It used to be so simple—and cheaper!—to buy a ticket to a sporting event: walk up to a window at the stadium or arena, purchase and go.
But in the Internet era and with companies like StubHub doing business on the secondary market, not to mention pro franchises and university sports programs discovering the use of advanced statistics both on and off the field, there’s a new trend some teams are using to sell their seats: dynamic pricing.
The concept is relatively simple: Instead of selling single game tickets at one price, the amount fluctuates based on demand. Other factors include promotions offered by the team, the opponent coming to town, or the weather forecast. So, for example, if the defending champs are visiting on what’s predicted to be a sunny Saturday, the price might be higher than when a squad faces a cellar dweller. If the home team itself is at the bottom of the standings, discounted tickets will help fill some seats.
Mark Conrad, the director of sports business specialization at Fordham University, likened the practice to “a floating price, kind of an option price,” and pointed out the similarity to the changing prices of airline tickets. He also sees a few benefits that come along with dynamic pricing: filling the seats at a stadium or arena benefits the home team and looks better on television. Additionally, teams can, at least, make some revenue off a ticket that might go unsold under a regular pricing scheme. There’s also a goodwill factor. “Maybe fans cannot afford top-level off-the-rack prices, to use a hotel analogy, but could afford a discount,” Conrad says.
The downside? “It does cheapen the value of a product. If I bought tickets at the beginning of a season and paid top dollar, how am I going to feel? It could alienate season ticket holders,” says Conrad. Nonetheless, both professional teams and universities have tried implementing dynamic pricing for their tickets. According to WCPO’s John Matarese, 20 Major League Baseball franchises have bought in. The University of Michigan’s football program will begin to use dynamic pricing this season, according to Michael Rothstein of ESPN.com, who also lists schools such as South Florida and Georgetown as utilizing the strategy. Qcue, Inc., which helps teams implement pricing programs, has clients that include the NBA’s Utah Jazz and Atlanta Hawks, as well as MLS’ San Jose Earthquakes.
But dynamic pricing may not work for everybody. As Conrad says, a team like the New York Yankees may not have trouble selling tickets, no matter how much they charge. NFL franchises, meanwhile, only have eight regular season home games to offer and might not want to offer many discounts. But if more teams catch on to the innovation, opinions—like ticket prices—may change.