The Effect of Increasing Ticket Prices By $2

[RonCo]

After forum posts and media guide pieces that suggested we could do better at managing ticket prices, it’s become all the rage around the league to default to raising prices. You can see it in the charts I dropped yesterday—particularly in 2037, right after the big rush. At the time of those posts, no one really knew much, but we all had opinions.

The good news is that all that discussion created a great laboratory—meaning a lot of guys started changing prices by some pretty big margins. Now that a few years have passed, we can look at actual results and get a feel about what’s real. These are hard questions to ask because there are multiple degrees of freedom here. I mean, how does fan interest bake into it? Or whether your team wins or loses? How will Gate and Prices and whatnot interact to create next season’s Budget?

In my own style, I’ve been looking at this question, and probably have enough material for a ton of features. Today, though, the only question I’m going to address is this:

WHAT HAPPENS WHEN YOU INCREASE PRICES BY $2 or MORE?

In other words, assuming you want to make a big move, what should you be thinking about?

Over the past four seasons, we’ve had 25 occurrences of teams increasing their average ticket prices by $2 or more. I took these occurrences and split them into four different types depending on the team’s recent win total and their fan interest at the time. In other words

• Teams under .500 with fan interest less than 75
• Teams under .500 with fan interest more than 75
• Teams over .500 with fan interest less than 75
• Teams over .500 with fan interest more than 75

There are, of course, other demarcations, but this is what I looked at. To determine whether the increase was a Win or a Lose, I looked at what happened that year and tried to make a value judgement—how much did fan interest change (and in what direction), what happened to revenue, and how did next year’s budget move?

THE ANSWER?

Well, bottom line looks like this:

• If you’re a winning team and are unlikely to become a losing one, raising tickets by $2+ seems like a good deal. If you’re a winning team, and likely to lose a ton next year, a $2+ increase is likely to be a disaster.
• If you’re a losing team, and do not expect to win much more, there be danger in big moves.

Here's the obligatory chart:

As I said up top, I’ve got tons more questions than this, and there are lots of other cuts to look at. As part of the charts post I liked to above, I’ve looked at individual teams over the whole four season period, and those are interesting, too.

There’s no doubt in my mind that back in the 2036-2037 time period we had teams leaving money and budget on the table. But there’s also no doubt in my mind that the answer isn’t a blanket statement. In other words, I now pretty much disagree that weaker teams should increase prices by rote. In fact, sometimes it’s been better for them to actually drop prices. Maybe.

If I get a little more time later today or tomorrow, I’ll post the opposite of this question (what happens when teams cut prices?), which turns out to be pretty danged interesting, too.

[crobillard]

I've always found that year really interesting for Edmonton. I didn't think we had a very good team. I'm just always really competitive and try to make the best of it. Raising ticket prices like that is very risky and I knew we were in for some hurt. I honestly thought it would hurt a lot more financially though until we won 96 games. Winning fixes everything though.

[jiminyhopkins]

I try to use sort of a dynamic pricing model. Basically I set the tickets at whatever it takes to sell out the park. Now that we have 100 FI its easy I admit, but I usually just incrementally raise prices until attendance drops below sellout levels, then lower the prices again until we find equilibrium.

Now after this year, when Phoenix sucks again, it will be a whole 'nother story LOL.