planomateo
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Single game ticket pricing changes, this will be a game changer for college sports.
<blockquote class="twitter-tweet"><p>Dynamic pricing could generate $1 million or more in new revenue for the University of Michigan's athletic program. <a href="http://t.co/vOGw4oa6dZ">http://t.co/vOGw4oa6dZ</a></p>— Warren K. Zola (@WarrenKZola) <a href="https://twitter.com/WarrenKZola/statuses/354684820602892288">July 9, 2013</a></blockquote>
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The price is right now for UM football
By Bill Shea
Dynamic pricing could generate $1 million or more in new revenue for the University of Michigan's athletic department when the software is deployed for the start of single-game football ticket sales on Aug. 1.
The Michigan football team is the first major college athletics program to adopt dynamic ticket pricing technology, which allows the school to fluctuate single-game ticket prices based on real-time market demand.
The pricing system will be applied only to single-game tickets, and not season, student or multigame ticket packages, said Hunter Lochmann, Michigan's senior associate athletic director and the athletic department's chief marketing officer.
The software's algorithms factor such metrics as team records, weather forecast, seat location, historic demand, resale market prices and remaining inventory. Scarcity drives up the prices.
The airline, hotel and concert industries use similar systems to manage their tickets. Professional sports began experimenting with dynamic pricing software in the mid-2000s, and it is becoming more common among teams. A few college programs have begun to use it as well.
Michigan is paying to use pricing software from Austin, Texas-based QCue Inc. (pronounced Q-Q).
The school previously set a higher ticket price for historically popular opponents. Now, that price could vary by day or even the hour.
End-zone seats at Michigan Stadium are expected to be the cheapest, and Victors section seats at midfield the priciest.
Michigan estimates the initial single-game price for the Sept. 7 game against the University of Notre Dame to begin at $195 per ticket, and for the Nov. 30 game with Ohio State University to begin at $175. The lowest estimated price is $65, for a Sept. 14 game against the University of Akron.
The price recommendations are made daily, and Michigan can use those prices or set its own, said Barry Kahn, who founded QCue in 2007.
The single-game tickets will never be priced below the $65 per-game season ticket price, Michigan said.
Michigan Stadium seats 109,901, and fewer than 10,000 seats per game are expected to be available for single-game purchase this season, Lochmann said.
Season tickets, student tickets and multigame ticket packages account for about 100,000 seats each game during the season.
Lochmann said he didn't have a detailed new revenue estimate for tickets sold via dynamic pricing because the university doesn't know what the final number of available seats will be.
"We don't have a (seat) number because it's pure speculation at this point, and we don't know the prices. We'd be happy if we netted over $1 million," he said.
While many games, especially those against Notre Dame and Ohio State, traditionally sell out very quickly, some can take a day or more, and that's where Michigan fans could see some price fluctuation.
"If they last to the second day, I'm sure the price will be higher," Lochmann said. "We're going to lean on their algorithm, on their science."
Michigan doesn't yet know when it will halt dynamic pricing prior to games, but Lochmann said it likely would be the day before a game. However, if an opponent returns a batch of unsold tickets to Michigan shortly before a game, the school wants to be available to sell those, he added.
"The bulk of their tickets are season tickets or student tickets. There isn't a whole lot of inventory for your one-off game purchases," Kahn said. "(Dynamic pricing) isn't something that's going to touch the bulk of the fan base."
Teams have seen a 5 percent to 10 percent revenue boost at the low end of the scale to more than a 30 percent increase by going to QCue's software, he said.
If UM is happy with dynamic pricing, it will expand its use.
"We're going to see how football goes. Depending on the success, we'd probably try men's basketball as well," Lochmann said.
Lochmann didn't disclose the details of the QCue contract, but he did characterize it as a five-figure deal for multiple years.
In addition to the licensing fee for the software and services, QCue will get a "very small percentage" of tickets sold above a certain premium, Lochmann said.
Michigan didn't bid out the deal, but it went with QCue because it already worked with another UM vendor, Irvine, Calif.-based Paciolan Inc., an automated ticketing company that is a division of Comcast Spectator LP, the sports management division of cable giant Comcast Corp.
Revenue growth
Dynamic pricing, while highlighting the value of set-price season tickets, clearly is aimed at generating new revenue.
