ticket sales & operations[1]

ticket sales & operations[1] - l'hnrm couer of...

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Unformatted text preview: l'hnrm couer of Rob-n Amman. it- l 3%.. ‘ mantra ‘ Milli? Ticket Sales and Operations This chapter examines a number of issues Facing sport managers with respect to the selling and pricing oftickcts For sporting events. First. the chapter provides a perspective on attendance trends For collegiate and professional sports and their implications For increasing revenues From charged admissions. Next, the oppor- tunities and problems sport managers face in establishing a price For admission to a sporting event are discussed because pricing is one of the least understood as pects of sport management. The chapter also devotes considerable attention to the major impacts emerging technology is having on the sale and distribution of tickets, including web—based ticketing applications. The chapter concludes with an in-dcpth discussion oFthe organization and administration olticket sales. The intent is to provide the reader with a basic understanding ofvarious kinds oFrick— eting plans and methods. Accounting procedures as well as current ticketing sys- tems are described. It is estimated that U.5. consumers spend almost $12 billion a year on tickets to sporting events.‘ As shown in chapter 2, the importance of ticket sale revenue [0 professional sports varies considerably from one league to another, Whereas in the NHL and NBA gate receipts are the single greatest source of income. the media-rich NFL receives less than one third of its overall revenues from ticket sales. Gate receipts are the lifeblood ol'rninor league baseball. A Former general manager with the Class A Everett Giants notes, “The core ofa (minor league) team’s existence is the admission ticket"(p. 27f).2 Approximately haifthe total rev- enues generated by minor league teams comes from tic.th sales, and it has been pointed out that high attendance is desirable not only for the ticket revenue, but also For the revenue from the sale of concessions and novelties. The size of the concession revenues greatly influences whether a team is profitable. In many cases, concessions account for more than 25% ol-a team's revenues.’ (p. 25) At the collegiate level, ticket sales are a primary source of revenue. NCAA stud- ies on the financial condition of intercollegiate athletic programs show that in- TICKET SALES AND OPERATIONS I 351 Table 9—1 Principal Revenue Sources for NCAA Athletic Programs by Division Div. IA Div. MA Div. II Div. III Source of Revenue Ticket Sales Student Fees Donations Bowls Government Support Institutional Suport NCAAIConf. Distributions Radiof’I'V SignagefSponsorship (NA) Guarantees Source: Rcvcnues and Expenses of Divisions If“ and Ill Intercollegiate Athletics Programs: Financial Trends and Relationships n 1999. D. Folks, Indianapolis, IN: National Collegiate Athletic Association. Figure 9—1 Percentage ofScating Capacity Sold by League Over I’ast Several Yeats NHL - NFL E §§i§§ MLB 352 0 CHAPTER NINE i come from the sale of tickets constitutes a significant share of overall revenue (Table 9- I}. At the Division [-A level, 2.7% ofathletic departments annual rev: enues are deritmd from ticket sales. the single largest revenue category. At Mlcl‘ll- gan and Ohio State. ticket sales to football games in 2002 earned each athletic department approximately $28 million.‘ W’hen the University ofMichigan raised the cost ofa football ticket by $10 to an average of $41 per game, the inctease brought Michigan’s tickct prices in line with other Big Ten competitors such as Penn State and Ohio State. which charged on average $38 and 541. respectively.’ The prominence ofticket revenues diminishes for smallcr collegiate programs. At the Division II and [II levels, direct subsidies from the institution or student ac- tivity fees. or both, replace gate receipts as the most important sources ofrevenue. A concern for many of these schools is that when faced with a funding crisis in which support for sports has to be weighed against support for academic prof grants, support among students and administrations for athletic programs may di- minish. It appears that managers at all levels will be faced with the chaliengc of sustaining .tndr’or increasing revenues from ticket sales. —-——-———-——-—————._—_.__—_—— _-_———_——_—_—.—___..—_.__— Admlssion Priclng Prafissional' Sport: Increasing gate receipts can result from either selling more tickets or raising the unit cost or price of tickets sold. Through the prosperous ‘905, many organiue tions were able to accomplish both. From 1991 to 2000. ticket prices for all Ieagues grew at an annual rate of8.4%, so that gate receipts more than doubled." The economic recession that persisted in the early years nfthc new century, how— ever, contributed to widespread attendance declincs across all four major leagues. As discussed in chapter 2. almost halfthe teams in the r 'HL, NFL. MLB, and the NBA reported attendance losses in both 2001 and 2002 Figure 9-] shows the percentage of available seating capacity actually sold across the four major North American sports leagues from 1995 to 2001702. The over- all profile indicates a generally flat or stagnant attendance pattern during this pe- riod. The league demonstrating the most significant improvement was MLB, moving from selling 56% of its seating capacity in 1995 to over 64% in 2002. However, an inspection of individual team attendance records reveals that 10 MLB teams posted doublevdigit attendance losses during ll'lC 2002 season. In part, the inabiIity ofmany MLB teams to sell a significant portion of their seating capacity is attributable to the MLB's 162 regular-season game schedule’s being much longer than those ofthe other major professional sport leagues (NBA 82: NHL 82; and NFL 16 games). Given baseball’s significantly iarger inventory, it is more difficult to sell out the SI home dates. Clearly, the widespread erosion in fan attendance is attributable to several factors. In addition to the persistent economic slowdown nfthc early 20005, other factors contributing to attendance losses include the increased competition from the en— tertainment industry, the availability of more sports programs on free or cabie television than cver before. and the stcady cost increases ofatrentling major sport— ing cvcnts. TICKET SALES AND OPERATIONS I 353 The impact of escalating prices was dis- cussed at length in chapter 2‘ As Show" in Figure 9-2 Rising Cost oFAttending Major League Figure 92. ticket prices to sporting events more than doubled From 1991792 to 2002- Sporting Events for "Family of Four" 03. The relatively high prices make it likely % change that potential spectators will substitute a $145.21 host of other less gapensivc entcr‘fiill'lmen; $254.88 ' t -tt in ames. [)Du' Glamor-‘5 -m d er-l- g 5 $152.55 $290.41 there is little empirical evrdence on the type and extent of switching that occurs among $240.43 emen‘finmem cpl-mm (such as mmlng ‘1 Based on Fan Costlndex (Pct) calculated by Iron: Mart-Hing Rrpartro WNW-la inflcad 0f attending 3“ NBA 531T”); represrnl the average test for family offour attending a major league the potential For cost-saving substitution is considerable and deserving ofcareful exam- ination by sport managers. It is clear thar the relatively high costs associated with attending major league sporting events place them in a particularly vulnerable price position (see Table 9—2). grams, 2 caps). __—_——_——-———-— ______________.__.__....._————-———— Table 9—2 Price ofAlternarive Entertainment Options Estimated National Range 0! Type of Entertainment Costner Engagement “(31an $0.03 to $1.00 per day (1] Internet Access $0.75 to $1.25 per day (2) Watch Cable“! $1.75 to $2.00 per day (2) Watch Satellite TV $2.00 in $3.00 per day (2) $3.00 to $5.00 for three-day use (2) $4.00 to $6.00 for three-day use (2) $5.00 to $7.00 for three-day use (2) $5.00 to $10.00 for single viewing (3) $9.00 Io $20.00 (1, 2) $5.00 to $40.00 $45.00 (3) $56.00 (3) 311.1310 $36.08 ($13.30") $31.50 to $81.99 ($50.02“) 533.1610 $91.15 (543.65”) $3219 to $75.91 (541.56") Rent a video tape Rent a PlayStation 2 cartridge Rent a DVD Attend a movie Purchase a 00 Go out to dinner Rock Danced tickets Broadway Show Attend MLB Attend NFL Attend NBA Attend NHL (1) Based on Cost of electriciry. Sunk cost nfpurehasingTV is not included. (2) Based on cost of montth subscription fees or standard rental cost. Sunk cost ofcour purer. VCR, DVD player. CD player, satellite dish. PlayStationZ unit is not included (e.g.. consumer already Owns aTV or DVD player]. (3) Source: Newsweek, Iuly 9. IDOL (Horn, 2001}. ("l Average Ticket Cost only. Does not include parking, {nod concessions, program. or souvenir. Source: 12am Mariam; Ripanwebsite, January 2003 354 I CHAPTER NINE game (2 adult and 2 child tickets. 4 sodas. 4 hot dogs, 2 beers, 2 pro- Until recently. tickets to most major professional sport league games have not been price sensitive. Even (luring the 2003 recession, almost 7 out of every 10 major league teams raised their ticker prices. During this period the NFL and MLB increased their ticket prices on average by 32.9% and 8.7%, rcspecdvely. it appears the pricing approach ofinost sports teams is cost oriented. The override ing concern of this pricing strategy is recovering costs. it has been reported that most costvoriented service providers do not lower prices during slower demand periods.7 This finding is particularly relevant. Among the 23 MLB teams that in— creased ticket prices in 2001, 15 lost attendance during that season. Although a direct causal relationship between increased prices and declining attendance has yet to be established, given the increased price sensitivity in difficult economic times, switching From a COSIvDrientetl to a more demand-oriented pricing strategy appears to be prudent. Empirical evidence indicates that the most effective price changes are based on anticipated reactions of customers, rather than on only a firm's own costs and circumstances.! Approaching the market with greater sensie tiviry to customers’ price tolerance levels is crucial to sustaining fan support. Recognizing the precarious position of sports properties, some in the industry have adopted a more [JrlCCASCnstllVC approach to the market. The owner oFthe NBA Los Angeles Laircrs proclaimed, "The league must do everything possible to slow rapidly escalating costs of tickets" (C 4).9 There is evidence rhat teams are recognizing this because in 2002-03, 55% of teams across the four major sports leagues either reduced or did not increase the cost ofa ticker during that season. In that year, over half the NBA reams [amend ticker costsusorne significantly. For example, Portland and Seattle were reduced 36% and 32%, respectively. It appears that the widespread pattern of substantial, almost automatic annual inv creases that persisted through the decade of the 19905 came to an end by the 200203 season. Collegiate Sports Table 93 indicates there were steady attendance increases for college football over the last several years. Although there was relatively mode-5r growth (about 5%) in the number of colleges fielding Football teams in this period, total attendance in basketball and football over the same period grew by more than 3.5 million to more than 40 million spectators in 2001. Given the dependence on Football revenues. most schools competing in major conferences (Big 10, Big [2. Par: 10. SEC) have developed "priority seating" prov grams for Football, which ties preferred seating locations to additional donations to the athletic program. To purchase the best seats in the srarlium, Fans have to make an extra contribution to the athletic department for rhe right to buy those scars. This "privilege" may cost a seasonerieket purchaser at a major school as much as $5,000—10,000 For two season tickers. Generally, the larger the dona- tion. the better the