Dynamic pricing pays off for San Francisco Giants tickets

The final weekend of the Major League Baseball season turned out to be more stressful than expected for San Francisco Giants players and their fans. But the unexpected suspense made it a perfect and quite profitable one for Giants ownership.

The Giants employ a dynamic ticket pricing system in which the price of tickets at AT&T Park fluctuates depending on demand. With the system, the team's bottom line got an impressive boost when the Giants—which needed to win only one game against the San Diego Padres to eliminate the Padres and win the NL West—lost the first two games of the series to set up a high-stakes finale (that wouldn’t have actually been a finale if the Padres won, but more on that in a moment) Sunday, October 3.

The Giants stopped their mini-skid in the nick of time by blanking the Padres, 3-0, to win the division and advance to the playoffs for the first time since 2003. The Giants’ clincher came in front of a sellout crowd of 42,822—the third SRO crowd of the weekend at the 41,915-seat facility. The Giants drew 42,409 to the opener Friday and 42,653 Saturday. The sellouts were the first for the Giants since they played to capacity crowds for each of the three games against those same Padres August 13-15—a span of 21 home dates.

Not bad for a series of games for which the Giants originally expected decent but by no means overwhelming crowds. Director of ticket sales Russ Stanley told Bloomberg News last week the Giants figured they would draw between 30,000 and 35,000 per game. Presumably, leading the NL West for the final week of the season also boosted interest in the Giants’ penultimate home series against the Arizona Diamondbacks: The Giants swept three games in front of an average crowd of 37,646.

The additional demand for the Padres series meant those who walked up to the gate over the weekend—or bought tickets on the resell market—certainly paid more than they would have in April, back when neither the Giants nor Padres were expected to contend and the cheapest seat to the October 1 game was a mere $5. By the middle of last week, that cheap seat reportedly was up to $20.

Bloomberg reported that a seat in the Field Club behind home plate was $68 at the beginning of the season but $175 by last week. At StubHub, meanwhile, the cheapest ticket Sunday to the afternoon’s game was $69.

The final weekend wasn’t the only time dynamic pricing paid off for the Giants. Stanley told Bloomberg the Giants’ revenue per seat increased by between 7 percent and 8 percent this season.

The Giants’ division championship gives them the home field advantage against the Atlanta Braves in the best-of-five NL Division Series beginning Thursday, October 7 and at least two more chances to maximize ticket revenue. That sure beats the alternative: Had the Giants lost Sunday, they would have been part of a historic three-team playoff for two spots with the Padres and Braves but would not have hosted either the NL West playoff against the Padres today, October 4, or, if they lost that game, the NL wild card playoff game against the Braves Tuesday, October 5.

Source: TicketNews: By Jerry Beach

Dynamic Ticket Pricing: Coming Soon to a Stadium Near You

Authority Tickets: Secondary Ticket News
Kelly

San Francisco is always a little bit ahead of the curve, in everything from haute cuisine to public policy. Now, according to Tickets.com, the hometown Giants are setting a trend when it comes to ticket pricing by employing a dynamic system that moves up and down depending on a variety of criteria such as dates, times, and opponents.

It’s a practice commonly found in the secondary ticket market that is making headway in the primary arena thanks to the Giants and other early adopters. And it’s only going to gain more traction in the coming years as consumers get more accustomed to a model that is also standard fare for hotels and airlines.

As Russ Stanley, managing vice president of ticketing sales and services for the Giants, sees it, “This is coming on very, very quickly. Within five years, I think everybody’s going to be doing this. Everybody in the industry is looking at it closely and evaluating it. I’m getting at least a call a week about this [from other teams], probably two.”

The Giants teamed up with Texas-based startup Qcue Inc. to begin testing the dynamic model last season and chalked up an additional $500,000 in revenues earned on a limited number of games. This season, they are looking to bring in seven figures worth as they expand the program to every game at AT&T Park.

The Houston Astros, Dallas Stars, Florida Panthers, and Cleveland Cavaliers are all testing the waters for themselves either this year or next.

