Posted: August 01, 2009
Sports biz: Price, value and baseball
We’re beginning to see some interesting attempts to tweak the price/value relationship in sportsStewart Schley
On the evening of Saturday, June 20, Colorado Rockies first baseman Todd Helton stepped up to home plate in the ninth inning of a game against the Pittsburgh Pirates, preparing to face reliever Jesse Chavez with the score tied and a runner on first base.
It had rained earlier, and the coolness that lingered in the evening air appeared to subdue the fans at Coors Field. By the eighth inning, the team’s remarkable streak – 14 wins in 15 games – was on the verge of sputtering out. The Pirates held a three-run lead, and with two outs and two strikes on batter Chris Iannetta, the math was strongly in Pittsburgh’s favor. But Iannetta connected hard with the third pitch from lefty John Grabow, launching an arcing home run that tied the game and rousted a weary crowd.
An inning later, pinch-hitter Seth Smith stroked a one-out single to put the winning run on base, and now it was Helton time. The ingredients for glory were sewn together in the space of a single at-bat: the city’s favorite baseball son, the possibility of a stirring comeback, the desire for redemption. And then just like that: the swing, the gunshot crack, the delicious moment when the baseball soared over the right-center wall. Helton rounded third and burst into a schoolboy’s grin, engulfed at home plate by delirious teammates.
Few fans could have felt remorseful that evening about getting their money’s worth on the price of their ticket. But that’s not always the case.
Poor weather, moribund performances and the occasional benching of a favorite player can create a sour price/value impression for some fans. If the home team gets drubbed, if Hawpe sits it out and if your 6-year old acts bored by the second inning, you might detect a faint sense of buyer’s remorse.
Since the inception of professional baseball, fans have simply accepted the game’s uncontrollable vagaries as a risk to be paid. You buy your ticket and hope for a good time. The occasional standout game, like the one the Rockies played June 20, is the extraordinary reward. Meantime, the Rockies and other MLB teams do their utmost to control those elements they can control: friendly ushers, comfortable seats, freshly prepared food and attentive vendors.
But we’re beginning to see some interesting attempts to tweak the price/value relationship in sports.
Economists call what the Rockies and some other teams are experimenting with “dynamic pricing.”
It means prices vary based on factors including who’s buying, when they’re buying, and what they might expect from their experience. When Frontier Airlines charges the traveler in seat 17-A twice what her neighbor in seat 17-B paid for a flight to Kansas City, that’s dynamic pricing. Same airplane, same flight, but 17-B paid less because he booked 30 days prior. Demographics factor in, too. If you’re older than 65 or younger than 13, you’ll pay less for a ticket to see ”Harry Potter and the Half-Blood Prince” than the guy who’s 35.
The Rockies so far are just scratching the surface of dynamic pricing. One example: For $40, Rockies fans can buy “Powertickets” that include $10 in credits toward food and drinks, effectively reducing the net cost of attendance by up to 20 percent. The Rockies have decided in advance which games deserve the special treatment, factoring in considerations such as the opponent and what day of the week the game is played. The San Francisco Giants front office staff has taken dynamic pricing further by using software that adjusts prices for some outfield seats based on the projected quality of the game itself. If flamethrower Tim Lincecum is on the mound, for example, you’ll pay more.
There’s a delicate balance here, in that teams must be careful not to offend season ticket holders who have paid fixed prices for games. The Rockies and other MLB teams know that, and are employing additional perks to keep season ticket holders happy. The bottom line: Expect to see more variations in sports ticket pricing going forward, and not just in baseball. The precedent already has been set in the secondary market, where ticket brokers routinely adjust prices depending on the perceived quality of game matchups. Fans recognize that not every game on the schedule is created equal. Now teams are getting the signal, too.