Pricing Strategies in Sports, Entertainment and Media

“We are driving revenue for the big games but we also can drive attendance for lower games.”

Recap of comments made by a panel of experts on digital disruption, from the Sports, Entertainment and Media Business Conference organized by SEMA, an organization that helps graduate students at UT explore career options in sports, entertainment, and arts management. Panelists wanted to speak freely without attribution, so they are not quoted directly.

Other panels from the conference are here:

Panelists are:

barry_kahnBarry Kahn founded Qcue and serves as the company’s CEO where he drives overall strategy, manages business and partner development and provides guidance for product direction. Qcue is reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time and provide the best value for fans, from the date of on-sale to the date of the event. Customers and partners include the San Francisco Giants, Dallas Stars, Major League Baseball and Tickets.com.

larry_martinLarry Martin is the Sr. Director of Team Business Operations for the NBA. As part of the Team Marketing and Business Operations division, Larry focuses on assisting teams with marketing and business objectives surrounding ticket sales, ticket operations, technology and relationship marketing. Larry also serves as the primary liaison with the different primary and secondary ticketing vendors providing services to the NBA, WNBA and D-League teams.

russ_stanleyRuss Stanley, Managing Vice President, Ticket Services and Client Relations, who enters his 20th season with the San Francisco Giants, is responsible for the ticketing of all events at AT&T Park and the team’s Spring Training facility, Scottsdale Stadium.Stanley and his service-oriented team of operations, client relations, and luxury suites staff have implemented many progressive ideas that have improved the experience of season ticket holders. During his tenure, the team has developed many fan friendly programs to alleviate the pressure for season ticket holders who must purchase and use 84 games. Whether it’s reselling tickets online, relaying via email, or donating tickets, Stanley’s team has built the infrastructure to do it all online.

derek_palmerDerek Palmer, a 17-year veteran in the ticketing industry. Palmer is the fueling force behind Tickets.com’s operational and sales organizations. Now serving as Chief Commercial Officer, Derek has experienced first hand the different facets of the business, and has successfully found ways to streamline and improve efficiencies within his organizations. Over the course of his tenure with Tickets.com, Derek has been involved with client support, training and installations, technical service, consumer services, professional services and strategic operations.

zach_andersonZach Anderson is COO at TicketCity, one of the largest ticket companies in the world. He focuses on strategy, growth and business development. Zach has put together partnerships with sports industry titans like NBC Sports. He also has an extensive marketing background and specializes in SEO and website growth/design/usability.

al_branchModerator is Alfred Branch Jr., a seasoned journalist with nearly 20 years of experience working for various publications, provides content and shapes the editorial voice of the website. Al has been writing compelling and timely stories for TicketNews.com since December 2006, and he brings integrity and a wealth of experience to covering this fast-growing industry. Daily readership has more than quadrupled since Mr. Branch began writing for the site.

Pricing Discussion Notes:

What the relationship between Qcue and the Giants, and what value is being passed on using dynamic pricing vs. the standard pricing ticket model?

  • This model updates what is the face value of the ticket. The value is increased flexibility for management. Dynamic pricing provides a way to take in new variables and translate that into price. It is a way to update prices and drive incremental revenue and sales.
  • It gives the ability to price nine minutes ahead of time instead of before the season. If we sign a hitter tomorrow, we can change the price of our tickets. If pitchers do better or worse, it affects our price. We look at other teams and how they perform. This affects demand and ticket pricing.
  • We started with 2,000 seats about two years ago. Five years from now everyone will be doing this. Our season ticket holders are guaranteed to have the lowest price seat. This drove another $500,ooo revenue. This year every seat in the house will be sold with dynamic pricing.

What’s the downside of dynamic pricing?  How does it affect the season ticket holder? How does this work?

  • Most primary ticket holders participate in the secondary market. With season ticket holders, we are setting different prices for different games. Season ticket holders get a discount.

Is it better to have variable pricing on season tickets or is it a better approach not to print a price at all?

  • We have to look at where demand is. It depends on the location of the seat.
  • We think  the face value is irrelevant. Once you take possession of the ticket, the market will drive the price of the ticket.
  • We see people want cheap tickets. Others want experience. The bar is set on what they are willing to pay, not what is printed on the ticket.
  • The primary market is learning from the secondary market.

