Clubs need to rework ticket pricing

A few days ago, I watched the outgoing Gor Mahia chairman talk about his time at the helm of the decorated club. He explained that one of the main challenges has been making the club financially stable. The main source of funding is the Sh65 million SportsPesa sponsorship deal, which goes to salary payments.

Club membership has failed to rake in revenue for the clubs despite numerous membership drives. Gate collection, which caught my attention, is sometimes as low as Sh6,000 a match after spending around Sh150,000 on the preparations for that match.

This reminded of a document that went viral detailing revenue and expenses breakdown from the recent Mashemeji derby (AFC Leopards vs Gor Mahia) where the host club (AFC Leopards) was able to only sell 234 VIP tickets at Sh500 and 11,754 terraces tickets at Sh200 collecting a total of Sh2,479,788. After deducting the total expenses, the club managed to bank only Sh1,327,710.

Sports economists will tell you that the business mistake clubs make is the tendency of pricing tickets at a very cheap price, leaving a lot of money on the table, on the pretext of attracting more fans and maintain that cheering atmosphere known as the 12th man in football.

This is the case for Kenya and it explains much why many clubs struggle financially, If a club like Gor Mahia with the biggest fanbase in Kenya can collect a paltry Sh6,000 from gate collection, how are clubs with little fanbase surviving?

Sports as a business in general suffers from an appropriability problem where the money-making venture comes from a tiny share of fans’ love for sports. Finding that niche, though disruptive, is what Kenyan football clubs need to drive at.

For example, Arsenal has the most expensive ticket prices in premier league. BBC once did a poll and found out that 82 percent of 18 to 24-year-olds felt that they are priced out of the games, but Arsenal still sells all its tickets. Sports consumption is a luxury consumption, it can’t be priced like food where you want as many people to eat as much as possible and the perfect anecdote to explain this economic thought is the premier League.

The culture and tradition had been that clubs attract fans through the terrace tickets which at the time was fans standing in all spaces in the stadia until it was filled to brim. This “terrace culture” was considered one of the memorable things about football and therefore there was need to preserve it.

In 1990, terrace culture was replaced with all-seater stadiums after recommendations from a government-commissioned report.

There was huge resentment that this will kill the sport because the price of tickets would hike and also the lack of terrace atmosphere wasn’t going to draw many fans to the stadiums. To their surprise, the hooliganism menace dropped drastically, safety of fans could now be better handled and clubs actually didn’t lose revenue.

Two years later, media mogul Rupert Murdoch managed to negotiate rights with Premier League clubs after the proposal had been objected and blocked for so many years on the same pretext that it would discourage fans from coming to watch the game at the stadium. Well, broadcasting of games in fact led to more consumption of the Premier League. The lesson for local football clubs like Gor Mahia and AFC Leopards is that ticket pricing should be about identifying conspicuous spenders and not pricing for every fan to afford a seat.

Tanzania seems to have understood this economic thought. Their biggest derby of Yanga vs Simba has gate collection averaging around $350,000 -$450,000, with the cheapest ticket goes for around $5 and the highest (VIP) going for around $50. So, collecting a paltry $24,000 in the biggest local derby means Gor Mahia and AFC Leopards need to rework on the pricing their tickets.