"Not all games are created equal"

August, 18, 2010
8/18/10
2:28
PM ET
Arnovitz By Kevin Arnovitz
ESPN.com
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Andrew Astleford, writing for the Times-Picayune, reports that the New Orleans Hornets have embraced variable pricing for the 2010-11 NBA season:
On Tuesday, the Hornets announced the introduction of variable pricing for the 2010-11 season to better reflect each game's worth. Yet-to-be-determined prices will be assigned to games based on value and demand, influenced by factors such as an opponent's quality and the day of the week the game is played. Each game will fall into one of five pricing categories: marquee, premium, classic, value and preseason.

"The concept is recognizing the fact that not all games are created equal," Biggers said. "We play games on all different days of the week, against all different kinds of opponents during different times of the year. There are games where the demand isn't as high as other games.

"For us, it's about pricing more in line with what the demand is. For games that have high demand, we can price those appropriately."

The basic principles of variable pricing are logical: The same seat for a Saturday night game against the Lakers is worth far more than for a Monday night game against Minnesota. Yet for decades, the team has priced those two tickets identically -- most likely at a number too low for the Lakers' game and far too high for the Minnesota game. This inefficiency in pricing means that the Hornets don't get to take full advantage of the market for the prized Lakers game, which routinely sells out weeks in advance. At the same time, the organization ends up eating thousands of seats to a Timberwolves game (or dumping them with a promotion) they could've been unloading at market value if they had the capacity to do so. Now they do.

Last winter, the San Francisco Giants became the first team in big-league sports to expand dynamic (or variable) pricing to every seat in their venue*, but virtually major league franchise has established an official relationship with StubHub where sellers can unload their seats at market value. Over the past couple of years, season-ticket holders to various sports have pocketed millions of dollars using pre-sale privileges to secure seats to premium games at face value, then flipping those assets on StubHub. It's an extremely efficient way to make money if you're a resourceful fan, but the teams miss out on the profit altogether. As franchises have become savvier about their marketing and personnel strategies, it was only a matter of time before they embraced the most efficient sales techniques.

What does this mean for the average fan? He'll have to be as precise in his purchasing strategy as the team is in its sales strategy. To maximize your dollars, first figure out the variables you value more (and less) than the rest of the customer base. In other words, apply Moneyball to your ticket-buying. The buying public usually prefers to consume live entertainment Friday-Sunday nights. If you don't have kids, or if late nights during the week don't bother you, zero in on the Monday-Thursday columns on the schedule. Second, what's worth more to you -- three games against mediocre opponents or one tantalizing matchup? All things being equal, superstars and the league's premier teams generally put on a better show, but a variable pricing structure might overvalue brand names. If you're a die-hard basketball fan, you probably have a better appreciation for the Sacramento Kings than the average New Orleanian, who might not know who Tyreke Evans and DeMarcus Cousins are. Watching the Hornets against an upstart Kings team will likely offer you the best bang for your basketball buck. Finally, seat location remains one of the most elastic variables in ticket-pricing. Determining which vantage point you value most relative to the median buyer is crucial in getting the most out of your purchase. As someone who needs to be between the baselines, I owned center-court seats in the first row of the upper bowl at Staples Center for years and paid less than half of what a corner seat 25 rows up from the floor cost.

Those with less money to spend might find themselves priced out of games they were traditionally able to attend because they logged onto Ticketmaster at 10 a.m. the moment single-game seats went on sale to the general public. In that old system, passion was often rewarded over means, as fans willing to camp out at the box office or hop online the instant tickets were released benefited from their dedication. Nevertheless, the new system operates far more rationally, which will ultimately allow thoughtful teams and fans to get the most out of a more efficient market.

*Correction: The Portland Trail Blazers have confirmed that they implemented variable pricing on every seat in the Rose Garden Arena for the 2009-10 season.

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