What remains to be seen is how fans will react. For many, their hometown teams are their lifeblood and have been for generations. Getting a calendar and buying tickets ahead of time is part of the annual ritual. If prices can’t be determined in advance or fluctuate too much, some fans may push back against their favorite franchises.

The highest risk demographic is that of season ticket holders. If a dynamic system drives the face value of tickets to a price point below what they paid, then the incentive for buying a package up front is eliminated. So far, that problem has been avoided by keep a watchful eye not to let prices drift that low and by offering additional value to the packages such as access to the team.

“I simply wouldn’t be doing this if it meant putting our season-ticket holders at risk,” Stanley said. “At least half of what we’ll sell all year will be through season tickets, so we absolutely have to protect that.”

Chris Hutson, co-chief executive for Turnstyles Ticketing, has his doubts: “I don’t begrudge anybody trying this, but not at the expense of traditional, blood-and-guts ticket selling. I’ve seen every gimmick in this business and we, as an industry, tend to rely on things like this too much instead of good old-fashioned elbow grease. There are so many variables in [dynamic pricing], and I’m not sure we’ve thought through them all. What happens, for example, if [Tim] Lincecum doesn’t pitch in a particular game after somebody’s paid an accelerated price to see that game?”

Filling the stadium and filling the coffers are two goals that can sometimes be at odds. Teams are now looking to dynamic pricing as an answer to both.

As technology – particularly computer modeling – has advanced over the years, some teams have used it to determine audience analysis by inputting factors like when the game will be played, who will be playing, and what the weather will likely be. A true dynamic system takes that another step further by implementing the system season-wide, year-on-year.

The Qcue algorithm uses similar criteria, while also taking the secondary ticket market’s prices into account, to recommend price shifts. The client team can go with that recommendation or consider other factors and set their own price. The Qcue system feeds into the team’s existing ticketing system, as it does for the Stars and Giants through Tickets.com.

Qcue’s chief executive Barry Kahn boasts,“What we’ve done is create a software platform that performs very high-end demand and sales forecasting. Obviously, we’re huge believers in dynamic pricing, but with or without that, that information is still very valuable. That’s the foundation, and from there, we’re proving value and revenue upside.”

Their main rival, Digonex Technologies Inc., is working with the Cavaliers and will soon announce another NBA partnership. The company sees a bright future for the dynamic model.

“Consumer acceptance of dynamic pricing has definitely changed,” said Rex Fisher, Digonex vice president of business development. “We all have greater access to information, and we’ve simply been conditioned that many products are priced subject to change.”

The Cavaliers added six figures to their revenue line last season, too.

Mike Tomon, the Cavs’ vice president of sales, believes that there’s more to it than just money: “Even more than the additional revenue, dynamic pricing has helped us engage the fan and be relevant by offering them the right product at the right price at the right time. That helps with building fan engagement and loyalty.”

Consumer education is one part of the two-pronged approach to respectability for the new model. Surveys and explanations are being offered, along with the tried-and-true ideal of locking in your price now so you save money.

As more fans latch on to the idea, so will more teams. Tomon continued, “It simply makes all the sense in the world to have a true value-based offering that’s derived from fan behavior. This is coming to a head in sports, and with good reason.”

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.

Dynamic Thinking

Stanley changes ticket prices on the fly - and doesn't look back

Venues Today 2009 Box Office Stars
February 2009
By Linda Deckard

The San Francisco Giants will be the first team in Major League Baseball to try dynamic pricing on select tickets thanks to the leadership of Russ Stanley, managing vice president, Ticket Services/Client Relations, San Francisco Giants.

He was also the first to allow season ticketholders to navigate the secondary market on their own - 10 years ago. That's why Pat Gallagher, president of the Giants, said Stanley "represents the best of the new breed of people who understand this business."

Those were all top-of-mind concerns when Stanley agreed to have the Giants partner with Qcue to offer a limited number of tickets on the dynamic pricing platform for the 2009 season.