What kind of conversations are you having with season ticket holders?

  • We are doing that right now. We don’t think it’s going to be an issue.
  • We are interested in data mining to know their purchasing behavior on various levels. We can go to our sponsors to sell additional value to sponsors.
  • When you give customers different sets of options, you learn more about their behavior, it is an extra data set in making decisions.
  • We are in early stages of learning about how dynamic pricing will affect things. We care about pricing right…finding the right price point is important. The Giants is a test.  Season ticket holders are not risk takers. It will be interesting to see what happens. The Yankees did not do well.
  • We did an extensive survey with season ticket holders recently. They don’t want to feel stupid when someone sitting next to them is paying less. They will always get the lowest price.
  • One of the challenges is that we put so much value in season tickets.
  • In this economy we have cut back. We are looking at putting a better product on the court. Not just a discounted price.
  • Season ticket holders are starting to figure out that they don’t have to buy 80 tickets when they only want to go to twenty games. Now they know they can get tickets from another market.
  • Another thing to consider is fan passion. If you feel you got screwed and you are passionate about the team it’s worse.
  • The media is telling the world about the pricing discounts, it’s not the interpersonal conversations so much.
  • Scalpers are brokers.
  • There was an NBA article in BusinessWeek yesterday about fan friendly offerings, talking about the value add. The beauty of this is that we have a lot of seats. We are able to come up with the dynamic deal of the week. We are driving revenue for the big games but we also can drive attendance for lower games. The idea is that someone can buy discounted tickets and bring a bunch of friends for the experience.
  • Even if a season ticket holder is selling most of their tickets, they are still a good customer. It’s almost like an outside sales force. We don’t want to be competing with them. It’s an interesting dynamic. We are learning a lot more about this. It’s a complex situation.
  • About 50% of seats in all events go unsold. The primary reason? People don’t know about the event, but if there’s the ability to bring the ticket price down, then they will go…and buy other things.
  • Two problems are the pricing problem and awareness problem. We are seeing in the NBA countless distressed marketplaces. Goldstar is a company doing well. Data coming from these companies indicate that on average 85% of customers are new people. The channels are selling to 77% female. Clearly reaching a different audience. Different people shop differently. We are good at reaching people in our bubble…those that touch us in our bubble. But those outside we don’t have the resources or the money to touch.
  • But, you must still protect your brand. You can’t go out with a $1 ticket.
  • From a technology standpoint, we are a primary ticketing company that has integrated with a secondary.
  • Teams are thinking they want a piece of the big pie, that they are missing a huge chunk of revenue. They are looking at pricing and other sales channels. There’s still a lot of pie to be had.

Is this potentially harmful in the long run?

  • At the end of the day, you need to create scarcity so the value of the seat will go up.

What about paperless tickets. They are now only 1-2% of market. What will this mean to your businesses?

  • It will happen. The issue is not paperless, but transferability. For us, we want to know what restrictions will be made on trade? There is still general distrust among customers.
  • The age old debate is who actually owns the ticket. It’s a temporary revocable seat license. That’s what it says on the ticket.
  • Paperless ticketing…using a credit card to gain entry. The Miley Cyrus tour is entirely ticketless. Ticketmaster is leading the way to close the loop. They feel the artist owns the ticket and should be able to decide whether it’s closed or can be transferred.
  • From a baseball team standpoint, any new technology that helps season holders manage their tickets makes it much better for ticket holders. This is a good opportunity.
  • It’s very different inside and outside of sports. There’s a lot longer line of people you need to deal with outside of sports.
  • When go outside of the standard customer relationship then it becomes all about distribution.
  • We got a little full of ourselves. Customers don’t care where they buy the ticket. They just want to go to the event.

What’s to stop putting everything on e-bay and auctioning it off at the last minute?

  • We have different types of customers. Not all customers are willing to wait until the last minute. They need to plan. When does that auction occur? It’s moved to “buy it now.”  There are many different types of seats…different products really.
  • We’ve done auctions…the economics of live entertainment are different. How can I get as much money as possible as early as possible even if the event is months anyway.  Bundled auctions worked, but not the ticket only auction for live entertainment.
  • People want to know they have a seat, and they don’t want to be outbid at last minute by $.50. We have not been successful with auctions.
  • We have been discussing a new approach, kind of like Hotwire.


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