seat location. First introduced in the early 19805, priority seat- ing has become the norm at the: Division I level, with abOnr 90% of Division [A schools currently implementing the concept. TICKET SALES AND OPERATIONS 0 355 Table 9—3 Attendance Trends for Selected Sports Full Season Totals by Year (in millions) Sport BASEBALL NILE teams Attendance Minor Leagues Teams Attendance BASKET BALL NBA Teams Attendance NCAA Men‘s Teams Attendance NCAA Women‘s Teams Attendance FOOTBALL NFL Teams “— 32 19,742 Attendance 19,050 32 20.763 20.953 (NA) NCAA College _ Far-yr HOCKEY NHL Teams Teams 5 601 606 Attendance 39.483 39.147 ' "i gal-“TI” ' “iffy . Attendance 17.641 18,057 18,800 20,372 20,614 Source: US. Census Bureau, Statistical Abstract oftlte United States, 2001 When it comes to establishing ticket prices, it appears that most sport managers make decisions "by the seat of their pants." For example, it has been suggested that "ticket prices for professional sport teams are the bestiinformed games {ital- ics added] ofmanagement" (p. 144).” Historically, sport managers have relied al- most exclusively on their own judgment as to what tickct prices would be most acceptable to Fans. The prevailing approach has bccn to raise prices incrementally by some arbitrary percentage or flat rate Although prices have consistently in, creased For admission to most professional and collegiate events. pricing decisions scam to be based loosely on two considerations, either the estimated revenue 356 0 CHAPTER NINE Prlclng Tickets for Sporting Events needs of the organization or managcmcnt's perception of what the market will beat In this section, we discuss some of the issues and concerns sport managers should consider in establishing prices for thc services they provide. It is important [0 consider thc price a fan pays for a ticket in a broad context. Normally, price is conceived ofas simply the direct amount of money sacrificed to acquire access to a desired service or event. However. the monetary price of buying a ticket is only part ofthe overall direct monetary expenditure made by a fan. Fans pay consid- erably more from 25 to 50 cents on every dollarifiar such things as transporta- tion to and from the game, parking, and ballpark concessions." As chapter 11 illustrates, expenditures on concussions alone have growtt substantially, with fans who attend major league games spending an average of$12 each on food and bev- erage concessions. For trinity fans, transportation costs are a significant part of the total cost of are tendance. These costs an: a fitnctiun of mode oftransportation, travel distance, and fee for parking at a stadium. ballpark, or arena. The magnitude ofthesc 3X7 penses varies widely. It is increasingly common, however, to find the fee for park: ing adjacent to a crowded sport venue almost as castly as the admission charge itself. In addition to these direct expenses. individuals may incur extensive non— monetaty costs associated with traveling to and from sporting events. There are two types ofnonmonerary time costs that sport managers should be cognizant 01': travel time and waiting time. The amount of travel time that creates a barrier to attending events obviously varies according to the individual and the event, bitr apparently even small travel times will inhibit attendance. Substantial effects have been reported for travel times of 30 minutes and less.” The cost of waiting time—forcxample. in long lines to purchase tickets print to a game or to use a bathroom stall in the women’s restroomimay be substantial. Substantial enough for some people to conclude that thc non-monetary costs as- sociated with attendance are too hiin even though the direct ticket charge may be acceptable. In these instances, fans not able to see a favorable btdance between the nonmonetary and monetary costs associated with attendance are likely to seek al- ternate forms ofctttcrtainment. The investment that fans make includes not oniy the direct charge of purchasing a ticket, but also the monetary and nonntonerary opportunity costs (travel and waiting time) associated with attendance. For some people. these access costs may involve more personal sacrifice than money and, therefore. may be more influential than monetary costs in determining whether or not these individuals attend. The important point is that sport managers should consider all the costs of attending sporting events. Psychology of Pricing Establishing a price that will be acceptcd by sports attendees requires considering several psychological dimensions of pricing. The most important ofrhese are dis cussed in the following paragraphs. Expectedprice threshold. Research has shown that consumers have an expected range of prices they are willing to pay For a particular program or service attd for various products." People refrain From purchasing a product not only when the TICKET SALES AND OPERATEONS I 35? price is considered too high. but also when the prict: is perceived to be too low. If a price is set above a threshold price, people will find it too expensive. [fa price is set below the expected level, potential consumers will be suspicious of the qual- ity ofthe service. The upper and lower boundaries of this zone ofacccptance may have been formed from an individual's rccollecrion of prices asked or paid in the past. An important firtmr in establishing tire sxperrtdprr'td :iJmimr’zz’ may {we to: initial price the organization chargesfiir admission to do event orfiir A particular service. If consumers have not previously attended this type of sporting event or have no previous exposure to the service, the initial price is likely to become the reference price. This first price firme establishes in the consumer's mind the fair price for the service. Hence. it becomes the reference price against which subsequent price revisions are compared. An organization is likely to have more flexibility in the first pricing decision than in any subsequent decisions, which will always be con- strained by consumers’ relating their sense ofappropriateness and fairness back to the former price. The first pricing decision, therefore. usually has a strong deter- mining impact on the level ofpricc tltat can be charged for that service through- out its life. The function of the initial pricing decision in formulating a reference price point emphasizes the risks involved in pricing an event or service too low when it is first offered, so that potential fans or patrons will be enticed to try it. This objective can best be achieved by offering a promotional price that is recognized by all po- tential users as temporary, A fixed. relatively short period during which the spe7 cial, low promotional price will apply should be established. This should be communicated togetherwith the regular price that will be charged for the service at the end ofthis uirttroductoryn period. Understanding sport consumers' expected price thresholds is important for ath- letic directors concerned with attempting to generate revenue from what have been commonly labeled “nonrevenue” sports. Although deriving substantial gate income from many ofthcsc sports may not be possible or even intended, some of these sports appear to have potential for expanded revenue production. Good prospects, for example, include many women’s sports and men's baseball and [toe key. The challenge facing many programs is how to induce people to pay either at all, or more, for something that historically has been provided free or at a nominal cost. Currently, in the Big 10 Conference. for example, the general public can at- tend three fourths of all sporting events sponsored by the member institutions at no direct cost. This pattern of fret: admission is common among collegiate insti- tutions across rhe United States and Canada. Athletic directors hoping to generate more front nonrevenue sports face a chal- lenging dilemma. Whereas establishing the first price is crucial to setting the start- datd for any subsequent price adjustntcntsftherefore. the first price should not be artificially low—at the same time. any new or abrupt increase in price may ex, ceed consumets' price thresholds. The existing price threshold may be low, be- cause the reference price has been conditioned by years of free or nominal admission. 353 0 CHAPTER NINfE brcreasr'ng the sport consumer} willingness to pay. lfa price is to be charged for the first time or ifa relatively large price increase beyond the expected threshold is to be made, fans' resistance may be reduced by raising their perception of the value ofthe event or service. [fconsumers think that the value ofthe event they are purchasing is commensurate with the price being charged, then they are less likely to react adversely to the price increase. Directly conveying the existing benefits or attributes ofartcndiog a sporting event may raise the consciousness ofaspects oftbc overall experience that orherwisc may have been ignored or taken for granted. Providing a detailed description of an event’s primary attributes and the benefits it offers may assist in raising its per- ceived value. For example, it has been demonstrated that consoiners' willingness to pay for selected recreation and sport activities could be raised substantially by offering information that directly communicated the personal benefits consumers would derive from the activity.” Another way to produce changes in perceived value to increase an individual's willingness to pay is to use price comparisons with other substitutable events or services. Comparisons with competitors' activities or services may help convey the impression that although an increase in prices occurred. the new price is still reasonable. The intent is to communicate excellent value relative to competitive options. For example, “for $5, you get the best in college baseball at less than half the cost of attending a professional game in the area." Comparisons with non— substituted services may provide individuals with a point of reference with which to favorably compare a price: "For less than the cost ofa hamburger and fries at your favorite fast—food outlet, you can spend an afternoon watching the best in college baseball." Tolerance zone. The concept ofa tolerance none suggests that ifprice increases are within a sufficiently small range or zone, they will not adversely impact attenv dance at an event or the purchase ofa service. For example, an increase in admis sion charge to a collegiate men's hockey game from $2.50 to $3.00 may be noticed by fans, but it is likely to be small enough that it will not alter their pat— tern ofattendance. Perceptions of price increases and decreases are relative to the original price. An increase in the price of an event frotn $5.00 to “0.00 may arouse vigorous protests, whereas an increase in the price of a different service front $10.00 to $15.00 may raise no comment. Even though the increase in each case is $5.00, the first is a 100% change, whereas the second is perceived as "only" a 50% change and not resisted as vigoroust A series ofsmall incremental increases in price over a period ofrime—all ofwhich fall wirhirt the tolerance zone—is less likely to meet consumer resistance than is :1 single major increase. Sport managers should consider increasing their prices reg— ularly rather than holding back increases until a large relative change is required. How-ever, arty price change, no matter how necessary from the sport organization’s standpoint, should be carefully considered. Too often, sport managers have failed to recognize that consumers ultimater decide how much they are willing to pay for a ticket or service. No matter how justifiable a price hike might be from the team's perspective, in the end all that matters is whether fans are willing to pay the higher amount. It is crucial, therefore, that prior to the initiation of arty price hike, market surveys that assess coitsumers’ levels of price tolerance be conducted TICKET SALES AND OPERATIONS O 359 to ensure that the new price falls within a potential target market's expected price threshold. One effective approach to learning how consumers may react to a propDSed price hike would be for Ihe sport organization to conduct focus group interviews. Focus groups provide sport managers with the opportunity to probe representatives of key consumer segments (cg. season—ticket holders) as to how they might respond to an organization’s plan to raise ticket prices. The feedback would be crucial in determining how much, if any, price tolerance might exist among targeted con— sumers. The information retrieved from focus group participants would provide the organization with the ability to make pricing decisions with greater confi— dence. Beyond determining whether fans would be willing to pay more and at what level, the interactive nature of focus groups would allow spurt managers to identify benefits that would enhance the perceived value ofthe purchase (e.g., free parking, admission to pregame tail-gating experience). _.