The sports calendar has been in flux since the omicron variant was discovered in late November. Hundreds of college sporting events (including five bowl games) were canceled, while dozens of pro contests have been postponed. The uncertainty, layered on top of the anxiety brought on by living through a pandemic for the last two years, has made many fans increasingly wary of buying tickets for an event far in advance. Many sports teams abroad (EPL and Championship League clubs) offer refund protection or ticketing insurance products designed to alleviate customer concerns. But to date, their U.S. counterparts have largely not done the same–that includes On Location, which sold the majority of Super Bowl LVI ticket packages. Paul Caine (president, On Location) believes with “the way the world is going,” that is going to change in the months ahead. “As far as the industry goes, this is definitively going to become something more companies are going to want to offer their customers,” he said.
JWS’ Take: To be clear, we are not talking about event cancellation insurance. Sports teams and event promoters have long had the ability to protect themselves against revenues lost to (or expenses committed because of) a misfortune beyond their control. We are talking about refund protection or ticketing insurance that would cover an individual ticket holder in the event they are unable to attend as planned, a far newer offering. Simon Mabb (CEO, Booking Protect) said demand for the products has been “building” abroad over the last three years, leading more and more teams to offer it at checkout.
Historically, ticket holders unable to make an event would try to unload their seats on the secondary market. While that remains an option, “If you literally [incur an] issue within 24 hours [of the event], your chances of being able to re-sell those tickets or do something with them is pretty rare and [you are likely] to lose a lot of money,” Mabb said. (Note: some credit cards offer users a line of protection.) Of course, last minute uncertainties are more prevalent now than ever (flight cancellations, positive COVID tests).
Fans have become aware even the best-laid plans can be upended. So, it’s no surprise that those with the option to purchase affordable refund protection or ticketing insurance plans (6%-8% of total transaction price) would do so. Mabb said his company is seeing “really high conversion [rates] on the product [it sells]–up in the 30%-plus [range].” That figure is “twice or more” what it was prior to the start of the pandemic, Dave Wakeman (principal, Wakeman Consulting Group) noted.
Mabb didn’t know the percentage of insurance holders who have filed a claim over the last eight weeks. But he said there’s been “a record number of refund [requests] coming through the door” since omicron emerged.
While fans buying expensive seats, hospitality packages and experiences to high-profile events are most likely to purchase insurance, Mabb said “with so much uncertainty, [his company has] seen lower [value] transactions pick up good levels of conversion [too]” (think: the individual buying three tickets to a single regular season game at $25/per).
Fans are also taking out insurance on season and partial-season ticket plans. It is certainly not difficult to imagine a scenario in which a fan couldn’t attend a game or two over the course of a long home slate.
Because refund protection and ticketing insurance policies must be sold as part of the primary ticket sales transaction, the team or venue selling the seats must embrace the product(s) before their fans can take advantage of them. While these policies are still rare in the U.S., it seems like a safe bet that will change moving forward considering our new normal and that there is little downside for the team, venue or company offering it. The policies “give buyers confidence” when purchasing tickets and help to drive sales, Mabb said.
They can also be viewed as a newfound revenue stream. Mabb explained, “It is not the club paying the money back [on a claim]. It is us paying the money back on their behalf. So, [the team] still has the money from the [initial] ticket [sale], their customer has their money back, [and now] the customer can [use that money to] go repurchase another ticket for a different game.”
Offering risk protection should also help teams from a customer service perspective. It is hard to imagine any organization wants to tell a loyal season ticket holder that they are out of luck and will not be refunded for missing games because of COVID-19 protocols (nor do teams want to refund those tickets out of pocket). For what it’s worth, Utah Jazz chief revenue officer Chris Barney said few, if any, season ticket holders have requested refunds due to a positive COVID test.
It is not clear why U.S. pro sports teams have been slow to adopt refund protection or ticketing insurance as a fan offering (beyond the lack of apparent consumer demand). Mabb theorized some organizations may be concerned about adding steps, or options, to the checkout process. Wakeman suggested the U.S. leagues are simply less innovative than some of their European counterparts because there is less urgency to sell seats (see: TV deals, consolidation deals with the secondary market, and corporate sponsorship dollars).
Caine noted that insurance is “not something [U.S.] fans have historically requested,” either. Barney said his organization “always monitors the demand of our consumers and if the demand is there we absolutely will offer the product/service. We are not philosophically opposed to ticket insurance.”
It should be noted that while few pro clubs have introduced refund protection or ticketing insurance options to date, “a decent number of colleges have taken it up—[including] some big schools like the University of Tennessee and Florida State,” Wakeman said.