It’s an absolutely gorgeous in Chicago today. It’s so nice that when our son said he wished he had a Little League game today, my wife and I said that we would see about getting Cubs tickets for tonight’s game against the Rockies. So where should I go look for tickets? Should I buy them from the Cubs themselves or look on the secondary market? The secondary market, of course, means StubHub, the partner for most Major League Baseball teams for reselling tickets. Here’s how the Chicago Tribune puts it (Baseball teams get dynamic with ticket pricing, May 12).
Teams deal with StubHub because the online reseller provides a trusted outlet for season ticket holders to dispose of tickets to games they don’t attend. Buyers also have confidence that tickets on StubHub are not counterfeit.
But the first signs of backlash against StubHub appeared in the past offseason, when MLB renewed its five-year agreement with the website.
Two teams, the New York Yankees and the Los Angeles Angels, opted out of the partnership to form their own ticket exchanges with Ticketmaster because they wanted more control over pricing on the secondary market, said Bob Bowman, CEO of MLB Advanced Media.
StubHub spokesman Glenn Lehrman was more blunt: “There’s one clear reason why those teams are not using StubHub. They did not like to see tickets resold below face value. We let the market dictate prices.”
The Cubs also considered opting out. Team officials were unhappy after some of their tickets were listed on StubHub for less than a $1, not including fees, for the team’s final three home games last season. In 2012, the Cubs lost more than 100 games for the first time since 1966.
To address some of the league’s concerns, StubHub now includes fees in ticket listings. The cheapest baseball ticket on StubHub is $6, which includes commissions and a delivery fee.
The Cubs also are one of two teams that cut off StubHub sales six hours before game time, up from two hours in 2012. By ending sales on StubHub earlier, the Cubs presumably hope to sell more last-minute tickets.
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StubHub and Major League Baseball have just renewed their agreement that make the eBay the official reseller for most of MLB’s teams. As Businessweek tells it, this has to date generally been a good deal for both sides (Why the New York Yankees Cry Foul Over Ticket Prices, Dec 11).
The league first joined with StubHub in 2007 through its Advanced Media wing, known as BAM. The marriage worked reasonably well. Ticket holders selling through StubHub could ask any price they wanted. And ticket buyers could access that market on team websites alongside the primary box office. StubHub skimmed about 23 percent off every transaction and sent more than half of that back to BAM, according to SportsBusiness Journal. The league, SBJ reported, has been reaping roughly $60 million a year from the arrangement. (BAM spokesperson Matthew Gould declined to comment on that figure.) Baseball helped StubHub recruit buyers and sellers. In return, teams profited twice from the sale of a single seat.
The interesting part here is that the deal only cover most of the league. Three teams — the Cubs, the Angels, and the Yankees — have opted out.
The trouble is that baseball teams have to worry about the feelings of season ticket holders. Paying $40 for a seat and then watching the one next to it sell for $2 can lead to some awkward questions when it comes time for buyers to renew. And according to ticket search engine SeatGeek, about two-thirds of Yankees tickets that sold on the secondary market last year went for below face value. “We believe there are serious issues with the StubHub relationship,” Randy Levine, Yankees team president, told the New York Post in June. “We are actively reviewing more fan-friendly alternatives for next year.” Translation: We want price floors. …
An unnamed source at the Yankees told ESPN that the team will be announcing a deal with Ticketmaster that is “more favorable to season-ticket holders.” Stubhub spokesperson Glenn Lehrman says the teams have “decided to create their own marketplaces.” It’s likely all three will employ systems like those used by many NBA and NFL teams, setting a limit on minimum prices.
Is the Evil Empire right? Are price floors really better for season ticket holders? (more…)
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Back in March we had a post on how the Cubs were going to use dynamic pricing to sell bleacher seats this season. That post apparently caught the attention of someone at SeatGeek, a ticket search engine, and led to me getting the following email:
I’ve followed your past coverage of the Cubs’ decision to bring dynamic pricing to Wrigley Field bleacher seats this season, and I wanted to share with you a comprehensive White Paper that SeatGeek has compiled to help identify the real factors driving dynamic pricing at Wrigley Field.
