Monday, December 9, 2013

Sports Teams Embrace Dynamic Pricing

The St. Louis Cardinals*, like a growing number of Major League Baseball teams, uses dynamic pricing to "adjust [single game] ticket prices upward or downward on a daily basis based on changing factors such as team performance, pitching matchups, weather and ticket demand."

The team's website notes that 77% of games in 2012 had tickets available for $10 or less, and 37% of games in 2012 had tickets available for only $5. Given the Cardinals' performance in 2013, I'm sure that single-game ticket prices were significantly higher--increasing both revenue and profits for the team.

The Baltimore Orioles have just instituted dynamic pricing for 2014. The Cleveland Indians also use it, which has resulted in raising the traditionally low upper-reserved ticket price from a flat $8 to a higher average price. Season passes aren't affected, only single-game tickets.

Other sports teams use dynamic pricing, as well. In the NBA, the Portland Trail Blazers are going to adjust prices every week, based on a variety of factors. Other NBA teams applying dynamic pricing are the Atlanta Hawks and the Orlando Magic. The NHL's Toronto Maple Leafs also uses a version of dynamic pricing.

Emory University's analysis of dynamic pricing in sports ticketing notes that the relationship between teams and their fans is a little closer than the relationship between most brands and their customers. In the view of Mike Lewis & Manish Tripathi, "a reliance on strict demand based pricing will tend to reduce the fan-team relationship to a series of cold economic exchanges."

Dynamic pricing may not be a fan favorite, but it looks like the wave of the future for sports teams.

*2013 National League Champions (they lost to the Boston Red Sox in the World Series)

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