September 14, 2009
Debates about variable pricing movement in professional sports, in which single tickets to some "premium" games are sold at a higher cost to the fan than other less-desirable games, inevitably lead to a rather indefensible point for proponents:
If a game on a Saturday night against a popular team is double the usual price, shouldn't that Wednesday game against the flea-ridden dog-of-a-team be priced below face value?
This season, the Dallas Stars are the first NHL team to implement a system called "dynamic pricing," which is like variable pricing only it's determined with artificial intelligence and in a constant state of flux.
Market conditions, consumer demand, the latest hockey news ... it all factors into what upper-level tickets for Stars games will cost leading up to faceoff. In some cases, that means prices with climb; in other cases, it means fans will buy ticket well below last year's face-values for less popular games.
"People's initial reaction is always 'variable pricing screws fans.' For us, it's almost a way to be smart about our discounting," said Colin Faulkner, senior VP of marketing for the Stars. "A lot of fans jumped to the conclusion that this was just a way to charge more money for big games. I think, for us, it was almost a way for us to discount our games more than charge a premium."
The software system, already being used in Major League Baseball, could revolutionize how you purchase tickets in most NHL cities; turning the experience into something akin to flying on an airline than attending a sporting event.
The teams are going to love it, the scalpers already hate it ... but what are the fans going to think?
Similar to airline pricing, the best prices are often found early. Dynamic pricing will provide fans with great prices starting from the initial on-sale on Sept. 12. The upper level single-game ticket prices can go up or down based on a variety of factors, including league standings, opposing team, star players, day of the week, and real time supply and demand. Dynamic pricing for upper level tickets will continue all season. Fans will be able to check out the current prices at any time at DallasStars.com.
As you can see, the Stars intend to set their prices using a variety of factors. Faulkner said "the most important factor is the ticket sales data itself," which goes for sales history on certain days and against certain opponents, as well as ongoing changes in sales for a certain game.
For example, if a game has 200 tickets remaining for purchase, prices will rise as the game date nears; if sales are significantly less than that, prices will likely fall, according to Faulkner.
There are other factors at play here, too. If the Dallas Cowboys have a game the same day as the Stars, the ticket prices will be affected. Same thing goes for a Texas/Oklahoma game in NCAA football. It's all about using "real market conditions" to set price points for fans to feel comfortable paying for specific games.
"In Toronto, I can totally see someone saying that [dynamic pricing is] a way to charge more money if they're sold out all the time. But in a non-traditional hockey market, we have tickets to sell," said Faulkner. "Our goal is to fill the building. We want more people watching the game, and the goal is to hopefully find the right price point for them to come to the game."
When Stars tickets went on sale last weekend, some of the initial numbers indicated an aggressive pricing plan from the team for weekday games against non-rivals. (Ticket prices from last year are at the bottom of the chart.) The prices will fluctuate, though not as wildly as, say, airline tickets:
As you can see, games against the Los Angeles Kings, Toronto Maple Leafs, Florida Panthers, Calgary Flames, Vancouver Canucks, Columbus Blue Jackets, Carolina Hurricanes and St. Louis Blues all begin under last season's face values.
The New Jersey Devils' visit, meanwhile, is pricing at face value because it's a Saturday night and because, Faulkner said, the Devils rarely visit Dallas.
Fan reaction to the "dynamic pricing" appears to be "wait and see," because the Stars had already started discounting tickets near the end of last season in a response to both economic conditions and their disappointing season. CNET, in a conversation with marketing VP Geoff Moore of the Stars, said fan response is a key to pricing:
One of the biggest potential issues the Stars might face while using Qcue's technology is fan response. Prices swing wildly between games. In fact, Premium terrace seats will be [initially] offered for $36 for the Stars' October 14 game. Just two days later, those same seats will be offered for $60. Granted, Dallas plays against Boston the second night, and it's a Friday night, but will a $24 price swing really appeal to fans?
Moore thinks so. And he doesn't believe that $24 is a wild swing. He said that "if there are wild swings, there might be some kickbacks, but we don't plan to have any wild swings." In the end, he said, the Stars' main goal is to "protect season ticket holder value."
Well, that and perhaps put a few scalpers out of business. "Dynamic pricing" is a handy way of beating the secondary market at its own game, or at the very least making their lives more difficult when it comes to reselling tickets. Could dynamic pricing render some Stars tickets un-scalpable?
"Yeah. You're theoretically decreasing the margins on the secondary market if you're pricing them appropriately on the primary market," Faulkner said. "I don't think they like it very much."
It could be the a significant step in teams attempting to freeze out scalpers from the process altogether.
"You're starting to see the primary market and the secondary market's lines being blurred together," Faulkner said. "Teams would ultimately like to control the primary market and the secondary market. To use the airline example, it used to be that you needed a physical ticket to go ride on an airplane. When they first introduced ticketless technology, people were a little freaked out, but now it's the standard. There's no transferring your ticket to anybody else on a plane. Maybe that's where it goes with teams."
Sure, this is a prime time for the Stars to try this pricing plan: In a bad economy, coming off a bum season and 14th in attendance last year. They want to fill the weekday games and squeeze out as much dough as they can from fans on the weekend, right?
Like it or not, if successful, "dynamic pricing" could become the standard for many NHL teams and other professional sports. (Assuming Ticketmaster plays ball; this is a Tickets.com partnership at the moment.)
That's bad news if you loathe the idea of families being unable to attend Saturday night games -- or those games against top rivals that make young fans fall in love with hockey -- because they're priced out of them.
That's good news if you think that external conditions should affect the price of a ticket.
Opponent suddenly stinks? Drop the price. Alexander Ovechkin's(notes) coming to town, but is doubtful for the game one week away from it? Drop the price, according to Faulkner. If this thing takes off, you're going to end up paying less for backup quarterbacks or Broadway understudies ... even if you'll be paying more for must-win games late in the season with only a few tickets left.
The Stars call that "dynamic"; wonder what their fans will call it after this season?