As the Cubs official website says, a dynamic pricing system allows the team to adjust ticket prices based on “changing market factors.” But what does that really mean? We’re a ticket search engine that aggregates data from over 60+ ticket providers, so we recently ran an analysis to tease out the true factors driving variable pricing of Bleacher tickets this season.
In the attached “Bleacher Bum Economics” report, we examine how the Cubs valued bleacher tickets by day of the week, quality of opponent, and time of day. We’ve also identified a few tips and tricks that Cubs fans can use to save money on Bleacher tickets. For example, we learned that tickets for games on a Saturday are 5x as expensive as Monday games, so picking an early-week game is a great way to consistently find good deals on bleacher seats. We’ve included more tips in the report beyond just these mentioned above as well.
I’m in all favor of finding a bargain in going to a ballgame, but are we really giving away Ricketts family secrets here?
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Selling baseball tickets should be easy — especially if it is before the start of the season and fancy revenue management schemes haven’t kicked in.
But the Los Angeles Angels of Anaheim (hereafter, simply the Angels since they have the stupidest, most awkward name in the majors) managed to screw it up. Here is how the Orange County Register put it (Angels fans wait all day, leave disappointed, Mar 6).
Many fans who waited all day Tuesday trying to get tickets for Angels games this season were told to come back Wednesday, after the box office could not handle the crowds.
Wrapped in blankets and wearing jackets against the chill, more than 1,000 people began standing in line as early as 6:30 a.m. Tuesday to redeem ticket vouchers to see the Los Angeles Angels of Anaheim play at Angel Stadium this season.
Angels staff stopped handing out wristbands early in the day, and began telling some people with wristbands to go home as early as noon. …
Angels staff began handing out some 1,800 wristbands at 6:30 a.m. that would enable fans to trade pre-purchased vouchers for tickets to upcoming games for the 2012 season.
By noon, several hundred people were lined up halfway around the stadium waiting for their turn to exchange multi-ticket plan vouchers for the chance to see a revitalized Angels lineup on the diamond starting in April.
In the video below, fans discuss their customer service experience.
So what exactly went wrong? (more…)
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It’s been almost three weeks since pitchers and catchers reported so it’s time to talk a little baseball. Specifically, it’s time for an update on how Major League teams are trying to separate fans from their dollars. The trend this year is dynamic pricing. This has been going on for a while. The Giants were the first franchise to try it and a few other teams joined the bandwagon last year. This year 17 of 30 big league teams are deploying dynamic pricing (Baseball Teams Are Acting Like Airlines, Planet Money, Mar 6) — that means that there are more teams using dynamic pricing than there are teams using a designated hitter. One of those teams is the Chicago Cubs (Moneyball: Cubs team up with Sox in offering ‘dynamic’ ticket prices, Chicago Business, Feb 20).
Note that this goes beyond just pricing differently by day of week or opponent. As we have written about in the past, teams have been more aggressive along these lines and the Cubs are no exception. I bought a six game pack of tickets. Over six games, the tickets have five different face values ranging from $24 for an April game against the Brewers (go ahead, make me an offer) to $72 for a June game against the Red Sox (sorry, I’ve got a Little Leaguer who thinks these are worth way more than seventy-two of dad’s dollars).
What we are talking about here is changing the price of a seat depending on how well they are selling (which presumably reflects everything from the standings to the weather). For the Cubs, this will apply to 5,000 bleachers but may eventually expand to the rest of Wrigley. Supposedly (according to the Chicago Business article), that could be worth $11 million in extra revenue. That money is coming, presumably, out of scalpers’ pockets.
“Teams are looking at (dynamic pricing) to capture some of that secondary market that they’re not capturing,” says Colin Faulkner, the Cubs’ vice president of ticket sales and service, who implemented the new system when he worked for the NHL’s Dallas Stars before moving to Wrigley Field in 2010. Mr. Faulkner says the dynamic pricing will supplement a tiered system in the bleachers, where initial costs range from $17 to $78 apiece.
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We are nearly two months into the baseball season and we have yet to have a baseball related post. Now that the Red Sox have crept above 500, it is time to rectify the situation. Check out this video on making baseball gloves:
The interesting part of this to my mind is what it says about manufacturing in America.