—.____'___‘___—__—__-——~——‘“————_—d_—_-———u——-————‘_—‘—_———_ Ticket sales programs are designed to achieve a number of objectives. For profit- oriented sport organizations. such as private golf clubs and professional sports teams, the primary objective of pricing greens fees for admissions tickets is rev— enue production. Pricing decisions focus on cost recovery and profit maximiza— tion goals. On the other hand, for many sport organizations. pricing objectives may be based on achieving nonmunetary outcomes. For example, small college athletic programs may place greater emphasis on building academic community support and involvement. For this reason, students, faculty. and staffare charged zero or a nominal admission fee to athletic events. This encourages more fan stip- port and a more stimulating atmosphere for student competition. Regardless of differing objectives, pricing should be based on a market orientation that allows consumers greater flexibility in choosing the time and specific seat location, as well as the price they are willing to pay to attend a sporting event. Dtfl'mn rial Pricing At the core ofa consumervoricnted approach is the concept ofdilferential pricing. Sometimes referred to as dynamic or variable pricing, the practice involves charg‘ ing different prices for essentially the same product or service, even though there is no directly corresponding difference in the cost of producing the service. A handful of major league teams. and a growing number ofgolf courses and ski re— sorts, have experimented with the demand-based pricing scheme in recent years. Differential pricing, however. has been standard practice in the airline and hotel industries for decades. When sport organizations have instituted differential pricing programs, the method ofselling different seats (or greens fees at golf courses or lift tickets at ski resorts} at different prices has been based on one of two variables: 1) Time: Prices vary by different times of day, week, or season of the year, or first-round versus championship game or match. 2) Plate. Prices vary by different seating locations. 360 I CHAPTER NlNE Tactlcs for Improving Ticket Sales A growing number of teams sell tickets at different prices depending on the at— tractiveness oftlie opponent and the dates of play. The Colorado Rockies charge fans extra when the team plays the New York Yankees. The San Franciseo Giants have added a surcharge for weekend games. The St. Louis Cardinals require fans to pay more for tickets in the summer months. in all three cases, teams used the pricing tacric to achieve :1 fuller andi'or more balanced use ofvenue capacity. The intent is to encourage use of services at off—peak times and to maximise revenue production during peak demand times. The St. Louis Cardinals reduced ticket prices in order to raise attendance during the traditionally slower months of the seven-month long majorvleague baseball season. According to a club spokesperson, "We reduced prices for d-iose times of year when we’d had trouble. Basically, we're talking about April. May. and Sep~ tember, when kids are in school. It’s a practice we're going to continue. because there's a definite benefit to having people in the ballpark even at a lower price'Tp. 50).“ On the other hand, the Cardinals compensate for the discounted portion ofthe season by raising every ticket $1 for games played in the high-demand pe- riod between May 3i and September 2, Which was projected to net the team $750,000 in increased revenues annually.” The San Francisco Giants charge $1 to $5 more for weekend games (Friday evening to Sunday afternoon). This decision produced the team an additional $1 million in net revenue." According to one baseball executive, “Weekend summer games and certain matchups generate a different level of demand than other games. it only makes sense to price them differently" (p. 40).” Although a growing number ofteams have begun to apply differential pricing. ac cording to one analyst. the jury is still out as to whether adjusting ticket prices by demand will work in every circumstance. As the accompanying vignette (“New Game To Play: Variable Pricing") implies, sport managers should carefully con- sider a number of factors (e.g., the reaction ofcore fans) before adopting variable pricing. New Game to Play: Variable Pricing The Colorado Rockies charge fans extra when the team plays the New York Yankees. The San Francisco Giants added a surcharge for weekend games. The St; Louis Cardinals fans pay more for tickets in the summer months. I ' ' I I ' I And the Boston Bruins said this week that they’ll set a maximum price for each seat, then adjust downward as demand reveals fans‘ preferences for I opponents or days ofthe week. Sports has started experimentingesomewhat tentatively—withivariable pricing. Only a handful ofteams are doing it, but the concept has gener- ated a lot of but; as teams look for ways to increase revenue and fill empty ' 'seats. - I' I ' _ I Variable pricing hasn’t arrived in the Dallas-Fort Worth market, but local teams are keeping an eye on the trendf‘j‘l'ou can never say never in this i ' business," said Jefvaerton. executive vice-president for marketing for the - ' Texas Rangers and Dallas Stars. I I TICKET SALES AND OPERATIONS O 361 The Dallas Cowboys charge the same price for all regular-season games. So do the Mavericks. and team owner Mark Cuban says he’s not yet sold - Ion variable pricing. “1 want to see how it goes for others,” he said. For airlines, hotels and, movie theaters, it’s standard practice to adjust prices to reflect variations in demand—Jot time, day, destination, or other facto rs. Most sports teams charge the same for all regular—season games, even I though fans clearly have preferences for opponent, day of the week, or - time of the year. "There are sotne events that you know are going to be sellouts, no matter what, and others that aren't," said University of San ' Francisco economist Dru-t Rascher. a sports business expert. "So why wouldn't you be charging premium prices for those top«demand games, the way it works in other businesses." More Revenue Higher prices will mean more revenue as long as teams don’t lose cus tomers. Ifrbe Giants continue to sell out weekend games. they will reap an additional $1 million From the variable pricing scheme. The Cardinals, Giants. and Bruins are trying variable pricing for the firsr time this year, but the Rockies started it three years ago. The team wanted 'to increase revenue without giving season—ticket holders sticker shock. ' This year, the Rockies selected nine games for premium pricing—Operk ing Day, three dates with the Yankees and Cleveland Indians, and two games around the Fourth ofjuly. Aside from tlte cheap seats, ticket prices range from $17 to $43 For these games, up from $15 and $41 for the rest ' 3 ofthe schedule. _ A Rockies spokesman said fans aren't griping about variable prices, but at least one local fan doesn't like the idea. “Ticket prices are too high al- . ready," said Jimmy Williams. an Irving. TX, residertt who attended 3. Rangers game at the Ballpark in Arlington last week. ' Overton doubts variable pricing will catch on everywhere. "You have to start with a core product that is in high demand for it to work," he said. That’s not the case at the Ballpark this year. where Rangets’ attendance is running more that 20 percent behind last year. and sales are lagging, even for the top dates. Tickets are still available for the July 4 game, which usu— ally sells out early. Fair Play The Dallas Stars are riding a long string of sellouts, which might make variable pricing an attractive strategy. Overton says the team might look at ' the issue. but it’s not really considering changing its present policies. Before going to work for the Rangers and Stars in November, Overton was -- marketing director for the Cleveland Indians. Once the team moved into Jacobs Field in 1994, it sold out every game for more than five seasons. , . The lndians could have charged more for games against attractive oppo- 362 I CHAPTER NlNE ! i E t nents in the summer months. Overton decided against it. at least partly out of concern that fans might consider it price'gouging. ' “i could have done well with the variable pricing, but the volume would have suffered to get those added dollars," Overrun said. "Hi rather drive volume first." ' 7 Teams can always discount prices when demand slackens, but it usually costs them money. The attraction ofvariable pricing is the promise ofin- creased revenues. If the concept pays ed for die Rockies, Giants; Cardinals, '. and other teams, variable pricing is likely to catch on in other markets. A nightmare to contemplate while waiting to see ifit does: What ifbuy— ing seats at sports events gets as convoluted as purchasing airline tickets? Note: Thisarticle, written by staff writer Richard Alrn, appeared in Tb:- I)th Morning Nays on june l, 2002. _ - ' ' ' Flexible Ticker Packaging Until recently, mosr teams offered minimal flexibility to Fans hoping to buy sea: son rickets. A majority ol'teams offered potential customers only one or two op- tions. College and pro football teams, with their relatively small inventory of games (5 to 8 home games per season), typically offered only a full-season ticket alternative {all home games). Basketball, hockey, and baseball, with their much more extensive game inventory, historically provide fans with the option nfeither buying a full—season or a half-season package (21 to 23 games for hocitey and has ketball and 41 to 43 dates for baseball}. Under these traditional arrangements. consumers were expected to make both a substantial monetary and time commit- ment for the privilege of reserving a more desirable seat location. As ticket prices have increased over the past decade, the cost of purchasing full- scason ticket packages to major league sporting events has required an ever-in- creasing financial cotttrnitmenr. The average cost of a full-season, 43Agame (41 regular season, plus 2 preseason) ticket plan for NHL and NBA teams exceeded $2,000 for the 2002-03 season Given that relatively few households have the lie according to the 2000 nancial capacity to make such a significant investment U.S. Census, only 12% ofAmerican households earned more than $100,000 an— nually—teams and leagues have had to extend more allotdable ticketing options to consumers. Full-season ticket plans have been split into partial plans to accom- modate individuals and companies who either could not afford the Full package or knew they would be unable to attend a majority ofgames. rid'ini—ricfiwpbns. One of the early successful eFforts to create more flexible and affordable ticket plan alternatives fnr fans was a "minieplan" program imple‘ mented by the Milwaukee Brewers. in 1992, the team sold a total of (1,326 (lull- season equivalent) tickers, onc oftht: lowest totals in Major League