VBS: Lesson 1 TICKET PRICING

Sports Marketing Learning Target(s) I will be able to determine and set the price level for my VBS tickets. I will be able to analyze demand to help set accurate/profitable ticket, vending and merchandising prices for my VBS franchise.

KEY TERMS PRICE REVENUE DEMAND YIELD MANAGEMENT PRICING Dynamic Pricing Marginal Cost Ticket Brokers Ticket Agencies

What is the main “product” of a sports franchise? The seats or tickets they offer for purchase.

PRICE - the amount of money you charge customers for one unit (product) of what you are offering. VBS – your price for your tickets should reflect what your fans are willing and able to pay.

REVENUE - money collected in sales. Revenue (# of unit sales) x (price of each unit) VBS a number of revenue sources (streams); Tickets Concessions Licensing Sponsorships Real Life - TV / Radio Broadcast

DEMAND - the amount of goods/services that customers want and are able to buy. VBS – your ticket prices should be determined by the demand of the event and your potential customers (fan base) income levels.

Pricing is tricky! # of seats are fixed Example: Stadium: capacity = 50,000 Tickets for sale must = 50,000 Marginal Cost – cost of producing one additional good or making one more commodity available. FYI – VBS there are no marginal costs.

Where are “seats” fixed?

What happens if pricing is set too HIGH? Don’t sell as much Limits your target market Limits your other revenue streams Stadium Parking Stadium Vendors Stadium Merchandise Simply said, “You Lose Money”.

What happens if pricing is set too LOW? You will lose money – why? Supply and Demand is not balanced. Seats should be priced based on “VALUE”. Value = what fans think its worth and what they feel they benefit from it.

Yield Management Pricing (YMP): Concept of setting different prices for seats of different value. Example - higher price for seats with better views lower price for “Top Six” rows YMP is used whenever quantity of a product is fixed. Example - Stadiums (PBS – 65,535) (Hines Field – 64,450) Arenas (Rupp Arena – 23,000) (MSG – 19,500)

Other examples where YMP is used: Plays Concerts Hotels Airlines

How do we purchase our tickets? FACT! ½ of all event tickets are never sold, while 10% are sold for twice their face value. What’s the cause of this ticketing disparity? BROKERS and the INTERNET

How do fans purchase their tickets: Ticket Brokers – individuals or companies who purchase tickets in bulk and then sell them for a profit. * Causes artificial demand which drives the price up. Team Box Office – safest most affordable means of buying a tickets. Ticket Agencies – Companies stadium owners use to manage their ticket sales.

Downside Pay over face value with ticket brokers / ticket agencies. Upside Dynamic Pricing – prices that aren’t fixed but change based on the ebbs (increase) and flow (decrease) of Supply and Demand. Example: Airline Tickets via Consumer makes an offer, and seller can either accept the offer or make counteroffer. Starting to see this occur with sporting events as it helps reduce the financial risk from unsold tickets.

VBS - Lesson 1: Ticket Pricing Reading Quiz Math Quiz SIM Exercise Due: Tuesday, Nov. 11 th - End of Day