What the Atlanta Hawks and Philips Arena Gain from Reduced Concession Prices

Share

Concessions-Hawks

In an industry where concession prices at sporting venues have been on the rise since the 1970s, Philips Arena home of the NBA’s Atlanta Hawks has chosen the opposite route by lowering concession prices in order to provide a more fan-friendly experience.

Prices will be cut by an average of 50 percent for 11 high-demand food and beverage items. Chips will cost $1; candy, jumbo pretzels and bottled water are $2; hot dogs, nachos, french fries and bottled soda are $3; pizza, bottomless popcorn and soft drinks are $4; select beer is $5.

The lower pricing options will be available at all Hawks games, as well as concerts and shows hosted at the arena — almost 200 events in total.

“At the core of the transformation of Philips Arena has always been creating a state-of-the-art venue that allows us to listen to and serve our fans with an amazing experience tailored to their lifestyle and means,” Atlanta Hawks Basketball Club and Philips Arena CEO Steve Koonin said in a release.

Teams like the Hawks who are dropping their prices must consider how the change will affect revenue, according to Mike Sunnucks, who covers facilities and fan experience for Sports Business Journal.

“That’s the biggest question facing teams and concessionaires,” Sunnucks said. “Cutting prices can bite into revenue, but they can also potentially make it up on volume, and if fans are spending more on low-priced items, they might also spend more on other food and drink or team gear.”

However, Sunnucks understands why some teams have been hesitant to make the shift.

“[Teams] make plenty of money, as it stands now, off $7 beers and $5 sodas,” he said. “That is a business model that has worked in the past… They still believe fans will pay traditional higher prices for concessions same reasons movie theaters charge what they do for popcorn and Starbucks charges what they do for coffee.”

Although the traditional business model is bringing in substantial revenue, fans may be turned off by the high prices. Chris Bigelow, a sports concessions consultant, told The New Food Economy that prices for concessions have been increasing for nearly 50 years. Furthermore, ValuePenguin, a personal finance website, ran a study in 2016 on the cost of attending a Major League Baseball game in each city. In some stadiums, the average amount of money spent on concessions by a group of three people ran well over $30.

Since those steep prices may be driving fans away, some teams like the Atlanta Falcons have reconsidered their model. When an NFL fan survey showed the Falcons near the bottom of the league when it came to concession satisfaction, the team, along with Atlanta United, chose to drop concession prices at Mercedes-Benz Stadium last season. As a result, they saw fans spend 16 percent more than the year before. Those teams aren’t the only teams who’ve made big changes. According to Sunnucks, the Baltimore Ravens, Arizona Diamondbacks, and Sporting KC have also featured cheaper menu options.

“The Falcons’ experience has been positive, so that eases some of the concerns,” he said. “The fact that the Falcons and Atlanta United already had the cheap prices gave the Hawks some incentives to follow suit in the same market.”

“Looking at the success of the Falcons with their pricing, and also how fans have reacted for decades to their food experience at The Masters in Augusta, reaffirmed our decision to offer even more quality, affordable food options,” Koonin said.

Sunnucks added that it is important for teams to focus on the fan experience, particularly those teams that have struggled with attendance numbers.

“I think there are teams who are looking for ways to forge stronger ties with fans and bring in new fans,” he said. “Fans, like other consumers, have so many choices of how and where to spend their time and money. Winning is, of course, the biggest elixir for a sports brand, but showing fans you aren’t gouging them can help.”

Koonin agreed, saying that the team chose to prioritize consumer satisfaction when it came to the game-day experience.

“We believe that the excitement that our fan-friendly concessions options have provided for our season ticket members, corporate partners, and casual fans, significantly outweighs the changes to our previous pricing model,” he said. “The key to any successful sports franchise is the authentic relationship that they foster with their fans.”