To end the year, I thought I would combine two of my favorite things (Football & Blogging) and relate them to the work SSC Solutions does. Over the next three weeks I'll be dispelling a few site selection myths that trap businesses of all industry types and maturity levels, using the NFL for case studies. Where possible, I'll try and cite a local Philadelphia example as well, to further demonstrate how these myths can impact companies of all sorts. First up, the sad, sad tale of the LA Chargers.
For the uninitiated, the San Diego...er...LOS ANGELES Chargers moved from San Diego to LA this year, in what I'm sure they intended to be a permanent move. However, things have been so bad at their new home, that even if they manage to win the abysmal AFC West and get a home playoff game, they will more than likely set a modern day record for lowest attendance for an NFL team. Now, in fairness to the Chargers, they are playing in a temporary setting while their new LA stadium is being built - something that has also affected attendance for the 2002 Bears (9% decline) and 2014-15 Vikings (21% decline) while their new digs were being constructed. And unlike their future co-tenant Rams, the Chargers chose to play their games not at the spacious 93,000 seat Colosseum, but at the StubHub Center, a soccer stadium with a max capacity of 27,000 seats.
The Chargers used to draw well over 50,000 fans when they were playing back in San Diego. Now, they're lucky to pull in half of that, and those that are showing up are often fans of the visiting team. Things may improve somewhat once the team moves into their fancy new home in Inglewood next year - but I doubt it. The Chargers are learning very quickly some of the key myths about site selection and brand loyalty.
The Chargers and Rams (and maybe the Oakland Raiders?) are just a few of the coastal examples of teams moving for the allure of a bigger market - following the myth that market size determines financial destiny. Stop me if you've heard this logic before: if company X can just capture Y percentage of the market, it will result in Z dollars. Let the money flow right?
On the surface, this makes total sense - a 100% capture of a small market isn't as valuable (in theory) as 50% capture of a market 3x the size. LA, with a metro area population of 13 million people, is more than double the size of the St. Louis (former Rams home) and San Diego (Charger) markets - combined. [For the Raiders, the Vegas market is 1.5 million - 3x that of Oakland, though a lot smaller than the bay area more broadly]. If the Rams and Chargers each take 50% of LA, that's over 6 million potential season ticket holders for each team. Simple yes?
NO. As the Chargers are rudely discovering (and the Raiders will likely next year), the number of people in a place is not as important as who those people are. Not just incomes, which is what most experts look at - but their mentality, the other things on offer in the market, and the local attachment/compatibility to the brand. LA as a market spent 20 years without football. That's an entire generation without an NFL team - 20 years for people to learn to like other sports - or to be drawn to the other football available in LA - USC and UCLA. Those fans old enough to remember football in LA weren't terribly nostalgic about the Rams, though I'm sure they're glad to have them back; and they most certainly didn't want the Chargers. The team Los Angelenos wanted was the Raiders. The Chargers as a brand don't have the same cachet as the Raiders - and understandably so. There was a point of time where the Raiders were embodied by LA culture in a way that the Chargers could only dream of. Heck they did a 30 for 30 on this very subject.
Sadly for the Chargers, they're just one example of a business thinking because their product is good or in demand, the brand will be successful. This just isn't the case. The failure of a Subway restaurant at 45th & Baltimore in West Philly is a perfect example of this hubris. Subway, in my opinion makes decent sandwiches at decent prices and has a very recognizable brand. That area of West Philly was (and is) becoming increasingly affluent and densely populated and needed a decent sandwich shop. Time to cash in yes?
Nope. The people moving in to that part of West Philly prefer local stores to chains, artisinal to mass produced, and organic to...inorganic? (I never understood what the opposite of that was supposed to be.) The Subway was even the subject of outright opposition by the local community. After a few years of business, it closed up, and the space is now rented to a local cafe.
The Chargers, like other businesses suffering through an ill-conceived move, are stuck between a proverbial rock and a hard place. Their ability to survive in LA will be a result of how effectively the organization can both produce a quality on-field product while similarly making tremendous efforts in their public outreach to fans - and even then, it may never work out.
The NFL has massive public relations issues at the moment, and the way the Chargers left San Diego doesn't exactly endear themselves to a city like LA, which lost two teams in a similar fashion two decades ago. Add all that to the previously mentioned 20 years of cultural changes and Chargers fans may never materialize in LA; and as mentioned, if the Chargers can't convince people in LA to be fans, the way the team burned bridges leaving San Diego makes a return back down I-5...tenuous at best.
For the Chargers players stuck playing in front of opposing fans at home, I do hope things get better for them soon; but for other businesses seeking riches in a larger market, let this be a cautionary tale. Market size only matters if your customer is there.
General thoughts and musings about the work SSC Solutions does and other things happening in and around Philadelphia