Baseball."Thc Brewers had struggled for wins and fan support for many years. Their trip to the 1982 W'orltl Series was the team's only appearance in the past 40 years. However, in l992 the team challenged for the division title, winning 92 games, leaving fans upbeat at the end of the season. Team officials recognized that they were facing the most positive selling environment they ltad seen in years. At the TICKET SALES AND OPERATIONS I 363 same time, they realized that in order to take full advantage ofti'ie team's growing popularity, they would need to develop a more consumer—oriented approach to selling season tickets. Their first action was to expand their understanding of the marketplace. The Brewers added a new computer system that enabled them to collect customer data. in addition to integrating a database management system with ticketing, the team conducted market research through surveys and focus groups to learn more about its customers, where they came from. why they purchased season tickets, and what benefits they valued most, An important finding was that considerable potential existed for increased sales by converting customers from their individual—game buying pattern to buying mini— season packages. To encourage this, the Brewers developed a "product line" of 16- and l3—gan1e packages based on themes that market research indicated would be attractive to customers in the Milwaukee market. Among the new lines of mini packages were ' Arch-Rival Pack (16 games): featuring the Brewers most attractive Opponents ' Hut Summer Nights (16 games]: consisting of games between May 28 and September 10 ' Game Day Pack (115 games): packaging all the day games - Sunday Pack (13 games): focusing on attracting Families to the ball- park. This variety ofcustomized ticket packages proved popular. in 1903, the Brewers achieved a franchise record by selling 9,018 full-season equivalent ticket packages, an increase of 43% in jusr one year. Most of the incremental sales were attribut- able to the mini packages. The vice president for ticket sales and operations stated, "The revamped approach to our mini season plans attracted many cus— tomers, both business and individual, who would have otherwise spent little or no money with us” (p. 9).” Following the Milwaukee Brewers' successful model, most maior and minor league teams across all sports, as well as a growing number of collegiate athletic programs, offered partial or minivseason ticket plans. For example, the NBA Phoenix Suns, after a disappointing 9% attendance decline the previous season, aggressively offered a halfidozen brand—new themed, partial ticker plans to their fans (13. 9)," The Suns created several six-ticket packages that allow fans, for $100, the opportunity to “sample” NBA games throughout the season. They also offered three IU‘packs that focused on weekends, \Western Conference (“West Coast"), and Eastern Conference (“East Coast") games, respectively The team created a ZU—gamc (half-season) package and a "family night" package that in- cluded, along with four Suns game tickets, four vouchers to a local movie theater chain. four sandwiches, and four sodas. The family package was offered at $75, with a face value of$125. The Suns found corporate sponsors for several oftltcir partial ticket programs such as the "Budweiser 6 Packs" and the “A'i‘tScT Wireless Big 10 Pacls" (see Figure 9-3). Not only did the team benefit from extending 364 '- CHAPTER NINE Figure 9—3 Sample ofPhoenix Sun's Mini-Ticket Package AT&T Wireless Big Elisr coasr Ten Packs DAY DATE UPPONENT Maximize your tree time and Monday Nov. 4 Cleveland Cavaliers entettainrnent dollar with a flexible, _ affordable ATsr Wireless Big Ten Suns MW“? “"3"- 25 M'W’l‘ee “mks ticket package. Packages start at just $100 and you get an Weds. Nov. 27 New Jersey Nets extra preseason game FREE! Manda D 1 6 0” mm M . to. a c I Same great seats for all 10 games! y _a ‘ m _ Save up to $50 an, singleflame prices! Thurs. Jan 2 Philadelphia 76ers - Buy playoff tickets BEFORE they go on sale to generai Monday F91" 3 email" B“"5 public! Friday Feb. 14 New York Knicks PICK THE PACK THAT FITS THUR STYLE: . Sunday Feb. 16 Boston Celtics Monday March 17 Toronto Raptors WEST COAST Friday March 21 Washington Wizards DAY DATE OPPONENT Friday Nov. B Portland Trailbiazers WEEKEND Friday Nov. 15 Houston Rockets my DATE oppougm Monday Dec. 23 Seattle Sonics Friday Nov. 1 Cleveland Cavaliers 511mm? Jan- 12 Utah Jazz Friday Nov. 29 San Antonio Spurs WGdS- J3" 29 L-A- Lake’s Friday Dec. 6 Indiana Pacers “195- F911 ‘1 L-A- Clippers Saturday Dec. 21 Sacramenlu Kings Sunday March 9 Minnesota Timberwblves Friday Dec. 2? LA. Clippers Thurs. March 13 Sacramenlb Kings Saturday Jay-L 4 LA Lake“ WBUS- Avril 9 Dallas MflVeflfil‘S Friday Jan. 17 Dallas Mavericks Sunday Anni 13 San Antonio Spurs Saturday Feb. 1 Golden State Warriors Saturday March 1 New Oneans Hornets Saturday April 5 Minnesota fimberwolves greater branding opportunities to its corporate partners, but also the sponsors in turn helped to promote the ticket plans through company I V. radio, and print advertisements throughout the season. Although teams would rather sell full- and half-season packages, it has become ev- ident that many fans look for more flexible and affordable ticketing options. A senior vice—president ofan NBA franchise noted, “Teams can no longer rely on a handful oftradit'tonal ticket plans as before." He stated that the future will be in "creating packages for distinct demographic groups and marketing them in a tar- geted way to appeal to those particular audiences" (p. 9)." TICKET SALES AND OPERATIONS O 365 1H0): ey-Brtck Guarantees In addition to making tickets easier to buy from both a convenience and afford— ability standpoint. some sport organizations have encouraged sales by reducing the potential risk fans incur in buying expensive ticket packages. Service guaran- tees, which are a promise to refund the purchase price to unsatisfied customers, have proven effective. Cost-conscious consumers are responsive to service guare anttes that eliminate or reduce financial uncertainty." The concept of service guarantees is not yet widespread in professional sports. The New Jersey Nets of the NBA provide an example of a team’s use ofa satisfaction guarantee tied to ticket sales. The Nets extended the offer to new corporate sensonvticket buyers, promising that ifthc season tickets did not help ticket holders increase their com- pany‘s sales, the Nets would refund the cost oftickets plus interest. According to the Nets' vice president for ticket operations, "Everybody we issued that money- back guarantee to renewed. . .The program helped the team generate $250,000 in new season ticket business" (p. 48).“ The University ofKansas athletic department adopted the service‘guarantee conv cept in an attempt to induce fans to buy season tickets to KU football games. The program was targeted at “firstvtimc” season—ticket buyers. who were offered a two-game "test drive" for the season. For $157, new buyers received tickets to the layhawks' six home games and, according to a personal communication be— tween Rick Muilins and one of the authors, had an "option for a full refund if they were not satisfied after the first two games." The season-ticket promotion indicated that those who were dissatisfied or uninterested in attending the final four games would have 3 weeks—the interval between the next home game—to exercise their full money-back guarantee. Even though the Jayhawks footbail program struggled, Rick Mullins told one ofthe Jull‘lDl‘S that the Director ofPro- motions stated, "You could count on one hand the number of people who exer— cised the guarantee, maybe five total." N As discussed in chapter I, sport organimtious use the Internet to enhance ticket sales. Webebased ticketing—applying Internet technology to selling andlor te- selling tickCISJis a prominent component of ticket operations Major ski areas, for example. now offer consumers opportunities to prepurehase almost all oftheir services online. Those interested in skiing at Mt. Bachelor Ski Resort can go to the Central Oregon resort’s website, click on the "e-centet" and choose from an array of options including 22 different season passes, a variety ofdaily liftvtickct prices. lesson programs, and even gift certificates. The inter-active "Season Pass Wizard" website feature helps users select the most suitable options by guiding them through a series of questions about the specific types of experiences they seek and the prices they are willing to pay. The Breckinridge Ski Resort website allows users to prcbook every aspect of their visit to the Colorado Ski Resort, in- cluding choice of lodging, lift ticket packages, and entertainment options, com— plete with “early booking" discounts and a variety of other "web special inducements.” The NHL Washington Capitals recently reported that "60% ofout season tick- ets and individual tickets are sold unlinefinot by phone, not the salesmen, nm 366 0 CHAPTER NINE Web-Based Ticketing Sales l i TicketMaster. . ." (p. 2)“ In the early days oftbis technology, those buying tick- ets online were required to physically claim their reserved seats at a stadium or arena‘s will-call wintlow. As more farts purchased tickets online, they found them- selves waiting in long lines to pick up tickets. However, the advent of"printvate borne" options for ticket buyers enables them to print game tickets from their personal computers. The NBA entered into an arrangement with 'I'ickerM-astet to equip 28 ofits 29 arenas with bar code technology capable ofteading print—atv home tickets, so NBA fans can print their own direct admission tickets online. Not only has this technology benefited consumers, but the ability of fans [0 by- pass will-call windows also has enabled teams to reallocate staff from serving will- call clients to opening more windows for direct on-site sales. Web—based ticketing’s greatest contribution to enhancing the ticket distribution process is its ability to facilitate the resale ofalready-purchased tickets. The "sec- ondary" ticketing market has long been a problem for many sport organizations. For fans unable to attend games, the available alternatives were either to sell their tickets to scalpers or to forfeit the use ofthe ptepurchasecl tickets. SCJSOnincket holders either had to fend for themselves in the secondary market or accept the loss ofexpensive unused tickets. Both consumers and teams suffered. When con- sumers do not use their tickets, teams lose additional revenues that would have ac— crued from the ticket holder's expenditures on parking, food, beverage, and merchandise. As these on‘site ancillary revenues typically amount to $15 per per- son at major sports venues, a 10 to 15% no—show rate translates into as many as 1,500 to 2,500 ticket—buying customers not attending NBA or NHL games. A no‘show rate extended over 41 home games (41 x 1,500 = 61,500 noeshows) means that a team could forfeit almost $1 million in ancillary revenues over the course of the season (5515 x 6LSUU = $922,500). Not only does the sport orga- nization forfeit substantial income, but it also risks many ofits season-ticket bold- ers not renewing their season-ticket packages. MLB, with the largest inventory ofbotne games, has taken the Eead in using web technology to alleviate the problem facing fuil—season ticket holders who cannor attend each ofthe team's 81 home games. The system was introduced by the San Francisco Giants in 2000, and now nli MLB teams use the Internet to resell un‘ used tickets ofseason-ticket holders through an onlinc ticketing service. Available through either individual team websites or MLB.cotn, the service allows season— tickct holders both a convenient and safe outlet to sell tickets they are unable to use. Fans interested in attending games can access some of the most desirable seats in the venue by going to a website up to 4% hours before a