"It makes more money for Michigan. They're capturing some of the upside you'd see for games such as Notre Dame and Ohio State," said Jesse Lawrence, CEO of New York City-based TiqIQ, which aggregates prices of tickets being sold on resale brokers such as StubHub, Ticketnetwork, Ticketsnow and eBay.
"It's been a revenue maximization tool, not a butts-in-seats tool," he said. "It's not like Michigan is going to be sitting there with unsold tickets."
Michigan's athletic department estimates that its football ticket revenue will grow to $42.9 million this fall from last season's $39.1 million -- but part of the projected $3.8 million ticket revenue increase comes from UM having seven home football games this season, versus six in 2012.
The department's overall budget for its 31 programs for the current fiscal year, which will end next June 30, is estimated at $146.4 million in revenue and $137.5 million in spending, for a projected $8.9 million surplus.
Last year's spending came in $1.3 million under budget.
The expected football ticket revenue boost will come atop an increase from last year in the annual "preferred seat donation" for the right to buy a season ticket.
The fees were created in 2005, and last year the Victors ($600), Valiant ($475) and Maize ($350) levels each were increased by $100. The Blue ($200) level has gone up by $75, and the end-zone seats ($75) increased by $25.
Revenue from the preferred seat donations increased to $26.6 million in 2012 from $22.3 million in 2011. The fee is expected to generate $27.8 million this year.
Other leagues
QCue has deals with pro baseball, basketball and hockey teams, but none with Detroit's franchises. Other companies offer dynamic pricing software as well.
The National Football League does not use dynamic pricing, mainly because it has not yet figured out how to satisfy revenue-sharing concerns, but teams in the other three major leagues do use dynamic pricing.
Major League Baseball's Detroit Tigers this season went to a three-tiered pricing system for value, regular and premium games, which are dictated by the popularity of the opponent and time of the season -- which is variable pricing rather than dynamic pricing that can change by the day or hour.
The National Basketball Association's Detroit Pistons have a hybrid system of variable pricing and limited dynamic pricing for games.
The National Hockey League's Detroit Red Wings have had a dynamic pricing system for the past six years, but have used it only occasionally. The team also sets higher base prices for certain popular opponents.<iframe id="rufous-sandbox" scrolling="no" frameborder="0" allowtransparency="true" style="display: none;"></iframe>
<blockquote class="twitter-tweet"><p>Dynamic pricing could generate $1 million or more in new revenue for the University of Michigan's athletic program. <a href="http://t.co/vOGw4oa6dZ">http://t.co/vOGw4oa6dZ</a></p>— Warren K. Zola (@WarrenKZola) <a href="https://twitter.com/WarrenKZola/statuses/354684820602892288">July 9, 2013</a></blockquote>
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The price is right now for UM football
By Bill Shea
Dynamic pricing could generate $1 million or more in new revenue for the University of Michigan's athletic department when the software is deployed for the start of single-game football ticket sales on Aug. 1.
The Michigan football team is the first major college athletics program to adopt dynamic ticket pricing technology, which allows the school to fluctuate single-game ticket prices based on real-time market demand.
The pricing system will be applied only to single-game tickets, and not season, student or multigame ticket packages, said Hunter Lochmann, Michigan's senior associate athletic director and the athletic department's chief marketing officer.
The software's algorithms factor such metrics as team records, weather forecast, seat location, historic demand, resale market prices and remaining inventory. Scarcity drives up the prices.
The airline, hotel and concert industries use similar systems to manage their tickets. Professional sports began experimenting with dynamic pricing software in the mid-2000s, and it is becoming more common among teams. A few college programs have begun to use it as well.
Michigan is paying to use pricing software from Austin, Texas-based QCue Inc. (pronounced Q-Q).
The school previously set a higher ticket price for historically popular opponents. Now, that price could vary by day or even the hour.
End-zone seats at Michigan Stadium are expected to be the cheapest, and Victors section seats at midfield the priciest.
Michigan estimates the initial single-game price for the Sept. 7 game against the University of Notre Dame to begin at $195 per ticket, and for the Nov. 30 game with Ohio State University to begin at $175. The lowest estimated price is $65, for a Sept. 14 game against the University of Akron.
The price recommendations are made daily, and Michigan can use those prices or set its own, said Barry Kahn, who founded QCue in 2007.
The single-game tickets will never be priced below the $65 per-game season ticket price, Michigan said.
