The National Football League is wildly profitable and widely popular but high ticket prices still keep some fans out of the stadium on game day. The Detroit Lions recently announced variable ticket pricing, one attempt at matching the cost of a ticket with the demand of its game. They aren’t the only NFL club venturing into uncommon ticketing territory; the Patriots and Dolphins have also entered the variable ticket pricing fray. Fans despise paying full price for a star-starved, meaningless exhibition game so, at Ford Field, there will be a 70-percent ticket price decrease for preseason games. Variable ticket pricing is just one of many trends in the event ticketing marketplace. Even if you don’t work the ticket booth or set the prices, all sports professionals should make sense of the ticket sales industry.

The primary ticket outlets—individual teams along with Ticketmaster—like the headwaters of a river, are the source of it all. Teams, via their box office and through a partnership with Ticketmaster, price and sell tickets to fans and ticket brokers in person, over the phone and online. There are various sale windows; groups of people gain access to available tickets at different points on the calendar. VIP Club members, season ticket owners and select credit card holders enter pre-sale purchase windows to score the best seats. The general public sorts through the leftover tickets at a later date. For years the primary ticket outlets followed a fossilized business model allowing others to reap the profits. Sports teams looking for fast sellouts priced tickets high enough to profit but kept simple, fixed prices across the schedule. These first line sellers are wizening up as technology evolves and team owners grow impatient with missed opportunities. Teams hold the trump card in the event ticket game; their squeeze on the resale market grows tighter with each passing year.

The secondary ticket marketplace—businesses like StubHub, SeatGeek, TiqIQ, TicketsNow—drives innovation in ticket sales. To some, companies like eBay-owned StubHub drive up ticket prices causing some fans to miss out on the action. Others suggest that the real value of a ticket is known once placed in a truly open market. After a game ticket is purchased from a licensed seller like Ticketmaster, it is either used by the owner, goes unused or is resold. Because teams don’t tie a ticket to its owner—the opposite of an airline ticket—it is placed on the market with demand dictating the ultimate selling price. Even teams themselves have entered the business, creating ticket resale marketplaces that feel more official to fans. Most people think of price gouging when they consider shopping on the secondary market. And while a ticket with a face value of $100 can easily be resold for $500 in some instances, a fan may also find an available seat hours before the game for pennies on the dollar. Because it’s all about supply and demand, the push and pull of the market. Until licensed sellers make tickets nontransferable—it’ll never happen, Ticketmaster even owns reseller TicketsNow—the secondary market will be a viable option for buyers and sellers.

With variable ticket pricing teams like the Lions leverage data from the secondary market to set prices based on anticipated demand. Instead of a 400-Level Grandstand seat costing $100 for Bears v. Packers and Bears v. Browns, it may be just $75 for the later and $125 for the former. The Chicago Bears net the same profit while fans pay a premium for a better on-field product. Todd Lambert, Vice President of Ticketing and Suite Sales for the Lions believes it’s a win-win decision: “We’re now using that information to offer a better ticket experience for season ticket members who previously paid the same price regardless of the matchup or viability as a regular or preseason game.” Variable ticket pricing doesn’t fully stamp away the desire for a secondary market; it better simulates the natural supply-demand economy people want when purchasing tickets.

An old-meets-new ticketing model most often called dynamic pricing sets an initial price and then raises and lowers it on available seats leading up to the game based on numerous factors. With so much data readily available and the computing power to analyze it all, setting a ticket price once, and only once, has become a prehistoric practice. On a frequent basis organizations can evaluate opponent win percentage, the weather, ticket availability, concentration of games and more. Based on these data points, a team adjusts ticket prices to better meet current demand. A September Cubs v. Brewers game has little interest when both teams sit at the bottom of the NL Central. But make that a game with playoff ramifications and a 25% price increase two weeks before the game will mean little to eager fans. Your next door neighbor may have purchased that ticket for $50 in May while, dependent upon a variety of circumstances, it could be much less or much more when it’s bought in September. Dynamic pricing works because people understand it—the airline industry has been doing it for decades. And it’s happening all over sports in America from the Blazers in Rip City to the Cubs and White Sox in Chicago.

Northwestern University implemented Purple Pricing, a ticket auction methodology, this past season. It’s the next revolution in ticket pricing but will be slow to catch on. One of its developers, Northwestern professor Jeffery Ely explains the ticketing conundrum: “The money is going into someone’s pocket, but the people who control the sale of these tickets, it’s not going to them… I’m the monopoly provider of that ticket, and I’m not earning my monopoly profits.” With this particular ticket auction fans are given the choice to buy or bid. Let’s say tickets in the section you would like to sit in are $100. If you buy you agree to pay $100. But if the finalized ticket price for your section decreased when it’s deemed final, you are refunded the difference between your cost and the lower, final ticket price. Instead of buying you can choose to bid, selecting a value less than $100. If the final price actually falls to your bid level then you’ll be pulled out of the queue to purchase your tickets. It’s not straightforward—most people are used to selecting tickets in their price range and paying for them—but it’s another step towards fair market value.

The entertainment ticket selling industry is transforming; the face value ticket is disappearing. The market is transforming into different versions of a rolling supply and demand system. But the system is still without final definition as businesses—and consumers—determine if dynamic pricing, ticket auctions, variable ticket pricing or some yet to be applied method is best. Whichever way the coin faces when it lands, people will soon realize that an evolving ticket price lands on a dollar value that better represents its worth to fans. It will often be higher or lower than the “face value” price but it will be fair because that’s what the market demands.

By Niral Patel,

Featured Blogger

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