game. The teams become ticket brokers, using their websites to march seasonvticket holders unable to use their tickets (I) certain games with fans interested in purchasing choice seat locations. The San Francisco Giants' "Double Play 'l'icket \Vindow" allows season—ticket holders to sell their tickets online at any price above the face value ofthe ticket, ensuring that the ticket holder, not a scalper, is the recipient of any incremental benefit. When a ticket buyer agrees to pay the price designated by the ticket holder, the Giants process the order in which they make the tickets available to the purchaser either at the will—call window or at one of the team's many 24Ahonr “Automated Will Call" machines throughout PacBelI Park. The team charges a TICKET SALES AND OPERATIONS I 367 l0% "convenience fee" that is added to the price ofthe ticket. Season-ticket holtl— ets can either have the money refunded to them at the end of the season or ex— change the money for ream merchandise. All parties benefit from the wchebased ticket program, The Giants not only re- duced no-shows by 50% but also generated an additional half-million dollars front their 10% transaction fee.” Season-ticket holders are not left with :1 drawer full ofunused tickets, and fans who may not have the time or resources to attend more than a few games a year have the ability to purchase some ofthe most desir— able seats in the ballpark. A number of vendors. most notably LiquidSeats and Season Tickets, now offer web—based secondary ticket programs similar to the Giants" ticket exchange. These software development companies design custom—tailored ticket resale pro- grams that are built onto a sport organization’s own branded website. W Organizing Ticket Types of Ticker: Sport organizations typically use one or more offive different types oftickets: (a) full season, (b) partial season, (c) individual game. (d) complimentary, and (e) Srll‘ dent. The specific circumstance of each team usually determines which ticker options are used. For example, established major and minor league professional teams are likely to offer all five options, with a priority on the sale of full and/or partial sea- son-ticket plans. Their intent is to ptesell as many seats as possible prior to the start of the season to ensure greater financial stability. A brandvnew ream, how— ever, without an established fan base, may find it necessary to distribute substan— tial numbers of complimentary tickets to introduce local residents to its team. Teams with a large inventory of games, such as MLB, may find it necessary to place greater emphasis on selling partial-season (or mini) ticket plans in order to generate greater attendance. A Division [ athletic program may offer a fulllseason ticker option for its football team's five or six home games, while offering both full and partial richer plans to increase demand for the [2—13 home games for its bas- ketball team. Typically, the athletic department will designate a section ofseats at both venues for the exclusive distribution of student tickets. Each of the ticker, ing options is discussed in greater detail below. Full season. Seasonvticket sales provide a guaranteed source of revenue before the season starts and are not dependent on variable factors such as weather, quality of a particular opponent. and team record. The money received from sales can be in- vested and begin earning interest. Season tickets can be distributed before the be- ginning ofthe season, and mailing tickets for 81 home MLB games atone time is less expensive than selling and distributing them for each of the 81 games indir vidually. Some NFL. NHL, NBA, and other sport organizations have been able to sell all their seats on a season basis. This may appear to be an ideal scenario, but there are some disadvantages, particularly for new teams. Fans who are never able to watch their team in pctson may lose interest. The interest of these fans may be 359 I CHAPTER NINE Sales l . i . 5 needed to increase television and radio ratings. to buy tickets if support for the team declines, or to fill seats if the team moves to a larger facility Also, season- ticket holders may spendless money on programs and merchandise on a per—game basis than would an occasional game attendee. Therefore, it may be advisable to sell at least 10% of the tickets on an individual basis, even in situations where a season sellout is possible. One creative approach to this situation was used by the Columbus Chill minor league hockey team. The Chill played their games in a 5,700—seat facility In the early 19905, the team became popular and could easily sell all their seats on a sea: '. instead of confining its fan support to the first 5,700 to purchase sca- soo tickets, Chill management devised a strategy intended to expand its fan base. son ba They set a limit for season-ticker packages of 2,500 seats. Another 2.500 seats Were sold as part of two miniplan packages, one for 15 games and the other for ll]. The organization still had 9 other games for which the 2,500 seats were avail- able to the general public. The Chill also set up 700 floor seats for each game to be sold to the general public, This strategy was used to increase the number offans who could come to games, without decreasing the amount ofper-garne ticker reve enue, Rather than seiling 5,700 full—season tickets. the ticketing strategy used by the Chill allowed them to maintain their consecutive sellout streak with a much larger Fan base, which included 7,500 fuli or partial seasonvricket holders and 25,000 singlegame purchasers. Season—ticket sales generally involve the sale ofa particular seat in the stadium for an entire season for a one-time fee. Season tickets often are discounted compared to the individual game price. Both professional and college sport organizations focus effort on selling the bestesear season tickets first, because generally they are the most expensive. The organization will offer these premium seats to the exisrv ing holders first, then to season—ticket holders in “nonchoice” sections. and finally to new season-ticket holders. However, a ticket manager should never sell all of these tickers before the season. Some choice seats need to be kept for players’ and coaches' families and special guests ofthe organization. Organization administra— tors expecr ticket managers to have some choice seats available for "last—second emergencies." At the college level, choice seats generally go to those who donate the most money to the athletic department. Donors generally are given first priority in selling, so donation club seating is an effective means for encouraging donations and in, creasing revenue.“ Many fans would rather donate an additional amount of money than pay more for tickets, because donations offer tax advantages not available to ticket purchasers. Partial! sermm. As discussed earlier in the chapter. because most sport organiza— tions cannot sell all their tickets on a season basis, many offer a variety of partial season—ticket options, often Called miniplans, that allow fans to purchase tickets for a portion of the total season. Such pians offer a lower financial commitment to individtialegame ticket holders who wish to become more active fans. but are not ready to purchase season tickets. Like season tickets, these plans are benefi‘ cial to the sport organization because they provide a source of revenue before the season and offer the efficiency of being sold and distributed at one time. TICKET SALES AND OPERATIONS O 359 M W Figure 9-4 Example of Collegiate Mini-Season Ticket Plan Plan A Full Season All 13 games College of Wooster Mississippi Valley tamar Tennessee State Northern Illinois Wisconsin-Green Bay Western Illinois Eastern Illinois Youngstown State Wright State Valparaiso Illinois-Chicago Cleveland State $78 5 'I'tckct Plans to Choose From Plan B Conference Special 3 Conference Games Plan 0 Saturday Night Special All Saturday Barnes Northern Iltinois WIsconsrn-Green Bay Western Illinois Eastern Illinois Wright State Valparaiso Iliinois-Chicago Cleveland State $48 Plan D FacultyIStatf (with Faculty LU.) Limit 2 Season tickets Mississippi Valley Lamar Northern Illinois Western Illinois Wright State Valparaiso $36 Plan E Famin Plan Children 18 Years and Under Get Free Ticket College of Wooster Mississippi Valley Lamar Tennessee State Nonhern Illinois Wisconsin-Green Bay Western Illinois Eastern Illinois Youngstown State College of Wooster Mississippi Valley Lamar Tennessee State Northern Illinois Wisconsin-Green Bay Western Illinois Eastern Illinois Youngstown State Wright State Wright State Valparaiso Valparaiso Illinois-Chicago Illinois-Chicago Cleveland State Cleveland State 536 5156 Miniplans require tickets to be purchased for :1 specific number of games. Our: typc of plan specifies exactly which games are being offered. Generally, when (has: “set” plans are being used, the organization wiil present a few different 09‘ tions from which the fan may choose. For example, (in: University of Akron of- fered two miniplan packages in addition to various season-ticker plans (see Figure 9-4). Plan B featured all the Conference games, whereas Plan C included all Sat: urdny games. A second type ofminiplau is flexible and allows the fan to list which games be or she wishes to attend. Although it is better for the customer, this type of plan wiil be far more difficult for the ticket office and will not hclp to sell the 370 0 CHAPTER NINE ;. l .wmw-h m- less popular games. Also, flexible plans make it virtually impossible to guarantee the fan the samc seat for every game. A third plan involves a combination ofa number of specified games and a numz her of games that are chosen by the fans. For example, an eight-game tttittiplan may specify four games and allow fans to choose the other four games.Tl'tc fourth type of miniplitn involves the sale of ticket books that include coupons that can be uscd for any games the fan chooses throughout the year. 'T'tckct books are best suited for situations where sellouts are rare. The coupons may allow direct admit- tance to the sport Facility or may have to be exchanged for a ticket. Complimentary. Complimentary tickets (also known as “cor-ups") are those given to individuals or groups at no cost. Mosr commonly, they are offered to Vlf’s (e.g., donors, key clients, politicians) with the goal of reaping future benefits. A number of comps are set aside to accommodate friends andr'nr famin of players and coaches. Sometimes. complimentary tickets are distributed in large: numbers by teams hoping to attract larger crowds. The team hopes (ht: “free” experience will he so positive that fans will want to return as paying customers, However, careful consideration should be given to the distribution of complimentary tick- ets. As discussed previously in the Psychology of Pricing section, consumcrs often make a connection between price and the quality of the product or service. Teams that “give their product away” may be devaluing ctrsromcrs’ perceptions of its worth. In the future, it may be difficult for a team to induce customers to pay fair value for a ticket they once received at no cost. Complimentary tickets must be JCCDLttlted for carefully. The documentation for these tickets will be audited. Because of strict NCAA rulcs regarding complimen- tary tickers. documentation is especially important at the collcgc level. Schools have been penalized and placed on probation because ofthu improper use nfcom- plimentary tickcts. Student. Colleges and universities generally allocate scars for students These ticks ets are usually discounted, but some larger schools with popular athletic teams rc- qnirc students to pay full price for tickets Schools that allocate student tickets may require students to pick up tickets before a game to control crowd sin: and to allow the athletic department to sell unclaimed student tickers. Many athletic dc- pattmcnts receive money frotn studcnt