Business

The Charlotte Hornets: NBA’s biggest comeback franchise?

Hats with the Charlotte Hornets old and new logo are sold side by side at Lids in NorthLake Mall on June 14, 2014. The Hornets are back and merchandise is booming, but fans have mixed feelings about the new logo.
Hats with the Charlotte Hornets old and new logo are sold side by side at Lids in NorthLake Mall on June 14, 2014. The Hornets are back and merchandise is booming, but fans have mixed feelings about the new logo. ibartolucci@charlotteobserver.co

The Charlotte Hornets play their season opener at home Saturday night following a performance last season that was their best since 2001. While the team’s play on the court has clearly gotten better, it’s the franchise’s business track record that makes the Hornets arguably the league’s biggest comeback story in recent years.

The team says it has improved on nearly every marketing metric since NBA icon Michael Jordan bought the team in 2010, including ticket sales, sponsorships and merchandise sales. The Hornets’ success comes even as the team deals with setbacks, such as the relocation of the 2017 All-Star Game from Charlotte, over House Bill 2.

Growth in season-ticket sales, experts say, is the most important step in improving a franchise’s health. When Jordan bought the Hornets, the team was selling about 5,000 season tickets. At that time, management set a goal to get to 10,000 tickets, which is considered the league’s “gold standard,” said Pete Guelli, the team’s chief marketing and sales officer.

This season, the Hornets are close to selling 11,000, Guelli said. The goal next is to get to 14,000, he added, which the team sees as an attainable goal that will help it operate “at a very high level”

The improved ticket sales comes at a franchise that has seen its share of changes over the years. The original Hornets franchise started in 1988 as a beloved expansion team but relocated to New Orleans after the 2001-2002 season in an arena dispute. In 2004, the NBA established the Charlotte Bobcats, which regained the Hornets name for the 2014-2015 season after the New Orleans team took the Pelicans name.

“The key to building brand value is to solidify the season ticket/luxury seat and corporate client base through an implicit contract to win on a consistent basis,” said John Vrooman, a sports economist at Vanderbilt University.

“This was true for the sold-out popularity of the original Hornets ... and will still be true for (Jordan’s) upstart comeback Hornets 2.0 since 2004.”

When Guelli came onboard eight seasons ago, he said the goal was to turn the Hornets franchise into a “premier database marketing organization.”

Although admittedly not the sexiest title in professional sports, it’s part of the deliberate effort to position the Hornets as one of the best-performing businesses in the NBA.

That meant the creation of a business intelligence department, a five-person office responsible for consumer analytics and data collecting, among other functions.

Before that office existed, no one was calling the Hornets about how to run a business, said Fred Whitfield, Hornets president and chief operating officer. But it’s not the case anymore.

“We continually pull best practices from Charlotte in terms of their approach to sales and marketing and involvement with the community,” said Amy Brooks, who heads the NBA’s team business operations.

Jordan’s stepping in as owner marked a sea change of sorts among Charlotte NBA fans, Whitfield said. Back then, fans were still upset about how former owner George Shinn moved their Hornets to New Orleans.

The name change back to the Hornets, Whitfield said, was a re-branding effort that cost between $4-$5 million.

“It’s probably the best investment we ever made,” he said.

The team says the return to the original name has helped it secure sponsors eager now to be affiliated with the Hornets brand.

Right before Jordan bought the team, the Hornets would tout the arena’s capacity as an entertainment venue as its most important asset. The “last page of the (PowerPoint) deck,” Guelli said, would be the Bobcats brand.

Back then, the team had about 50 corporate sponsors signed on, and the rate for annual contract renewals was “not good,” Guelli said. Today, the team has about 90 sponsors, more than 80 percent of which are regional companies, he added. The majority end up renewing their sponsorship.

Non-basketball business

As self-described “stewards of the arena,” the Hornets are also responsible for filling seats at the Spectrum Center for non-basketball events. But that task has become more difficult since the passage of North Carolina’s House Bill 2 in March, which has prompted entertainers like Maroon 5, Demi Lovato and Nick Jonas to move their shows from Charlotte in protest of the law.

“Over the summer we took a couple hits and realized pretty quickly we needed to stay out in front of this thing,” Guelli said.

Now, that means being in touch with entertainers and ticket brokers more often to encourage them to still consider Charlotte despite HB2, which limits protections for LGBT individuals.

Hornets executives have conference calls every week with concert promoter Live Nation, Guelli said, and take trips more often to Los Angeles to meet with talent.

HB2 has hit the franchise hard, Whitfield said, including the loss of the 2017 NBA All-Star Game, which would have been played in February.

“Acts are excluding North Carolina as a whole,” Whitfield said. “It’s difficult to quantify the opportunity lost.”

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