Price dispersion reflects ignorance in the marketplace in which different prices exist from the same or different sellers for a similar good. One of the sources of price dispersion is uncertain demand for a business’s good or service. Ticket markets are good opportunities to examine a firm’s pricing strategy under demand uncertainty, because professional sports teams have to price their tickets well in advance of the actual event and before actual demand is known. The purpose of the present research is to examine the relationship between price dispersion and regular season average attendance in Major League Baseball. Using a two-step generalized method of moments (GMM) model, the present research finds that an increase in price dispersion leads to a decrease in average attendance.
Brian P. Soebbing and Nicholas M. Watanabe
on hosting obstacle racing events. Nonetheless, Clayton, an environmental scientist, and Richard, a computer programmer, knew the potential for obstacle racing events and wholeheartedly planned the event. Pricing of the Red Dirt Mud Run In 2013, Clayton and Richard led the first Red Dirt Mud Run
Qi Ge and Brad R. Humphreys
by sports teams to raise the company profile, attract the attention of consumers, and gain market share in their industry. A large literature has assessed the impact of sports sponsorship on firm-specific outcomes like stock share prices and revenues ( Chen, Dietl, Orlowski, & Zheng, 2019 ). Although
Stephen L. Shapiro and Joris Drayer
In 2010, the San Francisco Giants became the first professional team to implement a comprehensive demand-based ticket pricing strategy called dynamic ticket pricing (DTP). In an effort to understand DTP as a price setting strategy, the current investigation explored Giants’ ticket prices during the 2010 season. First, the relationship between fixed ticket prices, dynamic ticket prices, and secondary market ticket prices for comparable seats were examined. In addition, seat location and price changes over time were examined to identify potential effects on ticket price in the primary and secondary market. Giants’ ticket price data were collected for various games throughout the 2010 season. A purposive selection of 12 games, which included (N = 1,316) ticket price observations, were chosen in an effort to include a multitude of game settings. Two ANOVA models were developed to examine price differences based on pricing structure, market, section, and time. Findings showed significant differences between fixed ticket prices, dynamic ticket prices, and secondary market ticket prices, with fixed ticket prices on the low end and secondary market ticket prices on the high end of the pricing spectrum. Furthermore, time was found to have a significant influence on ticket price; however, the influence of time varied by market and seat location. These findings are discussed and both theoretical and practical implications are considered.
Daniel A. Rascher, Chad D. McEvoy, Mark S. Nagel, and Matthew T. Brown
Sport teams historically have been reluctant to change ticket prices during the season. Recently, however, numerous sport organizations have implemented variable ticket pricing in an effort to maximize revenues. In Major League Baseball variable pricing results in ticket price increases or decreases depending on factors such as quality of the opponent, day of the week, month of the year, and for special events such as opening day, Memorial Day, and Independence Day. Using censored regression and elasticity analysis, this article demonstrates that variable pricing would have yielded approximately $590,000 per year in additional ticket revenue for each major league team in 1996, ceteris paribus. Accounting for capacity constraints, this amounts to only about a 2.8% increase above what occurs when prices are not varied. For the 1996 season, the largest revenue gain would have been the Cleveland Indians, who would have generated an extra $1.4 million in revenue. The largest percentage revenue gain would have been the San Francisco Giants. The Giants would have seen an estimated 6.7% increase in revenue had they used optimal variable pricing.
Taryn Wishart, Seung Pil Lee, and T. Bettina Cornwell
Price setting in the sponsorship of sport, charity, arts and entertainment is usually negotiated, and private, so we know little about what determines price. With a sample of publicly available sponsorship proposals, the relationship between sponsorship characteristics and price set by the property is examined. Media coverage and attendance levels are hypothesized to have a positive impact on property price, as are a host of on-site communications. Overall the most influential variable explaining the property’s asking price is media coverage. In contrast, on-site communications are not important in price setting. Interestingly, access to property offerings such as celebrities and venues has a significant positive impact on property price. While the empirical investigation is limited to the relationship between communication characteristics and asking price, the price negotiation process and property-based characteristics that lead to the final price are also discussed.
Mark A. Diehl, Joris Drayer, and Joel G. Maxcy
This study examines the determinants of regular season National Football League (NFL) ticket prices on the secondary, or resale, market. Prices in the secondary market are dynamic and thus particularly useful for evaluating the demand for live NFL contests. A rich dataset is employed that contains information about all transactions conducted by a prominent ticketing site during a full NFL season and allows for a comprehensive investigation of the components of demand in this market. Included in the analysis is a first look at the demand for different seating locations within the stadium. The revealed determinants of demand for resale tickets were largely consistent with studies of the primary market; however, there are notable differences in spectators’ preferences for contest characteristics and uncertainty of outcome across the seating categories. The evidence also suggests that while hometown fans are the primary participants, visiting teams are likely active in the resale market.
Brian M. Mills, Steven Salaga, and Scott Tainsky
We add to the recent ticket market literature by using a unique, disaggregated, and proprietary data set of primary market ticket sales transactions from a National Basketball Association team that includes previously unavailable information on date of purchase, customer location, and other consumer demographics. We find that local and out-of-market fans differ in their total purchase amounts, with out-of-market fans spending more than local consumers, on average, and differential spending effects based on the home team win probability. In particular, this differential behavior has important implications for Rottenberg’s uncertainty of outcome hypothesis. We find evidence that interest in visiting team quality dominates interest in perceived contest uncertainty, fitting the reference-dependent preference model in the context of low local team quality. Further, these findings also have important implications related to market segmentation and dynamic ticket pricing in professional sport.
Gerard T. Kyle, Deborah L. Kerstetter, and Frank B. Guadagnolo
Understanding consumers' response to price has become an important issue for managers of public sport and leisure services as they shift their dependence on revenue from government sources to user fees. Employing an experimental design, we manipulated participants' price expectations for the race entry fee of a 10K road race. Subjects were divided into six groups and provided with information relating to a different service outcome. Subsequent price expectations were elicited on the basis of the information provided in each message. Results indicated that messages including the cost of service provision information, information suggesting the loss of services, and information suggesting personal loss, significantly raised subjects' price expectations. One practical implication of these findings is that managers of public sport and leisure services considering price increases for their services should introduce them by outlining the purpose and the costs and benefits associated with the increase. Further, implementing effective communication strategies regarding price increases may significantly increase consumers' acceptance of an otherwise undesirable management decision.
Tim Berrett, Trevor Slack, and Dave Whitson
Although considerable weight has been placed on the economist's advice in many areas of public policy, it is suggested that this has not been the case in the pricing of sport and leisure facilities and services. This paper provides an overview of the extent to which economic analysis can be used in the pricing of publicly funded sport and leisure facilities and services. It is reasoned that such facilities and services display both public-good attributes and positive externalities. As such, market pricing is an inappropriate allocation mechanism. Some problems associated with the practical application of economic models to determine user fees in publicly owned sport and leisure facilities are highlighted. An overview of some of the current issues in public facility management and allocation is offered, along with suggestions for further research.