How to think about Pricing Sports Tickets

22 August 2018
22 Aug 2018
3 min read

Pricing is a fantastic economic exercise; is there anything purer than the idea of maximizing profit while selling one single experience? In the spirit of Sloan Sports Analytics Conference starting to sell tickets soon, I thought it would be fun to write down a few main points that I would think about while pricing sports tickets.

  1. The first concern would be to separate the experience artificially. Yes, the “product” is the same; the consumer sees the team play a game of basketball. But there is an “artificial” difference that I would be able to sell: how good of a seat they have. Thus, my first goal would be to examine the price point of these different seats.
  2. Assuming that this plan passes muster, I would then look at ticketing plans. After separating the seats into different categories 1 , I would then offer various programs for purchase: such as season, half season, what have you. These unique plans would be beneficial for numerous reasons: much like airlines, you could give a discount on reserving all the games early. On the other hand, I could charge a premium for a one ticket game. This price discrimination has the effect of increasing revenue. In addition, preselling tickets gives the organization capital earlier, which is valuable in and of itself.
  3. I would then measure customer churn, especially in the most valuable real estate. If all of the customers are not renewing their tickets in a particular row, is there something wrong with that row? Could the experience be improved in some minor way that would result in a significant revenue savings (aka not having to sell that seat again)?
  4. I would then change the single ticket price based on the particular game that is being played. If a trendy team or player is coming into town, I will charge more for that game as opposed to a less popular team.
  5. Once I get all of those ducks in a row, I could then look at the elasticity of the tickets. By varying the price slightly, I would see how changing the price affects the number of tickets sold. Perhaps some tickets should have their price raised, but others should have their prices lowered. Deeper insight and slight variation of the ticket price should let the team hone in on what exactly the price should be.
  6. Finally, I would examine the average value of the tickets and see if any should be put on sale even further. By discounting those tickets (perhaps to students, veterans, and the elderly), I can further extract even more revenue. It’s better to sell the tickets at a discount as opposed to having an empty stadium.

Overall, this has been a great way to walk through the problems I would tackle in ticket pricing. If I were a business person at a sports team, I would have other issues to worry about as well (staffing and food sales to name two), but this would be the track that I would follow to gain insight into the ticketing process.

  1. Courtside, etc. ↩︎

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