Thursday, February 27, 2014

How to Fill a Ballpark

Filling a ballpark is a classic example of a yield management problem. Demand for any game is uncertain but supply of seats is fixed. The team would prefer to set prices based on the expected demand for that game. Even better, let fans indicate the level of expected demand by their willingness to purchase early. Following this logic, more baseball teams are moving to dynamic pricing where the price of a seat changes over time as more or fewer are sold. As the Detroit Free Press reports:
“Dynamic pricing is based on consumer demand and generally affords fans who buy early to save more,” Duane McLean, executive vice president of business operations for the Tigers, said. “With dynamic pricing you could see the value of ticket prices increase and decrease based on demand."


  1. According to an example of Detroit’s Dynamic Pricing, the lowest that any single ticket would sell for is equivalent to that of the single game cost at season ticket rates. This would be a great MLB team model for pricing to combat their yield management problem but there are two major issues;
    Demand and elasticity for that of a baseball game in Detroit are not equal to that of a soccer match in England. Unlike the English Premier League, the MLB teams normally enjoy being the only team in their city. This allows for reduced demand for some teams competing for the same crowd. On the other hand, there are also many potential customers who are one train ride away from enjoying a match at an adjusted price.
    We also know that MLB has an official ticker reseller in Stub Hub where fans apply their personalized version of Dynamic Pricing for every game. Those who can afford it usually snatch up tickets are the early or season (reduced) price. They then begin offering tickets based on what they think fans are willing to pay. Stub-hub allows fans to make the same real-time adjustments and takes a fee on whatever price it sells for.
    For the current model to truly solve yield management problems, MLB should have total control over every ticket.

  2. This article sparks my interest because I enjoy going to sporting events throughout the year. As the years have gone on it’s become more difficult to get to games, family obligations, work, home and the list goes on & on. Overall pricing for tickets have gotten very expensive so I’m even less inclined to go to a game these days. After all that being said, if I go to a game, I would prefer to go to game, in which my team is playing a good rival or team that sparks my interest. From a pricing stand point, if the price isn’t much more, I will be willing to pay the extra few dollars to see that team. However, if I was to obtain tickets significantly cheaper, I would be inclined to go to the game just to get my fill of my yearly visit to the ball park. In the case of Baseball, I believe the length of the season makes it so much more difficult to continuously fill in the stadium. Hockey and Basketball have roughly half the amount of home games and Football only has 8. Even though Hockey and Basketball may have a smaller fan base they have the size of arenas to fill. As for Football, the stadiums are larger but the ability to get to the games are far fewer than any other sport. Like anything else, the quality of the product also impacts the demand. If my team is playing terrible, I’m not willing to spend the money to go to the games and vice versa. So there are 2 items that will trigger my demand: 1st) The overall quality of my team. 2Nd) The quality of the overall game being played with that opponent.

  3. Dynamic pricing is based on the market value of the ticket along with the demand of the fans. Basically, sports stadiums are aiming to sell more tickets at a reduced price that otherwise would have remained empty in hopes to attract new fans who possibly will attend future games.

    There are many factors that contribute to the ticket sales at baseball stadiums. Some of which include the popularity of the visiting team, the attendance of the star players, any rivals between teams and even introduction of rookie players. (Koba, 2012) All of these variables could either contribute to the sales of the tickets are hinder fans from attending the games.

    In order to establish a ticket price, teams use computer software to determine ticket demand and establish the more popular seats. Tickets are sold online through the team’s website or at the stadium box office. This sales technique has cut down on scalpers and has allowed fans to enjoy some quality entertainment at an affordable price. (Koba, 2012)

    I think this is a great way to increase ticket sales, unless of course you are the girl who paid $200 for your ticket when the person sitting next to you paid only $20!

    Reference: Koba, M. (2012). How Dynamic Pricing Is Changing Sports Ticketing. Retrieved March 19, 2015, from

  4. If there is indeed a close correlation between pre-sales and the ultimate number of fans who show up to games that it is no mystery why teams would create incentives for those purchasing tickets ahead of time. It is a case where the information alone may be worth the initial reduced revenue. As surmised by this article and others such as the e Learning article relating to ticket pricing, sports seating in particular has very complex pricing. Many factors can affect the supply demand balance and therefore the price of a ticket for each individual seat at each game. Location of seating is an obvious factor, but time of year, what team you are playing, what players are playing/pitching etc., how the team is doing relative to other teams all come into play. Other wild-card factors include player milestones, time of day, weather, etc. The more complexity, the more difficult pricing becomes, which is why many organizations have developed complex pricing models based on sophisticated software.

    Works Cited:

    Froeb, e. (2014). Managerial Economics; A problem solving approach (3rd edition). Mason, OH: South-Western Cengag Learning.

  5. Don’t get me started on the price of going to the ball park, it has become a luxury event for a lot of families. When you add up the costs of tickets, food, beverages, parking and souvenirs’; with a good Groupon you could take your family away for the entire weekend, for the price of going to a single game! Even if your team is doing poorly it will cost you a lung, especially if you live in a big market. I am long suffering Mets fan who has enjoyed the availability and affordability of ticket prices over the years, due to the poor performance of the team. I have had the opportunity to see many games at affordable prices, compared to my Yankee fan friends who have always spent an arm and a leg to attend a game. Of course this year that has all changed as tickets were not readily available and very expensive down the stretch. A couple of years’ back I took my whole family to the last game of the season, we sat right behind home plate and the cost was free. No one wanted to go and they could barely give tickets away.
    When I was growing up games were affordable, tickets may not have always been available but they were affordable. There were also no substitutes for baseball fans that lived on Long Island. There were no minor league teams around at that time, so going to the game was a special event; not a luxury event like they are now. Fast forward to 2015 and there are now 2 minor league teams in a short driving distance from my home. The prices to attend these games is a fraction of what it costs to attend a game at Citi Field or Yankees Stadium, plus the players put on a good show. The prices are the same all season long and typically include a complimentary item like a hot dog or souvenir. This is a very good consumer substitute.

  6. This post stuck out to me because I, myself am weighing the benefits of going on a cruise in January. If I had purchased it over the summer I would have got tickets at a lower rate however I was not sure I could get the dates off so I with held from buying tickets secretly hoping the prices would go down seeing that it was slightly out of season. However they actually did the opposite and the prices went up by about $250 dollars per person for a double occupancy room. So when looking at the section in the book 12.2 revenue or yield management we can see that they are overpricing because the lost profit from overpricing is less than the lost profit from underpricing. In which case the cruise was priced above the target price. (Froeb, 2014) However I am still waiting to see if there will be a price drop even though evidence suggests otherwise last minute because it still seems to be quite a lot of spaces and due to large sunk and fixed cost they may change their strategy to deal with unused capacity.
    Froeb, e. (2014). Managerial Economics; A problem solving approach (3rd edition). Mason, OH: South-Western Cengag