fees, and this is considered to be full or partial payment for the student tickets. Most schools require that Students show their student ID when being admitted to prevent (burn from selling these tickets to scalpcrs. Preseason Sales The ticket sales campaign typically begins three months before the season. The ticket office is likely to need three months to ensure that orders are recorded, seats are assigned, all tickets are printed (ifdoue by the office), and tickets are mailed at least two weeks before the season. However, at major sport organizations. ticket sales have become a yettr‘tound effort with preseason sales beginning soon after the prior season is completed. Sport organizations should try to take advantage of incrurucs in fan enthusiasm. [fa team completes an unusually successful season. thc organization may begin selling tickets as soon as the season is completed. The TICKET SALES AND OPERATIONS I 371 signing ofa superstar player or the hiring ofa new coach also may lead to increases in optimism and sales. lt would be a mistake 'ECI ignore such opportunities and wait until three months before the season to begin ticket sales. Before the campaign begins, the ticket office needs to he prepared. First, all brochures should be ordered and received for the direct mail campaign. Second. the ticket stock or printed tickets should be ordered and received. Ticket office employees need to remember that state institutions must go through a bidding process before ordering these materials, which will take additional time Third, open seats should be identified so that ticket office personnel can be knowledge- able when talking to potential ticket holders. Fourth, a schedule needs to be clearly outlined, including starting dates for the sale ofeach type ofticket (season, rniniplans, individual games, etc), deadlines for renewal, date on which final seat assignments will be made, and deadline for mailing tickets to fans. The seat-assignments procedure is important to the ticker purchaser. Seat assign- ments may be based on a variety of criteria, including (a) longevity, (b) date the order was received, and (c) donation level. Some colleges use complex point sys— tems that base seat assignments on a combination of the size ofdonations and the number ofyears ofgiving (See the Point System section in chapter 16 for more in: formation about how some athletic ticker offices assign preferred seat locations on the basis ofa point system). Although the method used may vary among teams, a clearly defined system for assignment should be documented and followed. Sea— son‘ticker holders want to be assured they are treated fairly and a rational system for assignment has been established. Methods afSefl'ing Ticket offices can use a combination of methods to sell tickets. This section will describe a few ofthe most common: (a) direct mail, (b) follow—up phone calls, (c) telemarketing, (d) direct sales, (e) outlets, and (f) E-Iickcting. All ofthese math: ods are most effective when combined with a targeted advertising campaign. Many sport organimtions use direct mail campaigns to sell tickets. Brochures are sc nt to current and past season—ticket holders presenting the various options avail- abie. Ticket office personnel add potential customer names to the database so that anyone who orders tickets will receive a brochure the following year. The ticket office identifies the team's trading radius and the groups it is targeting when de- termining to whom brochures will be mailed, because general mailings that are not targeted are costly and inefficient. Sport organizations can use follow-up phone calls after the mailing. They call all seasonAticker holders from the previous year who have not responded to the brochure solicitation after a reasonable period of time. These calls can be used to encourage renewals and to identify which seats will be open. In addition, the phone calls provide valuable customer feedback. lfstaffresourees are available, the organimtion calls others who received the mailing. Colleges have access to an in- expensive source ofiabot in work—study students, and some professional organi- zations have ust interns and volunteer fan groups to make these calls. Telemarketing has been used by many sports organizations to encourage pur- chases by people who were not contacted during the direct mail campaign. Again, 312 9 CHAPTER NINE l l many organizations have inexpensive sources of labor that allow telemarketing campaigns [0 be costieffective. However, the public's increasing distaste for such campaigns, the growing number of states with "no call” laws, and the use of an, meting machines to screen phone calls have decreased the effectiveness of [ElE‘ marketing. Such campaigns will be less successful if the organimtion does not determine target groups in advance. For example, the Los Angeles Clippers found they achieved more success in telemarketing by targeting mostly business execu- tives, who are likely to be able to afford season tickets.” To Compensate for the decreasing effectiveness of telemarketing, some organiza— tions use aggressive direct sales campaigns. The Oakland A’s employ a force offull— time. commissioned salespeople who “knock on doors in commercial buildings. industrial parks, and even dentists' offices" (p. ED.” They work on straight com- mission, 10% ofsales; thus, the campaign costs to the organization are minimal, The A’s management believes "that it is easier to hang up a phone or toss a brochure in a wastebasket” than it is to get rid ofa member oftheir sales force (p. ED.” Ticker outlets such as TicketMaster are used by many sport organizations to sell tickets. These outlets are convenient for the consumer. They have multiple lomv tions and are open longer hours than the typical sport organization ticket office. The work by the outlets also decreases the amount of work for the ticket oilice and some ofthe costs ofoperation.’a Finally, some ofthe outlets pay d'te sport or- ganizations for the rights to sell their tickets. This provides the sport organization with an additional source of guaranteed revenue. TicketMastet and similar ticketrdistribution companies typically charge the fan and the sport organization various service fees. The fee paid by the organimtion is usually a small percentage ofthe ticket price, and the service fee paid by die fan is generally a few dollars per ticket. There is concern the service fees may decrease sales by raising the price of tickets beyond the fan's range. Moreover, if fans are willing to pay the additional amount for the tickets, it is posrible that the increase could have been kept by the sport organization if it had sold the tickets. There is concern among some sport organizations that they lose control over customer ser- vice when they contract out the sale of their tickets to the outlets. Each sport or— ganiution should weigh the advantages and disadvantages when determining whether using ticket outlets is appropriate. As discussed earlier in the chapter, the Internet offers sport organizations many advantages, and it is likely that in the futureI most tickets will be sold on the Nerd" Ordering online is more convenient and has a number of other customer service advantages, such as allowing fans to see a map ofall seats in the facility and to pick the best seat for themselves. However, not all fans feel comfortable ordering on— line, Fears about the security of online orders exist. and sport organizations have to find a way to overcome this hesitation. Possibilities include providing a dis- count for the first online order, holding a sweepstakes for those who order online. and offering tickets online before they are available at the box office outlets.“J Once fans order online once or twice, their fear ofplacing orders on the lnternet will generally decrease, and the convenience of ordering online may encourage their repeated use. TICKET SALES AND OPERATIONS O 373 A number of incentives can be used to encourage purchases. One of the most popular incentives is a tax deduction. Businesses can deduct 50% of the price of the tickets they purchase as a business expense, Individuals and businesses can also deduct 80% of a donation to the alumni association or athletic department that is related to the purchase of college tickets. The ticket office needs to be careful, however, to separate the cost ofrhe tickers from the donation package. Payment for tickets is not a charitable donation. and deducting it as such is a violation of I R5 regulations. Some organizations guarantee that season-ticker holders can renew the same seat location for the rest of their lives. Even though a "scats-for-life" program can be effective in encouraging sales, the disadvantage is that once the [iClCtis are promised to the holder for life. it inhibits the organization's future flexibility and revenue-generating potential. Ira-Season Safes The ticket sales campaign does not end with the mailing ofseason tickets and the beginning ofrhe season. After the season starts. the ticket office knows how many tickets are available on an individualvgame basis, and its personnel have a number ofmeans available to try to sell the remaining seats. An advertising campaign can be used to encourage individual game sales. Similar to direct mail and telemar- keting, the advertising campaign will be more successful ifit is targeted. in addi- tion to focusing on the general excitement of the game experience, advertising campaigns should attempt to promote aspects of individual games that may be unique, such .15 a star player on the opposing team. a player going for a record, or the impact of the game on the playoff race. In addition to general advertising, other methods for increasing sales and filling seats are (a) group sales, (b) con- signment, (c) discounts, (d) complimentary admission, and (c) giveaways. Group sales. Sport organizations that have excess capacity may offer group rates that allow the ticket office to sell a large number ofriclteLs at one time and help to fill empty sections ofrhe stands. Often, a group sales department actively solicits groups and may offer packages that include transportation and lodging. Some times these groups are sold seats in an empty and poorly located section, but this strategy is likely to hurt repeat business and decrease group sales over the long term. Consignment. Tickets may be consigned to another group or organization, which then sells them. The most common groups to which tickets are consigned are the visiting team (respccially common in intercollegiate athletics) and charitable orga— niaations. Visiting reams often request a small consignment of tickets in order to ensure tickets are conveniently available for their loyal fans andfor large donors. Charitable organimrions that sell tickets for the sport organization generally rc- ceivc a portion of the ticket price as a donation to their organization. There are rwo items to remember when consigning tickets. First, the ticket office should maintain written documentation for all consignments and require someone from the other organization to sign for the tickets and accept responsibility for them. Second, a deadline for the return of unsold tickets by the other organization should he set and should be early enough to allow the ticket office to sell the re- maining tickets. 