This is what I blurted out in class, baffled by the high price casually associated with a seat at a basketball game. This got me thinking – what influences the wildly different prices of professional sports tickets? How are the tickets priced?
The first price determinant, as we would expect, is the sport itself. For instance, the average NFL ticket is more expensive than an average MBL ticket, which is more expensive than an average NHL ticket. This isn’t too surprising, but what’s interesting is the huge disparity within a given sport.
This disparity tends to come from pricing methods, which are much more complex than they used to be due to the wider availability of technological tools and the higher levels of information that both consumers and sellers possess. When prices able to fluctuate in real time with demand, sellers can respond to much more minute factors and thus extract a higher amount from buyers – in other words, they can price discriminate. Here are just a few of the factors in a tag cloud by Ortec Sports to demonstrate the wide array of variables that influence prices.
Teams generally respond to these variables through either variable pricing or dynamic pricing. Both pricing strategies use the unique demand for a particular game to set the price but, while variables prices are not changed after being released to the consumers (at least, not by the sellers), dynamic prices fluctuate throughout the buying period.
This allows ticket prices to respond to unforeseen developments like weather, player injuries, particular local or national events, or whether the particular team is on a losing or winning streak by the date of the game.
We see dynamic pricing in a lot of the purchases we make, especially for events. For example, ski resort lift tickets, concerts, Broadway shows, and even plane tickets are often dictated, at least partially, by dynamic pricing. It’s an interesting problem to think about how we are influencing the price of whatever ticket we’re considering buying. Although sellers generally have an upper hand in this arrangement, clever consumers can also take advantage of this pricing mechanism by predicting how the prices will respond to demand and buying tickets when prices fall to the lows of their cycles.
And that’s how much sports cost!