Dynamic Pricing in the Sports Industry

Basic Information

Dynamic pricing is a pricing strategy that is rapidly emerging in the sports industry, so professional teams and college programs can generate more revenue. The ideology behind dynamic pricing is to introduce a variable pricing system to reflect demand.  Games will be more expensive if they have a higher demand because of factors like the opponent, time of the game, and day of the week.

Qcue is the leading company that assists in dynamic pricing. Currently the serve more than thirty teams across the MLB, NHL, NBA, and MLS. As more teams are generating more revenue, the number of teams who use this strategy will continue to rise.

I can understand the logic behind this because as a sports fan I am willing to pay significantly more to go to a game against a difficult opponent. Also, we all know people take advantage of secondary markets (sites like Stubhub) and resell tickets for much more if the demand is high, so I am not surprised that an industry this size would capitalize on the opportunity.

An example that may impact many UMass students

Unfortunately for Boston sports fans, the Red Sox have changed to a type of dynamic pricing system for the 2014 season called a tier system. They introduced five different tiers which consist of five different price ranges for different types of games. For instance, fans are charged as low as forty three dollars for a tier five game, and as high as seventy three dollars for a tier one game for the same infield grandstand ticket.

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In College Sports

The University of Michigan has the second most valuable college football team in the country (120 million). They have decided to follow schools such as Georgetown University, University of California, and Perdue by introducing a dynamic pricing system. By doing so, The University is projecting to bring in an additional five million dollars in revenue each football season according to Forbes.

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I think that this is an excellent idea because it is a way for universities to bring in extra revenue to fund various programs. The school can use the money to give back to the vibrant college community. Hopefully UMass can do something similar once our football program develops.

Garno, Greg. “Athletic Department Could Make Millions with Implementation of Dynamic Pricing Model.” The Michigan Daily. N.p., 10 July 2013. Web. 19 Feb. 2014

“Red Sox Introduce Variable Pricing for 2014 Season.” Boston Red Sox. N.p., 15 Nov. 2013. Web. 19 Feb. 2014.

Rishe, Patrick. “Dynamic Pricing: The Future of Ticket Pricing in Sports.” Forbes. Forbes Magazine, 06 Jan. 2012. Web. 15 Feb. 2014.

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