Key Takeaways from New Study in the INFORMS Journal Management Science:
- The adoption of variable pricing increases primary market ticket sales by nearly 2% per game.
- Lower prices for less popular games are well received by customers, and customers don't object to higher prices for more popular games.
- Variable pricing has the most success in team hometowns with lower income levels and higher income diversity.
- Creating more game tiers in variable pricing leads to more sales.
BALTIMORE, MD, January 24, 2023 – How can a sports team win off the field with variable ticket pricing strategies? A new study in the INFORMS journal Management Science sheds light on the adoption of variable pricing increases in primary market ticket sales by looking at National Football League (NFL) ticket markets.
The study, "Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets," looks at primary and resale ticket market data from each NFL regular season game from 2012 to 2015. The authors find that the adoption of variable pricing increases primary market ticket sales by 1.59% per game.
"We explore the reasoning behind this positive impact and find that customers embrace lower prices for less popular games and accept higher prices for the more attractive games," says Hayri Alper Arslan of the University of Texas at San Antonio.
Arslan, alongside Necati Tereyagoglu of the University of South Carolina and Ovunc Yilmaz of the University of Colorado Boulder, say this work provides evidence for the increase in option value created by the resale market and explains the positive response to higher prices for more attractive games.
"Through our novel data set, this study sheds light on the interplay between primary and resale ticket market dynamics and provides important insights for sports teams that are interested in boosting ticket sales and revenues," says Tereyagoglu.
The study concludes by pointing to the situations in which variable pricing is most effective. "For example, we find that variable pricing has greater success in teams' hometowns with lower income levels and higher income diversity, and creating more game tiers in variable pricing leads to higher sales," adds Yilmaz.
The researchers are clear to point out that although variable pricing enables sports teams to respond to changing demand across games, reports point to somewhat limited implementation.
About INFORMS and Management Science
Management Science is a premier peer-reviewed scholarly journal focused on research using quantitative approaches to study all aspects of management in companies and organizations. It is published by INFORMS, the largest association for the decision and data sciences. More information is available at www.informs.org or @informs.
