Giants, Sharks Experiment with Ticket Pricing

SFGate
Benny Evangelista

Buying a ticket to a game is becoming more like watching the stock market.

For example, San Jose Sharks fans can buy "options" on future Stanley Cup playoff tickets.

Meanwhile, the price of a San Francisco Giants ticket might rise 25 cents on any given day based on market variables like supply and demand - or whether Tim Lincecum is pitching.

Technology is transforming the way tickets are sold, and these two Bay Area sports franchises are on the cutting edge.

"Within five years, I think everyone will be doing something like this," said Russ Stanley, vice president for ticket sales and services for the Giants.

Years ago, tickets to sporting events and other forms of live entertainment were simply priced by location - the closer to the field, ice or ring, the higher the price. But in the past decade, the Giants and other teams helped usher in an era of "variable pricing," which valued tickets using other factors such as the drawing power of the opposing team and whether the game was on a weekend or weekday.

Now, the Giants and Sharks are experimenting with pricing methods that other teams and event promoters are watching closely.

For this season, the Sharks teamed up with OptionIt, a Portland, Ore., startup, that sells options to buy tickets for future games at face value. The buyer can later exercise that option or sell it to another buyer.

The Sharks, which receive a cut of the option price, offered 20 tickets per game during the regular season and playoffs, a sliver of the HP Pavilion's seating capacity of 17,562 for hockey.

Sharks fan Jessica Welker of San Jose paid $114 in November for the option on a pair of tickets to what would be the franchise's first-ever Stanley Cup Finals home game. She figured those tickets would be nearly impossible to find at face value if the Sharks made it to the NHL's championship round.

"All my friends were skeptical," said Welker, who exercised that option on Monday. "They thought it was crazy that I paid $114 because they thought there was no way the Sharks would make it to the Stanley Cup Finals. To me, it was worth it. Obviously, it would be a once-in-a-lifetime opportunity."

However, it's also a gamble. If the Sharks lose to the Chicago Blackhawks in the Western Conference Finals, she loses the $114.

The alternative would be to pay more to brokers on secondary markets like eBay or StubHub. This week, tickets to G1 of the conference finals were offered on StubHub for $1,212 each, according to SeatGeek.com, a new site that tracks and forecasts the prices of tickets on secondary markets.

Contingency plan
OptionIt could be valuable, for example, for a fan planning in November to go to a regular season game in February, but not absolutely certain he or she can attend, said Mark Mastalir, chief executive officer.

OptionIt has similar deals with the NHL's Washington Capitals, the NBA's Boston Celtics and the NFL's Baltimore Ravens.

Some of the options come with extras, such as a ride on the Zamboni machine or the chance to meet a player.

Malcolm Bordelon, Sharks executive vice president of operations, said the team will evaluate OptionIt after the season, but is generally pleased with the results.

The team might consider option plans for other arena events, such as the SAP Open tennis tournament or mixed martial arts matches.

"We typically don't do things first, but this was actually easy to do," Bordelon said. "There's no cost to us and it's another avenue for people who want to purchase tickets."

Joris Drayer, a professor of sports management at the University of Memphis, said OptionIt could catch on only if fans "understand what they're getting and what they're not getting."

"The model isn't there to be a great benefit to fans, it's there to be a revenue generator for the team," Drayer said. "But I don't think it's a disservice to fans. It's got a chance, but the education process with that model is a little more difficult."

Drayer, a former marketing and promotions employee for the Oakland A's, said the "dynamic pricing" formula the Giants are using this season could spread quickly.

"Everyone's watching what the Giants are doing," Drayer said. "They're the guinea pigs not only for baseball, but for all sports."

The Giants and most major league teams already employ a variable pricing plan, setting prices months in advance to reflect factors such as the drawing power of the opponent and whether it's a weekend game.

In 2009, the Giants went a step further, becoming the first to use technology from Austin, Texas, startup Qcue Inc. to adjust prices on about 2,000 outfield seats at AT&T Park.

The system adds other factors, including whether the opposing team is on a hot or cold streak, whether a marquee player is closing in on a record or on the disabled list, or whether the forecast is for rain or sun.

Expanded experiment
Stanley said the experiment generated about $500,000 in incremental revenue, so the Giants expanded dynamic pricing this season to all 41,500 seats.

Stanley and his crew spend about an hour a day looking over Qcue's recommendations, which are based on algorithms that automatically crunch the data.

Sometimes the team is aggressive and tries to boost sales for a low-demand game by dropping prices to as low as $5.

Other times, bumping prices up 25 or 50 cents per ticket also spurs sales.

"It's like the stock market," Stanley said.

Drayer said that extra 50 cents can really add up over the course of the long home season, in addition to the added income from parking and concessions that wouldn't come in if the seat remained empty.

But ticket prices vary widely. A lower box seat for a Tuesday night in June against the Colorado Rockies, not usually a big draw, was priced at $30 (down $1 from last week), while that same seat for a Sunday afternoon matchup with the popular Boston Red Sox was priced at $89.50. In the middle was a Saturday match against the cross-bay rival A's costing $65.75.

Still, Stanley said, the Giants aren't trying to match prices on the secondary market. Similar lower box tickets for that Sunday Giants-Red Sox game were going for $355 each on StubHub.

"We're not gouging," Stanley said. "We're not sticking it to people. While we increase prices, we're not getting greedy."

Barry Kahn, Qcue's co-founder and chief executive officer, said the NHL's Dallas Stars also used dynamic pricing and the company could have 10 teams on board by September when the basketball and hockey seasons start again.