"It keeps us busy and it keeps the staff motivated because they're not bored," Stanley said of his latest innovation. "We have a great group of people here. I come back from meetings and say, 'okay, this is what we're going to do. We're going to change prices on 2,000 tickets on a daily basis.'"

Since then they've been figuring it out with their ticketing provider, Tickets.com. The first concern was to protect their best customers, the season ticketholders and the group buyers, so they know they will get the best price in their areas, Stanley said. So the chose four sections in the view level and three sections in the bleachers for the pilot program. Since the Giants had introduced variable pricing in 2001 in those sections, Stanley said the "normal" price would be anywhere from $8-$32. Variable pricing was based on day of week and opponent and was set in September with no adjustment as the season progressed.

This season, with dynamic pricing, the price will reflect all the true variables, from league standings to who's pitching to San Francisco weather that day.

Stanley recalled when he embraced the secondary market, then variable pricing, it was because "we saw what tickets were going for on the big games and the weekends. If that's what's happening, we ought to be following the market. And people said, 'What' are you guys crazy? You're going to charge more for the Dodgers on Saturday than the Padres on a Monday?' It increased our revenue over the course of the season by $1 million with no negative feedback."

His ah-ha moment with dynamic pricing came "when I look back at the night that Barry Bonds hit 756 [home runs] and it was probably the most demand we've ever had for a game. When he hit 755 and you knew 756 was coming, we were playing the Nationals on a Wednesday night. Not a great team, not a great night of the week. We were charging $10 for our view level ticket. That would have been a great opportunity to say, 'okay, those tickets are now $40,' which is what they should have been priced."

The Giants drew 2.85 million attendance in 2008, averaging 35,000 a game in the 42,000 capacity, 10-year-old AT&T Park. They sold out 20 games. Stanley would like to sell out 40-80 games...like the old days.

In truth, Stanley said it took him about nine months to understand what Barry Kahn of Qcue was asking the Giants to do. "He's a great partner, very smart. This guy's genious," Stanley said. Qcue, based in Texas, takes all of the information from the secondary market and the primary market, factors in sales history, game stats, opponent stats, current streaks and pitchers and star players and builds an algorithm that basically suggests the ticket was $10 yesterday, today it should be $11, or whatever. "We're able to make our pricing decision all the way up until the day of the game rather than the September before," Stanley said.

Stanley points out that the model is no different from what a broker does every morning when they come into work.

Nick Fanelli, Tickets.com, who is working with the Giants on dynamic pricing and another new initiativ, stored value, is constantly impressed by the job said Stanley and his crew are "pushing us and bringing us to new levels to where we can evolve technology."

Stanley and the Giants truly understand their audience, Fanelli said, and it is a marketplace that will support new technology.

"The buzz-word in ticketing has been secondary versus primary market: who controls it, is there opportunity for teams or venues to blend the two? We are going to allow the marketplace to price itself."

The other new venture, stored-value tickets, is being done elsewhere. Stanley said the Giants have introduced it in a limited fashion on 2,500-3,000 season tickets that were a tough renewal. They have kept the price at $18 and added $5 in stored value good at Centerplate concession stands. The Giants had to buy scanners for 350 Centerplate points of sale.

This is just a limited rollout, but Stanley already has his eye on the future. "We want to make sure we deliver this year, that it goes smoothly," he said, but Phase II will be adding stored value to group tickets. And eventually, now that Tickets.com is partnered with Givex, they can start offering promotional giveaways redeemable with a barcoded ticket, the same ticket that holds the stored value.

"We're sitting in meetings with them [Tickets.com] and the only thing stopping what they can deliver is our imaginations. We can say in a particular inning, if someone hits a homerun this inning, everyone in section 302 is going to get a hot dog, or everyone in this row gets $50 stored value for the dugout store. It's all bar code driven."

So far, their stored value offers are team generated, not bought, and have to be used that night. "I'd like the season ticketholder to be able, at the beginning of the year, to say, add $1,000 to this account and start moving money around ticket by ticket, but we still have to figure out what the laws are in California. I don't envision that until next year.

