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.
Daniel A. Rascher, Chad D. McEvoy, Mark S. Nagel and Matthew T. Brown
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.
Gashaw Abeza, Norm O’Reilly, Kyle Kashuck, Joshua Law and Alexandra Speck
, the possible reasons to consider include (i) a lack of Internet access (Wi-Fi) in the stadiums ( Kaiser et al., 2017 ), (ii) high ticket prices ( Foster, O’Reilly, & Davila, 2016 ), (iii) the quality of opponents (i.e., sometimes scheduling has lopsided games) ( Foster et al., 2016 ), (iv
Richard J. Cebula, Richard Austin, Kimberly Wildener and Willie J. Belton
This study finds that, due to the timing of games and excess capacity considerations regarding public mass transit, a more functional/usable mass transit system may benefit NFL franchise-operating income but may be nonbeneficial to NBA and MLB franchise incomes. The empirical results were obtained using ordinary least squares estimates for 1993 and allow for a variety of factors, including ticket prices, population size, win/loss records, and stadium/ arena size.
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.
Zenon X. Zygmont and John C. Leadley
This study tests for the presence of a honeymoon effect in Major League Baseball by using a set of panel data for the period 1970 to 2000. It expands on the existing attendance demand literature by incorporating a theoretical model of attendance and price, imposing a more flexible form for the honeymoon effect, and distinguishing multipurpose stadiums from vintage and current baseball-only parks. The honeymoon effect for attendance and ticket price is substantial, and it continues with only a modest decline over the first eight to ten years. We conclude that a new baseball-only park that replaces an older multipurpose stadium will generate an additional $228 million in ticket revenue over 15 years. Although this is less than the cost of constructing a new facility, additional revenue sources might be sufficient to eliminate the need for public subsidies.
James M. Gladden, Richard L. Irwin and William A. Sutton
Following a decade that produced astonishing player salaries, continued player mobility, widespread corporate involvement, and skyrocketing ticket prices and broadcast rights fees, North American major league professional sport teams enter the 21st century encountering a number of significant challenges. An analysis of the aforementioned trends yields valuable insight into the future of professional team sport management in North America and leads to the identification of a primary concern of team owners and operators, that of managing the franchise's brand equity. With team owners increasingly reaping profits from the long-term appreciation of the team's value while continuing to lose money on a yearly basis, there will be an increased focus on strengthening team brands. This new focus will lead management to build and maintain brand equity through two primary means: the acquisition of assets and the enhancement of customer relationships. Each of these predictions is explained in depth in this paper and examples are provided.
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.
Hal Hansen and Roger Gauthier
The heads of marketing and promotion for major professional and university sport organizations were asked to rate the relative importance of 19 marketing objectives on a 5-point Likert scale; 164 responded. Factor analysis resulted in the creation of six factors: player quality, community image of team, entertainment value of sport, team marketing, team as a contender, and attractiveness of game location. ANOVA, Tukey, and student t tests used on the data resulted in significant differences between leagues for the two factors of community image of team and entertainment value of sport. Professional teams favored 5 of 6 objectives over university teams: value of ticket price, entertainment value of the sport, image of the team, community-oriented nature of the team, and availability of athletes for community events.
: Recommendations for communicators . International Journal of Sport Communication, 9 , 321–339. Examining the Role of Price Fairness in Sport Consumer Ticket Purchase Decisions As ticket pricing transitions from a cost-based to a demand-based approach, the revenue generated has increased while consumers