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So the day I posted on scalping and LCD Soundsystem tickets, I got an email from the Cubs (I am the proud holder of position 88,950 on the Cubs season ticket holder waiting list). It offered a chance to jump the queue for single game tickets:
I posted about this program last year and I see that it still poses the same problem. This lets scalpers (OK, ticket brokers) grab prime seats for attractive match ups. Let’s face it: No one will pay a 20% premium for an April night game. Ticket brokers, however, can afford that premium for games against the Cards or Phils. This leads to the same process problem inherent in the LCD Soundsystem case.
There is a second part of the mail that I didn’t notice last year. It explains how they will manage the sales process when non-premium single game tickets open to the public.
So the Cubs will randomly pick people out of line for both in person and online sales as opposed to using fist come first served. The wristband system and lottery keeps people from camping out on Waveland Avenue and I suspect that the city likes that. It also makes it a little harder for scalpers to take advantage of the system. A ticket broker cannot just pay someone to camp out and beat the crowd.
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My colleague Kyle Cattani sent me a link to a Yahoo! Sports story about a proposed solution to a persistent operations problem at many sporting facilities: Long beer lines! (The Death Of The Beer Line, Jan 18). The trick is to pour beer faster — I mean a lot faster. Check out how quickly these guys are pumping out brews.
The secret here is the cup.
The key is the use of a cup that features a hole at the bottom and small, circular magnet that rests over it. When placed on the system, the magnet is lifted up by the pressure-driven beer. The cup fills up until the weight of the liquid pushes the magnet back down over the hole. The cup can then be lifted off and the beer consumed as normal.
What traditionally takes a single worker concentrating on the pour — which still produces spillage and waste to produce the proper foam head — is now hands-free, fast and almost perfectly efficient.
Springer said stadiums that have used the system have gone from using eight beer pourers for every two cashiers to having one beer pourer for every eight cashiers.
This is an intriguing technology. Stadium queues are a real challenge. Demand is highly spiky. Fans don’t want to miss any action so arrival are concentrated between innings or quarters or at half time. If technology is labor intensive (say, a traditional beer tap), then staffing to handle the peak means a lot of idle time and low utilization. Alternatively, one has to accept longer waits. This system (produced by GrinOn Industries and officially called “Bottom’s Up Draft Beer Dispensing System”) solves the problem by greatly increasing the productivity of a beer pourer.
Now, I can hear you saying, what’s the catch? Why hasn’t this spread to every stadium in America? It turns out that the cup is also the catch. (more…)
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Posted in Baseball, tagged Baseball on October 19, 2010 |
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We are well into the baseball playoffs and are thus running out of time for baseball posts. To the rescue is a story from Marketplace that relates to baseball and, in a way, statistical process control (The Yankees’ monopoly in baseball, Oct 14).
The gist of the piece is that the Yankees of have dominated professional baseball essentially from its inception. The easy answer for this is they have spent a lot of money. But there are also things in the way that baseball runs that make spending on tons of talent count:
But there’s more to it. Just about everything in baseball’s structure militates against parity. Start with the long baseball season. In the same way an opinion poll sampling 100 subjects will be a more precise than a poll sampling 10 subjects, baseball’s loooooooong season lends itself to an accurate reflection of talent. If two teams play one game, anything can happen. But if they play a good many games, the better team will win the majority of the time.
Then consider the playoffs. Only the eight best teams in baseball make it to the postseason — fewest of any major sports league. And, unlike the Super Bowl, the World Series is a best-of seven game, again, a large enough sample size so that best team should win. The Yankees may have the most baseball titles, because they buy the best players. But the imbalance is allowed the flourish because of baseball itself. (more…)
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We’re now about a third of the way into the baseball season so it is time to make good on our promise to talk a little baseball. As an added plus, I get to mention that my team is finally ahead of Gady’s in the Kellogg Operations Fantasy Baseball League.
So we have to two videos on the business of baseball. The first is about the Giants and steps they have taken to improve the fan experience at the ballpark. It also mentions their ability to price tickets dynamically. An interesting bit of demand management and related to the growing complexity of baseball ticket pricing, something we have posted about in the past.
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