Bottom line, he wants it to be a benefit to the season ticketholder, "our best customers. We're not going to do something that is not right for them," Stanley said.

Some day, when dynamic pricing is more universal, that may not be the case. "I'm trying to figure that out," Stanley said.

"Some season ticketholders and other fans say it's about time you price your product based on supply and demand. You don't know six months out what the right price is. But is the world ready for a ticket to change prices on the primary market on a daily basis? I don't know. I'm hoping they are; I think they are."

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Tickets.com congratulates Russ Stanley!
"Box Office Super-Star Award Winner"

Wishing you continued success,
your friends at Tickets.com

Dynamic Ticket Pricing: San Francisco Giants

The San Francisco Giants rethink ticket pricing and will offer dynamic pricing in 2009.



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Tickets.com Client Spotlight: San Francisco Giants

Giants plan aggressive dynamic-pricing effort

Published December 01, 2008
Sports Business Journal
By DON MURET
Staff writer

The San Francisco Giants have signed a deal with a software company that enables them to change single-game ticket prices at any time.

The club hired QCue to help find the right price for selling 2,000 seats in AT&T Park’s outfield bleachers and upper deck, the last ones to sell for Giants games, said Russ Stanley, managing vice president of ticket services and client relations. Stanley declined to disclose the financial terms, and as of last week the two parties were still negotiating the length of the contract.

QCue, a one-year-old firm based in Austin, Texas, connects its system with Tickets.com, the Giants’ ticket agent. QCue joins Stratbridge, Eloqua and other data managers that teams use to crunch sales numbers to determine the right price to sell those tickets in low demand.

QCue’s formula, similar to Stratbridge’s, plugs in factors such as team performance, opponent, starting pitchers, weather conditions, day of the week and gate giveaways. The Giants will use those results to raise or lower ticket prices as late as the morning of a game for tickets purchased online, at ticket kiosks, by phone and at the box office, Stanley said.

The plan early on is to adjust prices once a day for every home game. “We have the potential to change every price in those [seven] sections every day,” Stanley said. “We could go up or down. There may be a day we do multiple changes and we have that ability.”

The price change will most likely be 25 cents to $1. The Giants believe even a decrease that small will make a difference as they attempt to move slow-selling seats without alienating season-ticket holders who pay full price for their seats, Stanley said.

There are other clubs reducing ticket prices on game days to fill seats, said Matt Marolda, founder of Stratbridge. Marolda, whose company has deals with 40 teams and leaguewide contracts with the NBA and NHL, declined to identify specific clubs.

Stratbridge was among the first to develop computer programs to help pro teams implement dynamic-pricing strategies before and during the regular season. “No teams are as aggressive as the Giants,” Marolda acknowledged.

The Colorado Rockies, whom the Giants talked to before doing their deal with QCue, use a less analytical form of dynamic pricing to fill Coors Field’s 50,449 seats.

The team does not feed boutique software into its Paciolan system (soon to be known as Ticketmaster Irvine) but does rely on historical data and team performance before setting prices for single-game tickets, said Greg Feasel, the Rockies’ senior vice president of business operations.

“We have so many people who live and work downtown that wait longer to make a decision,” Feasel said. “A lot depends on the weather.”

Depending on day-of-game demand, the team lowers its price by about $1 for seats in the upper deck and $4 to $6 for other seats when the Rockpile, the popular family section above the batter’s eye in center field, sells out.

Kids younger than 12 and adults older than 55 can buy tickets for $1 in the 2,300-seat Rockpile and others pay $4 to sit there. “We don’t want to lose those fans waiting in line if they can’t get those tickets,” Feasel said.

In San Francisco, QCue tested its software without selling tickets at the end of the 2008 season, and identified a three-game series in early September against the Diamondbacks for which the team could have decreased prices slightly to move tickets.

“It gave us a good feel for how this would work,” Stanley said.

The Giants were out of the divisional playoff race and “there wasn’t a whole lot of demand” for those games, said QCue CEO Barry Kahn.