By Bill Shea
Crain’s Detroit Business
Published: January 7, 2014
The Detroit Pistons say there are new indications that their financial and on-court turnaround is working.
Fans are buying Pistons logo merchandise at a 70 percent higher rate over last season from the official team stores at the Palace of Auburn Hills and Great Lakes Crossing Outlets, and to a lesser degree from the team’s online store.
The Pistons declined to disclose the team’s retail sales revenue, but National Basketball Association team annual merchandise typically accounts for 3 percent to 4 percent of total revenue, sports insiders say.
“We’re seeing a really nice uptick in our merchandise sales,” said Charlie Metzger, Palace Sports and Entertainment executive vice president and chief marketing officer. Palace Sports is the umbrella management company for the Pistons.
Transactions at the team retail stores are up 15 percent compared with 2012, said Metzger, a former McCann Worldgroup advertising executive and a 2002 Crain’s “40 under 40″ honoree.
“The people in the store are spending more,” he said, adding that the revenue is similar to 2009-10. That season, Forbes.com had overall team revenue at $147 million, compared with $125 million for 2012-13.
That would mean new sales of nearly $1 million for an annual total of $5 million to $6 million in revenue. The Pistons keep the revenue from their own brick-and-mortar store and online sales, Metzger said. Other pro sports leagues share such revenue among all teams, as the NBA does from its league-wide online shop.
Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC, said merchandise sales are a small revenue stream for NBA teams, but are one measurement of a team’s overall financial situation.
Increased sales mean more lucrative sources of money — corporate sponsorships, suite sales, season tickets — should increase correspondingly.
“Fans are tuning into them. You’re getting more potential eyeballs on games, which is good for sponsors,” he said.
NBA teams don’t disclose financial data, but Pistons and PS&E President and CEO Dennis Mannion told Crain’s in November that season ticket sales are up 36 percent over 2012, and that the Pistons are no longer borrowing money from the league’s low-interest credit facility to cover operations, as they had prior to the team’s 2011 ownership change.
“It is self-sustaining operation,” Mannion said.
Retail sales help that sustainability.
Twenty percent of this year’s merchandise sales are of the 80 “Motor City” items introduced in August to celebrate the franchise’s Detroit and automotive heritage. The team this season is wearing a blue uniform with “Motor City” replacing the team name atop the front of the jersey for 10 Sunday games.
Adult Motor City jerseys retail for $105, while hoodies and fleeces are $57 to $62.
Detroit was scheduled to wear the Motor City livery on Sunday against the visiting Memphis Grizzlies, then for a pair of upcoming road games before a final time at the Palace on April 13 against the Toronto Raptors.
The team said sales are up because more fans are coming to games.
The Pistons, who have seen management and coaching changes along with $40 million in renovations to the Palace since Tom Gores bought the franchise in 2011, are contending for a playoff berth and have a roster of talented young players.
The Pistons (14-19 going into Sunday’s game) have averaged 14,377 fans per game over 17 games at the Palace this season, good for 26th in the 30-team NBA.
The team was 28th in attendance last season with a 14,782 per-game average, but that number was lower in November, December and January last season because of the quirks of the schedule (opponent, time and day of game, etc.).
Additional merchandise changes are coming for 2014-15. For example, the NBA introduced this season in limited markets what it calls heritage jerseys, which have T-shirt-like sleeves, and the Motor City jerseys will be that style next season, Metzger said.
One infamous Pistons style won’t return.
“Teal is not coming back,” Metzger said, chuckling.