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As The Super Bowl Ticket Market Fluctuates, Patriots And Lions Embrace Variable Pricing For 2014

Feb 2 2014, 3:11am CST | by

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As The Super Bowl Ticket Market Fluctuates, Patriots And Lions Embrace Variable Pricing For 2014
 
 

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As The Super Bowl Ticket Market Fluctuates, Patriots And Lions Embrace Variable Pricing For 2014

The 2014 Super Bowl has been an advanced lesson in price optimization for ticket sellers on the secondary market. Over the last week, prices dropped 21% to a low of $2,480. In the last twenty-four hours, they’ve climbed 10%.  The roller coaster of prices is unlike any other year and it’s made clear that even for the biggest game on the planet, demand can be subject to a lot of external factor, weather included.  During the same week in which prices were dropping 21%, the Patriots and Lions announced that they’d be using variable pricing for the 2014 season, making them the first two teams in the NFL to do so. These announcements, along with the turbulent market for Super Bowl tickets, makes clear that even the mighty NFL isn’t immune to varying levels of demand. If they’re going to keep filling stadiums, they’ll likely need to do even more.

Over the last decade, the quality of in-home entertainment has increased while prices for wiring the man case have decreased.  As that’s happened, every major league in the country has adopted some form of variable or dynamic pricing to keep fans coming out to the ballgame…except the NFL. Variable pricing allows for a tiered pricing structure in which games are slotted into demand buckets of low, high, and medium. Dynamic pricing allows teams to move prices up and down in real time based on market demand. Today, 100% of baseball teams use variable and about half use dynamic. Likewise, almost all NHL and NBA teams use some form of ‘demand-based pricing’. With only eight games played each season, though, the NFL hasn’t had to spend nearly as much time worrying about empty seats.

For the 2013 NFL season, only half of NFL teams filled their stadiums to capacity for every game. Ten teams filled their stadiums at or under 95%.  As recently as 2008, that number was as low as five. While most teams don’t have a problem selling out rivalry games in the NFL, a 4pm game against, say, Tampa Bay is a different animal altogether.  By allowing teams to adopt variable pricing, the NFL is giving them the ability to price around the reality that all games are not created equal, and in the process help them fill seats to every game.

Variable pricing takes into account the opponent, day of the week, time of the game and placement of the game on the schedule. For the Patriots, preseason games will be priced at about 50 percent of premier games. Marquee games will be priced 25 percent higher than premium games. The Lions provided less detail on the pricing tiers other than announcing that prices for pre-season games would decrease by 70%.

In their news release, the Patriots said that their intention is to “reflect the value and expected demand of each game.” That’s another way of saying that they’re pricing tickets based on what they expect to see on the secondary-market. At it’s core,the goal of variable pricing is to allows teams to capture more upside for high-demand games, be more competitive with the secondary market for mid-tier games and help season ticket holder avoid losing money on the dogs. Last season, the average NFL preseason ticket price on the secondary market was $68, which is just $10 more than Yankees spring training tickets and about $30 less than Red Sox spring training tickets. While letting teams lower pre-season prices good start, it’s just the first step in allowing teams to compete against the secondary market.  The next step for the NFL would be to allow dynamic pricing, which would go a step further and allow factors like weather and team record to factor into prices.  As we saw in the divisional playoff round this year, three teams narrowly avoided a blackout by selling out on the day of the game, including the fan-owned Green Bay Packers.   Despite their loyalty, Packers fans were not expecting a win, and on top of that, temperatures were close to zero.  The result was a much publicized scramble to sell tickets with a fixed price, while the secondary market adjusted based on ‘real-time’ market demand.  The other option is to set prices deliberately low, like Katy Perry has done for her upcoming tour to ensure a sell-out, or create the sense of scarcity or novelty as was the case for Billy Joel tickets. For the NFL, though, neither of those are an option.

As for the Super Bowl,  18  hours before kickoff, the average price is back up to almost $3,000 and the cheapest ticket is available for over $1,500.  While many expected Super Bowl XLVIII to be the most expensive ever, it will end up in the middle of the pack compared to the last six title games.  Regardless of where prices end up, the New York City Super Bowl experiment has shown that even for the biggest game, in the biggest sport, in the biggest city in America, demand can be a hard thing to predict ahead of time.

 

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<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
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