The Logic Behind Variable Pricing for Tickets | Magic Basketball

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Aug 30

The Logic Behind Variable Pricing for Tickets

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Via Josh Robbins of the Orlando Sentinel:

The Orlando Magic are borrowing a page from the movie industry’s playbook.

Just as it costs more to attend a Friday-night premiere than a Tuesday matinee, the Magic also will base their single-game ticket prices on demand this upcoming season. A ticket to watch the team host the star-studded Miami Heat, Boston Celtics or Los Angeles Lakers will cost more than a ticket in the exact same seat for, say, a game against the lowly Sacramento Kings.

For the first time in franchise history, the Magic will employ variable pricing for single-game tickets to all 41 of their regular-season home contests. Team officials will set prices based largely on the game’s day of the week and the quality of the opponent. [...]

Variable pricing is becoming increasingly popular throughout the NBA, with at least the Atlanta Hawks, Houston Rockets, New Orleans Hornets and Utah Jazz also planning to use it in 2010-11.

Makes sense from an economic point of view — it’s an efficient way to make money.

Considering the Orlando Magic will be sporting a payroll over $92 million this year, before accounting for the luxury tax hit, it’s only logical for ownership to squeeze out every last penny in a revenue stream that is going to be bolstered by the opening of the Amway Center.

This topic was touched upon by Kevin Arnovitz of TrueHoop a little over a week ago.¬†Here’s what he had to say about variable pricing for tickets:

What does this mean for the average fan? He’ll have to be as precise in his purchasing strategy as the team is in its sales strategy. To maximize your dollars, first figure out the variables you value more (and less) than the rest of the customer base. In other words, apply Moneyball to your ticket-buying. The buying public usually prefers to consume live entertainment Friday-Sunday nights. If you don’t have kids, or if late nights during the week don’t bother you, zero in on the Monday-Thursday columns on the schedule. Second, what’s worth more to you — three games against mediocre opponents or one tantalizing matchup? All things being equal, superstars and the league’s premier teams generally put on a better show, but a variable pricing structure might overvalue brand names. If you’re a die-hard basketball fan, you probably have a better appreciation for the Sacramento Kings than the average New Orleanian, who might not know who Tyreke Evans and DeMarcus Cousins are. Watching the Hornets against an upstart Kings team will likely offer you the best bang for your basketball buck. Finally, seat location remains one of the most elastic variables in ticket-pricing. Determining which vantage point you value most relative to the median buyer is crucial in getting the most out of your purchase. As someone who needs to be between the baselines, I owned center-court seats in the first row of the upper bowl at Staples Center for years and paid less than half of what a corner seat 25 rows up from the floor cost.

Interesting stuff, to say the least.

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