How much revenue will Clemson's new seat equity plan generate?

How much revenue will Clemson's new seat equity plan generate?


How much revenue will Clemson's new seat equity plan generate?

It’s hard to imagine the inside of a football stadium being a prime piece of real-estate, but that’s exactly the way the Clemson Athletic Department views Clemson Memorial Stadium and the 82,500 seats it houses.

In our second of a series of articles on IPTAY’s 2017 seat equity plan, Clemson athletic director Dan Radakovich told The Clemson Insider earlier this week that the lower bowl of Death Valley is IPTAY’s most valuable real-estate as an organization. That’s why Clemson and IPTAY have gone back and reviewed its old seat equity models and released a new plan last week for the 2017 football season.

In 2008, Clemson joined the other top-20 FBS football attendance leaders in adding a preferred seating component to its annual giving program. Under the plan, season ticketholders who gave at or above the specified per-seat values qualified for specific seating in Memorial Stadium.

The initiative has enhanced annual support for student-athletes at Clemson and has given its athletic programs the resources it needs to compete at the highest level, both in the classroom and in athletic competition.

According to a correspondence IPTAY sent to its respected donors last week, for the IPTAY 2017 year, adjustments to the per-seat donation values that qualify donors for seating areas in Memorial Stadium will be made to the IPTAY Seat Equity Plan. In addition, all season tickets in Memorial Stadium available for purchase will require a per-seat donation beginning for the 2017 season. These adjustments have been determined and endorsed by the IPTAY Board of Directors and the Athletic Department.

Clemson anticipates IPTAY donors will continue the long-standing history of a high renewal rate, which could impact the number of lower-level seats that come available.

“What we ended up doing was we had a number of different colors along the lower deck, and what we did, I think we took five or six and compressed them into three. And it was really done that way because that is where we felt our most valuable real-estate was as an organization,” Radakovich said. “Now IPTAY in general, neither Davis (Babb) nor I were here when this was all done (in 2008). They have kind of been on a five-year cycle in dealing with increasing the seat equity program.”

The question is how much will the increase affect the pocket linings of those that are already donating money to the previous seat equity plan. To estimate the minimum IPTAY donation required to renew seats for the 2017 season,  donors were asked to multiply the new seat value for a section by the number of tickets they have in that specific location.

For example, if a donor who gives an annual amount of $2,400 (the Howard level), which allows them to purchase up to eight tickets, and they want to sit in the tangerine colored area then they would have to donate $350 for each seat which would increase their annual donation from $2,400 to $2,800.  A donor giving an annual amount of $400 (the Orange level) which allows them to purchase up to four tickets, that wanted to sit in the tangerine colored part of the lower bowl would need to increase their annual donation to at least $1,400 per year.

Clemson and IPTAY said they did their due diligence and discovered there are a lot of people already giving well above what the new seat license would be for the seats that they have. So how much net revenue will this bring IPTAY?

“You just can’t multiply the seats times the increase and that is the amount of revenue that is coming in,” Radakovich said. “That would be a bad way to look at it. It really gets down to individuals and how much they give. How many seats they have, which is another interesting piece, which is the number of seats that people own.

“I think one of the takeaways from this could be that people might not be their own miniature ticket broker any longer. I don’t mean that in a negative way. ‘Look I had eight tickets, and I only really need two, so I am selling them and using them for whatever personal deal that I have.’ Maybe we are going to see a little bit less of that. It will allow us and IPTAY to know our customers better.”

Babb, who is the CEO of IPTAY, says he and Radakovich looked at that lower bowl and asked themselves, “Where did we think we got this right and where does this need some adjustments?

“So you will see that those folks sitting at or near midfield, they don’t have as much of an adjustment, but obviously the lower bowl with the type of program that we have, with the type of value that we put on the field, it is very much the best non-premium seats that we have in the house,” Babb continued. “So I think some giving levels were asked to give more, but I think we also tried to make a point of giving people options on where they could plug in so they might not be an $800 figure, they might not be a $600 figure, but they might be a $350.

“They might have an opportunity to go to a $250. The key was finding places for people to plug in.  Obviously, we hope that everyone will renew.”

So if Clemson sells the same amount of seats that it did last year, with the increased giving, how much additional revenue does this bring IPTAY and Clemson?

“We have estimated, again based on what I said, where you may be in one of those giving areas but your giving area is already at a high enough number and you do that for other reasons … maybe parking is a big driver in that giving level,” Radakovich said. “So the increase for the number of tickets you give may draw no more revenue.”

TCI asked if there is an amount of revenue based on the seats and the donations, and if there is a guaranteed minimum that IPTAY is bringing in today, what is a guaranteed minimum that it is going to bring in starting in 2017?

“I probably wouldn’t use the word guarantee,” Radakovich said.

TCI: “So you don’t have to give that much to purchase that seat?”

“No, you may decide with those eight tickets you only need two and the amount I am giving right now is going to cover that,” Radakovich said.

TCI:  “But from a Clemson perspective you’re still selling those seats at that price?”

“It will give you more money coming into IPTAY. The quick answer to your initial question is there is somewhere between $1.5 and $1.7 million in additional revenue coming in,” Radakovich said.

TCI: “That’s all?”

“That’s because of the giving levels that people have right now, but that number goes up, as I was getting ready to say, if the person with eight tickets says I really only need two so I am going to put these other six out there. So we are able to move people down and gather money at a higher level than they had previously paid. That could increase the amount of money. But $1.5 to $1.7 million and if things go really well we might be able to hit two million dollars,” Radakovich said. “The key here, these are not facility dollars. This wasn’t mandated by the facilities that we have built. Our capital projects, as we have talked about before, we have taken care of that.

“This is operational. The cost of operating the athletic program and the IPTAY scholarship costs, which IPTAY takes care of, they continue to rise. This is really not just for one year, but as history has told us we are going to hold these numbers for a period of time so we really had to look at how this was going to affect us three or four years down the road.”

Seat equity plan has nothing to do with facility upgrades



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