374 0 CHAPTER NINE Dirmuntr. The sport organization may decide to discount tickets for specific games, but this should not be a lasterninutc decision because it may decrease the perceived value of the tickets and will make the organization look desperate. As discussed earlier in the secrion on psychology of pricing, for those attending for the first time. the heavily discounted price may become the fan’s reference price. Organizations that deeply discount tickets risk the discounted ptice's becoming the reference price against which subsequent price revisions are compared. Thus a “quick fix” at the gate may unwittingly erode the long—term price tolerance of potential fans. Fans are likely to wait longer to buy tickets in the future ifthey know the tickets will be discounted on game day This increases the heavy workload on game day and may decrease the amount of revenue. Further, fans who have already purv chased tickets may become upset and ask for refunds. One sport organization found that a late discount significantly increased its workload (they had to process numerous refunds], and the organization actually refunded more money than it made by selling the discount tickets. An example of an effective discount system is that used by the Cincinnati Reds. The Reds sell the top six rows of the stadium at a discount on game day, if the seats are still available. This provides the team with the opportunity to sell the tickets at regular price. but allow: them to discount unsold seats on game day. Be— cause the discount is well publicized by the organization, the fans are not sur- prised and do not feel cheated ifthey paid the full price. Complimentary. Ticker oilices may give away more complimentary tickets in order to increase attendance. The advantage ofthis strategy is that a larger crowd will improve the game atmosphere, and the team will generate more money from concessions and parking. Also, the tickets can be given to charitable organiza7 tions, which is good for public relations. The disadvantage is that these giveaways may decrease the perceived value ofthe rickets. Many struggling leagues have tried to increase attendance by giving away complimentary tickets and selling tickets at a great discount. However, as discussed earlier. there is a danger that ‘50 may be- come the consumer's reference price. For that reason, complimentary tickets are most successful when they are given to charity or advertised as a special onevtimei only deal. Giveaways. Another method used by sport organizations to increase attendance is to give away something ofvalue to those who attend the game. Many ofthe give: aways are related to the team or sport, such as baseball bats. bats, Tvshirts, posters of the team or a star player. and player cards. Some giveaways are unrelated to sport. For example. many MLB teams gave away Beanie Babies at selected games, resulting in a significant increase in attendance.“ The relationship between the giveaway and the team is not critical. As long as the giveaway has some value to the potential spectators, it has potential to increase attendance. Because sport or- ganiurions typically pay little or have the giveaways donated by a sponsor, even a small increase in attendance results in a financial benefit to the organization. TICKET SALES AND OPERATIONS I '375 M Accounting Systems Computerized Ticketing The sophistication ofcomputetization in ticket offices has increased over the past 15 years. The days of shoe boxes full of season-ricketiholder cards. large hand written seating charts. and multicolumn spreadsheets completed by hand are long over for sport organizations, With a personal computer, even a small sport orga— nization can purchase relatively inexpensive programs to maintain a database of ticket holders and produce necessary documentation for accounting purposes such as spreadsheets and records ofsales. TicketMastt-r and other outlets use com- puters tn locate the best seats, maintain a record for each seat in the facility, and print ail tickers. After the athletic venue is entered into the system, selling tickets for any event at the facility is relatively easy. Pointvofesale printers can be used to print the tickets as they are sold so there are no printed Ibut unsold tickers (these tickets are referred to as "deadwood"), and reconciling tickets to receipts is facili- tated by the use of daily printouts from the computer. The system allows the ticket office worker to view a “map” of the facility showing which seats are open, which are sold, and which are on hold for a particular reason. However, it was noted earlier that reliance on outside outlets has disadvantages. Specialized computer systems such as Paciolan and Select-Aeseat allow ticket of- fices to store their ticket records in a computer memory. For example, l’aciolan maintains perpetual records on everyone who purchases tickets, including their ticket orders, payment history. scat assignments. and donation levels. Computer systems can be used to assign seats more rapidly and to print all tickets in the of? face. Generally. pnint—of—sale printers also are available for sales at the ticker win- dow, Although the ticket office still needs to keep some "paper" documentation for the annual audit and for investigations of any discrepancies, most of this can be disposed of after a few years. Although dacse computer systems have advan- tages. they are not the best option for all spnrt organizations. The hardware and software needed to run the systems is quite expensive and beyond the means of many smaller sport organizations. Printing Tickets may be printed by an outside company or by rhe ticket office. Even when the tickets are printed internally, the ticket stock has to be ordered. Each ticket that is printed externally musr be counted and checked to assure that there are no duplications. When season tickets are mailed, each seat for each game must be pulled from the stacks, double-checked, and then placed into the envelope before mailing, Every ticket for every game must be printed before the season, even though many will not be sold for some games. This system is cosrly and time-con- suming. The ticket office has more control when its personnel order the ticket stock and print all their own tickers. Specialized computer systems allow the organization to print complete seasonlticket packages (3 ticket for each game for a specific seat) with mailing labels attached. Employees then separate each season order and place it into an envelope for mailing. Internal printing also enables the ticket manager to control how many tickets are printed for each game, which will decrease the amount of deadwood. Printing tickets internally is preferable for the organiza- tious that can afford this type ofsystcm. 375 0 CHAPTER NINE Accounting Procedures-for Ticket Revenue The ticket office receives paymenrs throughout the year and has a system [0 main rain accurate records of receipts, deposits, and accounts receivable. Employees record both the amount received and the reason for the receipt. \‘v'hcn deposits are recorded, every dollar is attributed to the game or event for which it was received. Money reCeived for outstanding accounts is attributed to the paying customer. Al- though deposits should bc made daily, the deposit is not ready to he sent to the cashier's office or the bank until the ticket manager is sure that everything has been accurately recorded. Mistakes are easier to locate on the day ofthc receipt than days or weeks later. The deposit is kept in a vault until it is taken to the bank. Many ticker offices allow, and sometimes encourage, fans to order tickets without immediate payment. The ticket office maintains accurate records and pursues payments for these outstanding accounts. Although allowing customers to order now aiul pay later is temporarily good for customer relations, there are disadvani rages. First, some ofthc money will be uncollcctible. Second, the ticket office may have to become a pscudocollecrion agency. This unpleasant task can be timeAeon- suming. Third, relations with customers may be damaged if they view the collec- tion calls and letters as harassment. Because of these problems, some sport organizations have instituted policies that require payment to be received before tickets are mailed or distributed, This is similar to the policy used by many retail businesses and is not difficult for customers to comply with because ofthc avail- ability of credit cards. Regardless of the type of approach chosen, the ticket of, fice must have a documented policy that is clearly understood by customers and employees, Tides! Records The ticket office maintains records to account for every ticket. For each game, the organization knows the number oftickets that have been (3) sold at each price; (b) consigned, and the organitations that have them,- and (c) distributed as compli- mentary with an explanation and approval for these giveaways. The ticket office maintains records that include signatures for consigned tickets and complimeni tary approvals. The records relating to tickets are audited at the end ofthc year, and the office has to account for every ticket and every dollar. lftbe records are ac- curate and detailed, the audit is easy for all parties involved However, an audit is complex and stressful for a ticket office that is not prepared and does not have good records. Game Day Pregame preparations. Many preparations are done before the ticket windows are opened (usually 90 minutes before game time). First, the ticket office assigns a small “bank” to each ticket seller from the petty cash fund. Both the sellers! banks and the petty cash fund include the type ofchange needed for that event. For ex- ample, plenry ol‘quarters should be available ifthe ticket price is $5.25. Second, the ticket office assigns a sufficient number of tickets to each seller when preprintcd tickets are going to be used. The tickers assigned to a seller should be easrly accessed from his or her ticket-selling location. Ifrhere arc ticket printers at TICKET SALES AND OPERATIONS O 377 the seller's station, plenty of ticket stock shouid be available. After counting 35- Third. a ticket office employee completes a pregame reconciliation to account For signed tickets and money. each seller signs an assignment sheet to acknowledge re— sponsibility For both. 'l'iekets also are assigned to the ticket manager to that he or she has them available for sellers if they sell their allotment. all rickets printed and pregame receipts {see Part 1 of Figure 9-5.1 and Part 1 of‘} 5b). This reconciliation can be done early in the morning. or the night bEFDIB. 50 the employee has time to investigate any discrepancies before the day becomes hectic. The employee should start with Part 1 of Figure 9—5a. The amounts at the top of E Figure 9—5a Men’s Basketball Game, Toledo vs. Topeka March 4. 2003 at 7:30 PM : w Figure Ell-Sb Mens’ Basketball Game. Toledo vs. Topeka Match 4, 2003 at 7:30 PM each column are equal to the number of tickets printed in each category. The -__.‘ _ W.‘ Part 1: Pregame Ticket Reconciliation Paciolan TicketMaster Student Part 1: Pregame Sales 1 1 0 Log 1.9m Season Adult 5.000 l TiCke“ Receipts Season Youth 500 Season Adult ($8) Miniplan 250 1 Season Youth (56) Individual Game 1 Miniplan ($3) SID 1.300 Individual Game (TickeLMaster) $ 3 . 700 I 510 $ 6 250 g $ 8 comPllmcmaW llwo l Individual Game (Paeiolau) Visiting—ream 200 $10 1.300 13.000 Student 2.000 5 3 . 700 5,600 Sellers: l $ 6 #1 300 150 ‘ Student Wm #2 300 150 l 10.500 3 73,900 #3 300 150 | Visiting Team Sales (510) 200 2,! 