The Detroit Pistons are taking a bank shot. The team will pay season-ticket holders the highest interest rate in the nation to sign on early.
The NBA squad has teamed with Flagstar Bank to pay individuals who pay $500 or more for a season-ticket package a 5% annual yield through the end of the year. The promotion, called the “Pistons IPO: Initial Piston Offering,” is the first post-pandemic incentive to get fans to commit to next season. Starting today through the end of October, people who fund next season’s tickets will have their money go into a Flagstar Bank CD with the interest being deposited in a checking account at the bank for them.
“As we look to grow our season ticket base and engage them with promotions, we wanted to make sure we provide value to our fans for being a ticket holder. The thought was, during these times what will resonate the most?” explained Michael Zavodsky, the Pistons’ Chief Business Officer.
The 5% annual percentage yield is 100 times more than the yield on a typical three-month to half-year CD being offered at Flagstar right now. It’s also more than five times the highest interest rate on offer at any bank in the U.S. for a checking account, according to data from Bankrate. For a $10,000 season ticket—roughly the cost for a center court ninth row seat at Little Caesars Arena last season—the Pistons IPO offer would earn the holder about $168 by year’s end.
“It’s smart for teams to be skipping ahead to a season in which they might possibly get back in the business of making money with spectator sports. Any incentive to try to get fans to overlook this fractured season and look ahead to the next one is worth considering,” said Joshua Boyd, a sports communications professor at Purdue University. After all, the current season is a “revenue disaster,” he added.
Flagstar Bank, the Pistons’ jersey patch partner, will split the cost of the promotion with the team. Based in Troy, Mich., its parent Flagstar Bancorp is a publicly traded bank with a $1.8 billion market cap. The eye-popping interest rate may be a good strategy for Flagstar. New customer acquisition cost banks a lot of money, ranging from a few hundred dollars to perhaps a couple of thousands of dollars for a well-heeled banking customer. Finding new customers is an effort made more difficult by the current environment of ultra-low interest rates, which makes it easy for people to decide their money may not even need to be in a bank.
For the Pistons, the offer should entice a segment of fans who may be on the fence about committing to a season when the impact of the coronavirus remains unknown.
“Given the fluidity of what’s going on in today’s sports landscape, and while we await the return of fans to our games, we thought that the deposit program will work for them and help them accrue funds to use at a later time and thank them for their commitment,” said Zavodsky.