In April, I looked at the Yankee ticket pricing system, determining that the one-price-any-game system was inefficient, and in part a cause of early-season Yankee attendance woes. At the time, the Yankees were averaging about 41,000 tickets sold per game, and tickets to weekday games were practically being given away on Stubhub. After a weak April, attendance has bounced back to 44,933 per game, but the team only sells about 89% of seats on average. I recommended switching to a dynamic pricing system, where games are priced according to their quality, with weekend games and games against major rivals becoming more expensive while weekday games against less-interesting opponents becoming less expensive, but the average ticket price remaining the same. This would result in more filled seats, more revenue from hotdogs and nachos, possibly more revenue from gate receipts, and more happy fans.
Well, the New Jersey Devils have announced their 2011-2012 ticket prices, doing almost exactly what I recommended for the Yankees. Tickets for the 41 Devils home games are priced into three different levels, Premier, Classic, and Special. Premier games will be all games against the rival Rangers and Flyers, as well as weekend games against other top teams. Classic games will be some games against the league’s top teams, games down the stretch, and all other weekend games. Special games will be against some of the less interesting teams in the league on the weekday only. The price differences are pretty big – the difference in price varies depending on the seat, but Special tickets average about 30% less than Premier tickets, while season tickets remain pretty much untouched.
What does this mean for the average fan? First, it means that games will be more filled. The Devils had the same problem, all season, that the Yankees did in April: fans didn’t want to come to mid-week games against average teams, but packed the Prudential Center in games against rivals and on weekends. By lowering prices for weekday games, the arena should be more consistently full. This is a more enjoyable experience for anyone who prefers the excitement of a full house, and should almost always result in more revenue for the team. More importantly, it allows cash-strapped fans like myself to sit in better seats, or go to more games, at a more affordable cost. I won’t be shelling out $135 for a bottom-upper level seat against the Rangers, but I’d be more than happy to buy that seat for $85 against the Hurricanes.
The second big thing it means is a loss of profit for Stubhub sellers. I know that a lot of fans will finance a portion of their season tickets by selling top games on Stubhub. Theoretically, this would lessen demand for Stubhub tickets, as pressure is lifted from quick box office sellouts and transferred to cheaper games. You’d still probably be able to sell your Stubhub tickets at a higher price in the case of a sellout, but demand would be less.
We’ll see if this improves the inconsistent attendance in Newark over the course of this season. I think it will, and I think that teams with quickly move to adopt these pricing strategies over the next few years. The Yankees could do it especially well because of the tremendous differences in pricing for their tickets throughout the stadium. We all know the seats – expensive MVP-level seats – that sit vacant most games due to a $325 price tag, but are filled when the Red Sox or Mets come to town. The Yankees could offer those seats for $150 against the Royals, and I think a lot of people would bite. The same goes for a lot of the grandstand and terrace-level seating that is constantly empty, and at times quite price. Empty seats make no money, and it would serve the Yankees very well to get them filled for more games. And it would stop being such an annoying eyesore for everyone watching.
Of course, this isn’t true dynamic pricing. True dynamic pricing would be up-to-the-minute demand-based pricing, where prices would change based upon the number of open seats still for sale. The Minnesota Twins, among other teams, have been experimenting with this system for the 2011 season. The price of all tickets rises as the game comes closer to a sellout, and falls when the reverse happens. So if you want the last seat in the ballpark, you’d better be prepared to pay through the nose for it. Its a cool way to price things, as those familiar with congestion pricing and hot lanes probably are familiar with. But for now, I’d settle for a simple variable pricing mechanism.
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