VBS Lesson 1 TICKET PRICING Sports Marketing Learning

VBS: Lesson 1 TICKET PRICING

Sports Marketing Learning Target(s) • I will be able to determine and set the price level for my VBS tickets. • I will be able to analyze demand to help set accurate/profitable ticket, vending and merchandising prices for my VBS franchise.

KEY TERMS • PRICE • REVENUE • DEMAND • YIELD MANAGEMENT PRICING • Dynamic Pricing • Marginal Cost • Ticket Brokers • Ticket Agencies

What is the main “product” of a sports franchise? The seats or tickets they offer for purchase.

PRICE - the amount of money you charge customers for one unit (product) of what you are offering. VBS – your price for your tickets should reflect what your fans are willing and able to pay. If the

REVENUE - money collected in sales. Revenue (# of unit sales) x (price of each unit) VBS a number of revenue sources (streams); • Tickets • Concessions • Licensing • Sponsorships Real Life - TV / Radio Broadcast

DEMAND - the amount of goods/services that customers want and are able to buy. VBS – your ticket prices should be determined by the demand of the event and your potential customers (fan base) income levels.

Why is pricing so tricky? • # of seats are fixed Example: Stadium: capacity = 50, 000 Tickets for sale must = 50, 000 Marginal Cost – cost of producing one additional good or making one more commodity available. • there is no marginal cost to selling additional seats

Where are “seats” fixed?

What happens if pricing is set too HIGH? • Don’t sell as much • Limits your target market • Limits your other revenue streams • Stadium Parking • Stadium Vendors • Stadium Merchandise Simply said, “You Lose Money”.

What happens if pricing is set too LOW? You will lose money – why? • Supply and Demand is not balanced. Seats should be priced based on “VALUE”. • Value = what fans think its worth and what they feel they benefit from it.

Yield Management Pricing (YMP): • Concept of setting different prices for seats of different value Example - higher price for seats with better views lower price for “Top Six” rows • YMP is used whenever quantity of a product is fixed. Example Stadiums (PBS – 65, 535) & (Hines Field – 64, 450) Arenas (Rupp Arena – 23, 000) & (MSG – 19, 500

Other examples where YMP is used: • Sporting events • Plays • Concerts • Hotels • Airlines

How do fans purchase their tickets: Team Box Office – safest most affordable means of buying a tickets. Ticket Brokers – individuals or companies who purchase tickets and then sell them for a profit. Artificial demand which drives the price up. Ticket Agencies – Companies stadium owners use to manage their ticket sales.

VBS – Lesson 2 Assignment Ticket Pricing