SF Giants, Dynamic Pricing...Game Changers in Ticket Selling for Baseball

“We started dynamic pricing three years ago and the St. Louis Cardinals did it last year. The joke in baseball is that if you do dynamic pricing and have a full ballpark, you’ll win the World Series!”
                      Russ Stanley, San Francisco Giants, Managing Vice President, Ticket Sales & Services

If only that was the secret sauce to winning the World Series…the Chicago Cubs would have signed up years ago!

While it may not lead to winning the World Series, dynamic pricing is definitely revolutionizing the way baseball teams sell tickets. And, if you don’t live in San Francisco or St. Louis and haven’t heard of dynamic pricing…watch out, according to Russ Stanley, it’s coming…and soon. Fans of the Oakland A’s will experience dynamic pricing this season.

So, what is dynamic pricing? Basically, the prices for single tickets change on a daily basis depending on the pitcher, the match up of pitchers, who your team is playing, and other variables. So, technically, if you are a fan it might make more sense to buy your tickets earlier…before many of these variables come into play.

Before the holidays I sat down with Russ to learn more about this innovative new way to sell single game tickets.

PJ: How does dynamic pricing work?

Russ: Dynamic pricing has simplified things for us, and in turn, for our customers. We partnered with Qcue in Texas. They built an algorithm and portal and we can quickly change a price, leave it alone, and make an update in the system. We can do all games in an hour to an hour and 15 minutes. Then, we send the file to Tickets.com and Major League Baseball (who updates the website). It’s pretty complex to make changes—1,600 prices each day.

We’ve created a better/easier ticket buying experience for the customer. They can view prices on games from a few days ahead to behind. They can evaluate prices against comparable games in the series, etc. Or, the fan can just look at the least expensive seats in any game.
We will see more teams following this model. They are seeing the value and asking questions. Getting a 7-8% lift in revenue last year and the year before is pretty impressive.

PJ: I know the number of season tickets you’ve sold has increased the last few years in this ballpark, what does this year look like? And, are you limited on the number you can sell?

Last year we sold 28,000 season tickets; 21,000 the year before. We’ve slowly lost some single game inventory and we need to be more accurate with pricing and be more fine-tuned this year.

Dynamic pricing is more challenging with 29,000 to 30,000 full season ticket holders. You have less single game tickets to sell. We have to be more accurate with fewer tickets to sell.

Once you hit 30,000 season tickets you can’t go higher. Major League Baseball gets 12,000 for playoffs and you need to provide them with this inventory. Even with 12,000 tickets per game it is over 972,000 tickets to sell over the year. That’s a lot to sell. Although, it’s still a lot less than previous years.

PJ: Does it make more business sense to sell fewer season tickets and more single game tickets?

Russ: There is a fine line from a business standpoint. You could argue selling more single game tickets bring in more revenue. But, selling more season tickets is secure and we are willing to take in less revenue for this security. We could sell only 5,000 season tickets and sell more single tickets and bring in more revenue. But, we find it is easier to navigate and know what we need to sell this way.

PJ: How did you decide to take a shot at such an innovative model for your industry?

Russ: It made sense on paper. Most businesses set their prices based on supply and demand. In the airline industry people get that flying on certain dates cost more. Same with hotel stays. I wasn’t sure the sports fan would understand and buy into our thinking that “every game is created differently.”

We did a small scale test that generated $500,000 more in revenue. I kept looking at it—impacting the bottom line by 7-8% is big. We also had to be careful with our season ticket holders. They wanted price protection to know they were getting the best price.

We’re lucky we have great ownership. They took a risk—totally changing the pricing in sports and letting the ticket guys manage it. They understood it and took the risk.

PJ: This is not the first innovative move on the ticket front for the SF Giants.

Russ: When we built the ballpark we thought about bringing the secondary ticket market, which was done in the parking lot, into the box office. [The Giants sell only full season ticket packages. This move allowed season ticket holders an easier way to sell the tickets for games they could not attend.] It was done electronically through the Giants and changed the world of thinking there, too. This business turned into Stub Hub.

PJ: Why aren’t other teams doing this?

Russ: We will see more teams following this model. They are seeing the value and asking questions.

I want to shake them and ask why they aren’t doing this. They say they are too busy and fear it would take too much time. For me, if the impact on my bottom line is 7-8% per year…then, why not do it?

We are working with Qcue to make the system more automated. We think the algorithm is close to being spot-on—we are accepting a higher percentage of prices now. This happened through asking a lot of questions over the past few years. We’ve helped fine-tune this for the SF market; however it would need to be adjusted for Chicago.

I think in the next three years every team in baseball will be doing dynamic pricing.

PJ: Would dynamic pricing work in other sports?

Russ: Baseball is so different from other sports. Each game is different. Other sports don’t have the variables or inventory of tickets. Basketball is played indoors and doesn’t have rain or snow. The lineup really doesn’t change much from day to day. Football doesn’t care if they sell out.

In baseball, we could play the same team three games in a row with Timmy (Lincecum), Matt Cain, or Ryan Vogelsong on the mound. In each game, the perceived value is different to customers and we have to react differently.

PJ: What’s next for the Giants?

We’re two-for-two so far! I think about what’s next all the time. How do you come up with something bigger than these two ideas?

We aren’t waiting around, we are aggressive. We want to make the season ticket experience better for the customer. They own 81 games—that’s a lot of games and a big commitment from the fan.

We are looking at digital. Maybe transferring tickets through cellphones. For example, if I am running late, I can send you the ticket on your phone. Maybe it’s not a huge revenue builder, but it’s high on customer satisfaction. Then, it turn, it might generate revenue.

The Giants are on the cutting-edge of the ticketing world and we are always hearing of companies wanting to get into the business. We meet with at least one company a week with new ideas or new technology. I guess it helps to be the baseball team up the street from Silicon Valley!