selling, which reduced the need for police forces which was vital for security. However, putting this strategy into action was not as successful as planned. Even though employees had to complete a training program, staff reverted to old practices during critical situation, giving patrons permission to park where they desired. Further this was aggravated by patrons that were not willing to cooperate (Brooks and Torrance 2010). This coincides with academic sources, which state that a crucial factor for efficient queue management is proper training for staff members. If contact personnel is trained appropriately to handle queue management and dealing with dissatisfied customers, service experiences for customers can be improved (Davis and Heineke 1994). One can apply a Failure Mode and Effects Analysis to evaluate the effects that the implementation of speed parking had on the operational process. The Failure Mode and Effects Analysis is a technique used to analyse possible consistency difficulties within design of service operations. It can be utilised to recognise activities to diminish the detected potential failure modes and their negative influences on the operational processes. Whenever changes to the process design within an organisation are made, the Failure Mode and Effects Analysis can be used to depict whether the changes ensure a more reliable and safer process. The emphasis this tool puts on improving operational processes will result in increased customer satisfaction (Ebrahimipour, Rezaie and Shokravi 2010). Overall, the introduction of speed parking had a positive effect on this particular National Football League venue. When looking at a Failure Mode and Effects Analysis (see appendix), one can observe that with the implementation of speed parking, the frequency of occurrence of failures in the parking operations were significantly lessened. By diminishing the overall criticality of failures and their occurrence within the operational process, the whole service design in this peripheral service has been improved and, therefore, should lead to a higher customer satisfaction. However, a general recommendation for the parking operations at the Dallas Cowboys stadium is to continuously track customer satisfaction and then implement further improvement processes in areas that customers deem to be necessary (Mohr-Jackson 1998). Furthermore, it can also be aimed on educating the patrons by offering maps, aerial photographs and other supplementary information to them. Such measures would further facilitate the parking operations and increase its performance (Silvers 2008). To increase customer satisfaction, the option of changing customers’ expectations of the wait time should also be explored in the future (Davis and Heineke 1994).

4. Concessions

Concessions are ancillary services and one of the most significant secondary products offered in conjunction with sporting events. Hence, they augment the game attendees’ overall experiences (Ko et al. 2011). As the core product of sporting events is beyond managerial control, ancillary services should be focused on, as they are manageable (Yoshida and James 2010). By doing so, needs and wants of the game attendees can be satisfied (Theodorakis 2001).

[...]