It's a common question for fans and front-office executives alike, but it's the latter that sets the all-important number. Whether you have the smallest stadium (Fenway Park, with 3.02 million cumulative seats over the course of the season) or the largest (Dodger Stadium, 4.71 million seats) it’s imperative to get proper value for your tickets.
A quick gander through most teams' price sheets finds 100-125 price points. But what should the price be? When it comes to ticket sales, should it be the goal of a team to maximize profit? Revenue? Quantity? The answer is all three. Major League Baseball teams use their premium seating to maximize profit, the main seating bowl to go after revenues, and the upper-level seating to push volume with the help of group sales.
Like many large retailers, teams sit down at the beginning of each offseason and determine each slice of the ticket-revenue pie. Every price category is picked over and examined like the fruit aisle at your local grocer. What's the breakdown of our sell-through? Is a given seating area mostly season-ticket holders or day-of-game buyers? The season-ticket holders are usually the toughest to sell a price increase to unless you have a large offseason acquisition to justify they jump.
As for the right ticket prices to set, it depends on what the market will bear. Teams are in a very tough place, because they can’t truly operate in a free market. Each team has season-ticket pricing, mini-plan pricing (if available), group pricing (if available), individual pricing, plus day-of-game price offers as well. Once teams sell season tickets, though, there is very little leeway in pricing the rest, because their pricing has already been released to the general public.
Most teams use status-quo pricing in an effort to maintain their season-ticket revenues from year-to-year, because they produce the largest revenue stream for the teams themselves (regional sports networks are separate entities). The prices then rise incrementally across the board for mini-plans and individual purchases, but the more games a fan buys, the larger the discount he or she gets.
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What I propose may seem a bit radical in the eyes of many who have been using status-quo pricing, but I believe it's the best practice in pricing for season tickets. First, track the true value of each seat on the secondary market throughout the year and add up the cumulative total through each price category. From there add a 20-to-40 percent increase for the buyer and cover it by adding items like autographs, players appearances, batting practices, and other additional services one can offer season-ticket holders. If the sell-through on the seat is more than 80 percent, additional costs should be added to the seat and incurred by the fan. From there the mini-plan holder pays a 25-percent premium in relation to the season-ticket holder; however, the team should offer perks to the mini-plan holders, as they are your potential season-ticket holders of the future.
The goal of any retail business is a 100-percent sell-through. With teams having to understand that half the games will sell on the secondary market for below face value, it is imperative to maximize sell-throughs and revenues on every game. Group tickets help push volume and sell-throughs but bring in a very small portion of overall ticket sales.
The San Francisco Giants, led by Managing Vice President of Ticket Services Russ Stanley, is the only team in MLB to take advantage of dynamic pricing, although the Chicago White Sox, Houston Astros, and St. Louis Cardinals will all have some sort of dynamic pricing this season. Every team should be doing this. I imagine that by 2020 every team will use this system, although the Boston Red Sox, Chicago Cubs, and Philadelphia Phillies get immunity, as they sell almost everything through full season tickets.
Why would all teams subscribe to this? For competitive teams, they receive the share of the funds during the season rather than capitalize in the year after. For losing teams, it’s an opportunity to achieve a higher sell-through and maximize their ancillary incomes. There is a very fine line in discounting one's own seats, as MLB is finding out with its StubHub deal. As long as the benefits to being a season-ticket holder and mini-plan holder are in place, it will be easier to “sell” the merits of dynamic pricing to the fanbase. The team should be able to take advantage of the free market just as the fan and secondary services have been doing for years in the resale markets.
While only 3.3 percent of MLB businesses (the Giants) use the idea I am supporting in this article, in the years to come this will become the only way to do business. Keep an eye out here in the coming weeks as I analyze every schedule with my predictions on which team's ticket sales are going to go up or down this upcoming season.
David Simmons is a graduate of the University of Central Florida who worked in the front office of the Los Angeles Dodgers over 4 seasons. He has a decade of ticketing experience and currently resides in Baltimore. You can follow David on Twitter @davidesimmons
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