0!! :3 Tomi Pregame Sales _ fl fi 25 200 Ticket Manager 200 125 ; Control _10_Q J: 1 Part 2: Game Day Sales (Seller Checkout) m m m Total Part 2: Deadwood (Seller Checkout) Receipts Control 100 75 Seller #1 Seller #1 200 so Seller #2 Seller #2 0 ' 25 Seller #3 Seller #3 150 25 I Seller #5 20 Seller #4 200 50 ' Seller #5 _2: 199 Seller #5 250 50 , g m m Ticket Manager 4m: —l§ Pregame Sales 5 75,900 112 0 “m l Game Day Sales £480 Note: The ticket manager assigned 100 more Paeialm lickets m Seller #2 and 100 more Sludcnt tickets tn Scllct 31- l Total Sales M I {ma 0 CHAPTER NINE TICKET SALES AND OPERATIONS I 375 numbers for season tickets. miniplan rickets, individual-game tickets, complie mentary tickets. visiting team tickets, and student tickets are available Horn :1 computer printout or daily sales log totals. The totals for each seller and the ticket manager are on the assignment sheets. The control tickets are generally assorted singles that probany will not be sold. If the total of each column is equal to the top (number oftickets printed), this part is complete. If these two figures are not equal, ticket office personnel re-count tickets assigned and control and recheck their logs or printouts to find the discrepancies. After this section is complete, the employee completes Part 1 of Figure 9—Sb. The number oftickets sold in each category is available in Part 1 ofFigure 9-5a. These totals are then multiplied by their respective prices to determine the amount re, ceived. The total receipts should equal the ticket office records ofrhe total game deposits plus the accounts receivable for that game. If this is not true. further in- vestigation is needed. The pregame reconciliation will assure that tickets and re- ceipts are balanced at that point, and problems with the postgame reconciliation can be attributed to a mistake made during game day. During game. Although game day is invariably difficult fiat the ticket office, there are strategies to help the operation to run more smoothly. First, the organization should hire a sufficient number of experienced ticket sellers. Although a cheaper source oflabot may be available (i.e., students}. experienced sellers are generally quicker, more professional, and less likely to make mistakes. Although most fans will arrive close to game time, long lines and unhappy fans can be avoided ifextra sellers arc hired. Second, the ticket office should have a clearly identified window(s) at which fans can pick up prepaid tickets, complimentary tickets, or tickets being held for someone (this is referred to as the will-call window). The ticket office should have enough workers to distribute these tickers quickly. Teams may separate the will: calls alphabetically and hire more workers to decrease the length of the lincs. Some organizations require advance payment, so that timevconsruning cash trans— actions ate avoided at the will-call window. The ticket office should have a sepa- rate players' and coacltes’ will—call area so these special guests do not have to wait in long lines. Also, the NCAA rules regarding players’ complimentary tickets [cw quite that an established procedure be followed that is different from the normal will-call policy. Third, the organization should have as many employees as possi- ble without preassigned responsibilities to deal with situations that may arise. Even the best-prepared organization will have to cope with lastssecond problems, Pastgdme. The ticket office's job is not done when the ticker sales are finished. The office checks the ticket sales and receipts for each seller to snake sure his or her records are accurate. Proving a mistake is difficult after the seller has signed our. The sales figures for each seller are recorded on Part 2 ofFigure 9-Sb. The total l't‘: ccipts (in this case. $8,480) should equal the money received from the sellers minus the bank they received before the game. The number of unsold tickets, or deadwood, is recorded in Part 2 of Figure 9—521. The total deadwood should equal the number of printed tickets left after the game (these tickets must be kept for auditing purposes). 330 0 CHAPTER NINE Sometime before the game is completed, the ticket office gives an attendance fig- ure to the media. Contrary to popular belief, this number is not generally arrived at “scientifically.” In faCt, teams and ieagucs report attendance figures in a num- ber Ill-different ways, ranging from (a) total tickets distributed (including both sold and complimentary), (b) turnstile count (sometimes referred (CI 35 [he (imp count), or (c) an estimate based on what the crowd size looks like ("eyeball count"). Using the number oftickets distributed to represent attendance often ex: aggcrates the actual count because it fails to account for the irumbcr of nD—shows, or individuals who, for whatever reasons. do not use their tickets. Figure 9—6 Postgame Reconciliation, Men's Basketball Game Toledo vs. Topeka, March 4. 2003 at 7:30 PM Purchased tickets Complimentary Deadwood JED 3.000 Tickets Receipts Season Mull ($0) m- $40,000 Season Youth (56) m 3.000 Miniplan ($8) 2.000 individual Game flicketMasier) — $10 IE- 4.000 s 8 m 800 Individual Game (Pacialan) — $10 1,995 19,950 $ 8 850 6.800 s 6 m_ 2430 Student (:52) __2,10_ll _i.§D_Q Total Sales . 12,200 3.35.353 Complimentary 1,500 Total TICKBlS Distributed Jim Turnstile Count (atlached) .lleflQ Attendance to Press _12,i0_Q Weather: 45. Rain Scnra': Topeka 83. Toledo as Comments: Bad weather, bath team undefeated and naiinnally ranked, many students came to buy tickets the morning of the game. west ticket window #2 was very busy Signature: TICKET SALES AND OPERATIONS l 381 The office does a postgame reconciliation (see Figure 976), which is easy if the pregame reconciliation and seller checkouts have been dottc accurately. The mid- dle section is completed by adding the pregame sales figures in Figure 9-5b (Part 1} with the game sales in Figure 9-5h (Part 2). The total is then compared with total receipts at the bottom of Figure 9-51) to ensure that all figures in Figure 9-6 are accurate. The complimentary—tickers total (from Figure 951) is added to total sales to determine the total tickers distributed. In this case, this amount is used with the ttirnstile count to determine the attendance to the press. The last check is at the top of Figure 9-6. All the figures are available in Figure 9—6 or Figure 9— 53, except the total for Pacinlaneptli’chascd tickers. This amount is computed rising the middle section by adding all Paciolan tickets sold. The final game report includes the preA and postgame reconciliations and infor- mation. such as turnstile counts, attendance to the press. weather. team records. and comments that will make this report more useful to the ticket office in fiiture years. Reports from previous years can help determine the number of tickets to print and sellers to hire. The report is placed in a file that includes all documen- tation related to the game (signed consignment sheets, complimentary approval forms. etc). Using the information in the game file. the ticket office can answer any questions an auditor may have regarding the tickets printed and the game re: ceipts. fl_—________________________.___ Consumers in the United States spend almost $12 billion a year buying tickets to Summary sporting events. For many sport organizations, ticket sales- are a key source ofrev— enue; the NBA and NHL depend on gate receipts as their single greatest source of income Admission charges and fees are the lifeblood ufa range oforher sport or ganimrions. In collegiate sport. ticket sales are a vital source of revenue, com, prising almost 30% of the total income generated by Division [A athletic departments. The economic recession ofthe early 20005 contributed to a widespread decline in attendance and a corresponding decrease in gate receipts at many sport organiza— tions. Erosion in ticket sales was aggravated by a sharp rise in the cost of attend— ing many sporting events. Ticket prices for major professional league and collegiate football and basketball games more than doubled over the past decade. Determining the cost oftickets to fall within fans' price tolerance is key to main- taining attendance. The prevailing approach has been to raise prices incremen— tally by an arbitrary percentage or flat rate. Historically, pricing decisions have been based on either the revenue needs of the organization or on management's perception of what the market will bear. Confronted with increased competition from other entertainment providers for consumers’ discretionary dollars, faced with a "soft" economy and widespread attendance decline-t, sport organizations must adopt more priCe—sensirivc approaches to setting admission and service p riccsr Sport managers need an understanding of key psychological concepts of pricing such as reference price and price tolerance zones. Application ofthese concepts is likely to be important in increasing litos' willingness to pay. 332 0 CHAPTER NINE i E i | i i i References A number of teams have adopted differential or variable pricing strategies. whereby different prices are charged for essentially the same product (attending a game) or service (using a ski lift). Prices are raised or lowered based on time ofday or season andlot by sear location to either increase demand at off-peak times or to maximiac revenue durng peak—use times. Flexible ticket packaging or the use of mini—ticket plans has proven effective in stimulating demand by providing more flexible and affordable options. Although money—back guarantees have been used sparingly by sport organimtions. evidence suggests that a promise to refund the purchase price (c.g.. seasnn-ticket package, season pass) to customers who are not satisfied can encourage sales. Internet ticketing has become a prominent vehicle for the sale and resale of rick— ets to sporting events. The Internets greatest contribution to the ticket distribu— tion process may be its ability to facilitate the resale or exchange ofprepurchased tickets. Organizations have created ream websites with "secondary" ticket pro grams where season-ticker holders can sell tickets to games they are unable to are tend. Fans are not left with expensive, unused tickets at the end of the season and are inclined to renew their season-ticket packages Effective ticket-sales offices share sound fundamentals. Firsr, they are proactive, not reactive. Extensive preparation can lessen the number and severity of laso minute problems. Second, they maintain accurate and complete records, needed for the annual audit and for investigation ofany discrepancies. Third. they are fu- cusctl on customer service, crucial to building a positive image ofthe organization and sustaining a high level ofrepeat sales. l. Dollars in sports: $191.6 spent to 200i. (2002. March lI-l7). Sparlrfluirrmr Journal. I. 25- 1‘) 2, Pajalt, M, (1990, March). Every fly ball is an adventure. Athlztir Brooms, 26-28. 3. Johnson. A, T, (1993). Elinor fugue timeout? and [and (transmit dentbpmufl, Urbano, IL: University of Illinois Press, 4. U-M athletics announce footbali ticket price increases, (2001. Winter). Michigan 764'in On- Imt. Retrieved from http:wa-w.umichrrlu’newsinfofMI'l'ihtml S. Matkiewicz, D. (2002, Jilly [4). UN! upbeat despite more financial woes. Detroit Free Prim. 6. Howard, D.l{., at Burton, R. (2002). Sports marketing in a recession: It‘s a brand new game. {ntenmnmmljaumal effluent Mnr-éermg é Spanronbrp, 4(1), 2340. 7. Zeirhami, V.. Parsuramzn. A. St Berry. L. (1985). Problems and slralegit‘s in services marl-err ing. fourmfaf-Mari'elmg. 4.9”). 33-46. 3. Ross, 13. (1984). Making money with proactive pricing. Harvard truism“ itm'm. 34(5). 145- 155. 9, Beck, H, (2001. June), [alter owner says mum prices must mp rising, [A pair; Newt, 3.9 10. Folks. D. (2000). Revenues and capture: afDr'm'riai-i if” (“Merit- programs - I999. lntiiampfl- lis. lN: National Collegiate Athletic Association. 11. Quirk. ].. St Fort. RD. (1992). Pay dirt: Tl}: 6mm”: ufpmfiirr'amrr'ieam spam. Princeton. NJ: Princeton University Press. 17.. TMR's fan cost index for MLB, NBA. NFL, NHL. (2002). 72mm Marketing Report. Re trieved from hitpn‘lwwwteamrnatketingconu‘feifcfm i3. Crompton. }.. BC Lamb, C. (1936). Markzlrrtggewmmenl um! metal rerutm. New York. John Wiley St Sons. 14, Monroe, K. (1971, November). Measuring price thresholds and latitude ofarccptanoc. fear- mtil oszrlrrtmg Rrrmrrilr, 460-464. 15 McCarville, R. Cronipton, ].L.. A! Sell. ]. (1995). The influence ofourcomc messages 0n references pritcs. Leth Scimtfl. 15(2), 1 15-I30. [(3. Cameron. 5. (2002. March 4‘10). Bruins set prices hourly. épamfiuiimrsjoumal, l, 50. 17. anell, D. (2002. June 2}). Sports fans feel pinch in seat (prices). ESPNrom. Retrieved from hrtp:wawrspn.go.comi'slmrrsbusinesslsr'ZDDZi'DfiZU|397591htmi TICKET SALES AND OPERATIONS I 333 ...
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