Michigan Stadium seats 109,901, and fewer than 10,000 seats per game are expected to be available for single-game purchase this season, Lochmann said.
Season tickets, student tickets and multigame ticket packages account for about 100,000 seats each game during the season.
Lochmann said he didn't have a detailed new revenue estimate for tickets sold via dynamic pricing because the university doesn't know what the final number of available seats will be.
"We don't have a (seat) number because it's pure speculation at this point, and we don't know the prices. We'd be happy if we netted over $1 million," he said.
While many games, especially those against Notre Dame and Ohio State, traditionally sell out very quickly, some can take a day or more, and that's where Michigan fans could see some price fluctuation.
"If they last to the second day, I'm sure the price will be higher," Lochmann said. "We're going to lean on their algorithm, on their science."
Michigan doesn't yet know when it will halt dynamic pricing prior to games, but Lochmann said it likely would be the day before a game. However, if an opponent returns a batch of unsold tickets to Michigan shortly before a game, the school wants to be available to sell those, he added.
"The bulk of their tickets are season tickets or student tickets. There isn't a whole lot of inventory for your one-off game purchases," Kahn said. "(Dynamic pricing) isn't something that's going to touch the bulk of the fan base."
Teams have seen a 5 percent to 10 percent revenue boost at the low end of the scale to more than a 30 percent increase by going to QCue's software, he said.
If UM is happy with dynamic pricing, it will expand its use.
"We're going to see how football goes. Depending on the success, we'd probably try men's basketball as well," Lochmann said.
Lochmann didn't disclose the details of the QCue contract, but he did characterize it as a five-figure deal for multiple years.
In addition to the licensing fee for the software and services, QCue will get a "very small percentage" of tickets sold above a certain premium, Lochmann said.
Michigan didn't bid out the deal, but it went with QCue because it already worked with another UM vendor, Irvine, Calif.-based Paciolan Inc., an automated ticketing company that is a division of Comcast Spectator LP, the sports management division of cable giant Comcast Corp.
Revenue growth
Dynamic pricing, while highlighting the value of set-price season tickets, clearly is aimed at generating new revenue.
"It makes more money for Michigan. They're capturing some of the upside you'd see for games such as Notre Dame and Ohio State," said Jesse Lawrence, CEO of New York City-based TiqIQ, which aggregates prices of tickets being sold on resale brokers such as StubHub, Ticketnetwork, Ticketsnow and eBay.
"It's been a revenue maximization tool, not a butts-in-seats tool," he said. "It's not like Michigan is going to be sitting there with unsold tickets."
Michigan's athletic department estimates that its football ticket revenue will grow to $42.9 million this fall from last season's $39.1 million -- but part of the projected $3.8 million ticket revenue increase comes from UM having seven home football games this season, versus six in 2012.
The department's overall budget for its 31 programs for the current fiscal year, which will end next June 30, is estimated at $146.4 million in revenue and $137.5 million in spending, for a projected $8.9 million surplus.
Last year's spending came in $1.3 million under budget.
The expected football ticket revenue boost will come atop an increase from last year in the annual "preferred seat donation" for the right to buy a season ticket.
The fees were created in 2005, and last year the Victors ($600), Valiant ($475) and Maize ($350) levels each were increased by $100. The Blue ($200) level has gone up by $75, and the end-zone seats ($75) increased by $25.
Revenue from the preferred seat donations increased to $26.6 million in 2012 from $22.3 million in 2011. The fee is expected to generate $27.8 million this year.
Other leagues
QCue has deals with pro baseball, basketball and hockey teams, but none with Detroit's franchises. Other companies offer dynamic pricing software as well.
The National Football League does not use dynamic pricing, mainly because it has not yet figured out how to satisfy revenue-sharing concerns, but teams in the other three major leagues do use dynamic pricing.
Major League Baseball's Detroit Tigers this season went to a three-tiered pricing system for value, regular and premium games, which are dictated by the popularity of the opponent and time of the season -- which is variable pricing rather than dynamic pricing that can change by the day or hour.
The National Basketball Association's Detroit Pistons have a hybrid system of variable pricing and limited dynamic pricing for games.
The National Hockey League's Detroit Red Wings have had a dynamic pricing system for the past six years, but have used it only occasionally. The team also sets higher base prices for certain popular opponents.<iframe id="rufous-sandbox" scrolling="no" frameborder="0" allowtransparency="true" style="display: none;"></iframe>
