The class of 2012 visited the defending World Series Champion San Francisco Giants during the Warsaw Center’s annual trip to the Bay Area.  Meeting with several team representatives, including Giants’ president Larry Baer, the presentation examined the team’s advertising campaign for the 2011 season among other topics.  However, much of the visit focused on the Giants’ new, ground-breaking dynamic ticket-pricing model.

Dynamic pricing has the potential to change the structure of ticketing in sports.  The system, which was developed by the Austin, Texas based firm QCue and syncs with the Tickets.com platform, mimics an airline ticket pricing system and more resembles a Stub Hub-type experience than the traditional ticketing model with fixed or variable prices determined at the outset of a season.  The Giants’ ticket prices now change on a daily basis to reflect market demand by accounting for elements such as the opponent, starting pitchers, day of the week, weather and the team’s win-loss trajectory.

The Giants and Russ Stanley, VP of Ticket Services and Client Relations, are beginning their second season in which all seats at AT&T Park are dynamically-priced, after experimenting with a group of 2,000 seats during the 2009 season.  The 2009 results were immediate with the team selling an estimated 25,000 extra seats in these sections over the course of the year, which contributed an additional $500,000 in ticket revenue.

Following the 2009 success, the team implemented the dynamic model stadium-wide for 2010 leading to several advantageous trends for the club.  Overall ticket revenue again increased in 2010, despite the Giants’ estimations that 75% of all tickets bought prior to opening day were purchased at a lower price than the seat’s corresponding value under the previous static model.  Additionally, the Giants seem to have achieved one of the universal goals of any sports franchise.  They got their fans to buy tickets early.  In doing so, the Giants are now able to more accurately predict their revenue streams and attendance numbers while reducing their reliance on game day and walk-up sales, which are heavily influenced by uncontrollable variables such as weather, team performance or starting pitchers.

What does this mean for fans?  If you want to see the Giants, it’s best to buy your seats early or even consider season tickets to lock in the lowest possible price.  As game day gets closer, your seat is likely to cost a bit more.  Many fans have expressed their frustration with the model and its ever-changing prices.  However, with the rise of secondary ticketing sites such as Stub Hub and Ace Ticket where price and profit are determined by perceived market value, dynamic pricing is a logical next step for many front offices as they seek to keep the profits generated by their product in-house.

Dynamic pricing has been effective for the Giants and with more and more teams like the Minnesota Twins, Dallas Stars and Cleveland Cavaliers moving to dynamic models, the Giants appear to be on the cutting edge of the industry.  With the never-ending quest to maximize revenue, early returns indicate that dynamic pricing has the potential to be one of the biggest innovations in ticketing since the incorporation of barcode technology.  Without a doubt, it’s a trend worth keeping an eye on over the coming years.

– Mike DeMartini, MBA ’12

Mike DeMartini is a first year student in the Warsaw Sports Marketing Center’s MBA program and worked previously as the Director of Ticket Operations for the New Britain Rock Cats, Double-A affiliate of the Minnesota Twins.

Written by grimstad@uoregon.edu

Senior Honors Business Student