View from the Northwestern News Network
Georgia Tech University is looking into adapting a new ticketing approach that Northwestern University has found to be successful. This approach is a Dutch-auction style, modified from a Netherlands style of selling flowers. Northwestern University economics professors Jeff Ely and Sandeep Boliga pitched their customized version of this auction to the athletics department for their ticket sales.
In this case, Northwestern would tailor ticket prices according to demand and popularity and set them accordingly. As game days approached, ticket prices would drop until the section was sold out. However, differing from normal Dutch auctions, if you bought a ticket at a higher price than the final buyer, you would be refunded the difference in prices in the same section. This way, everyone in the same section pays the same price and no one feels cheated. For example, if tickets go on sale for $80.00 and you buy one right away, but the price drops to $65.00 right before the game, you would be refunded $15.00. A “price floor” would be set to never go below what season ticket holders pay. This method encourages fans to not wait to buy tickets, increases revenue, fills seats, and makes season tickets more appealing. The sooner you buy, the better seats you are guaranteed. Additionally, there is a chance that the ticket price will drop and you could receive a rebate. Season tickets may be more appealing because you avoid the chance of tickets selling out at a higher price, and you avoid the auction all together.
Some schools and professional teams have started using dynamic pricing systems. These two systems are similar that their ticket prices fluctuate according to demand. However, dynamic pricing can go up or down, increasing as demand increases or decreasing as demand decreases. Therefore, someone who buys the first ticket to a game or event will pay less than the person who buys the last ticket. The Dutch auction style will only decrease, never increase. Also, dynamic pricing locks the buyer in at the price they purchase at. Northwestern’s “Purple Pledge” allows for a refund if the price drops in their section after purchasing. Both styles encourage fans to buy tickets early.
Georgia Tech’s Bobby Dodd stadium holds 55,000. Adjusting ticket pricing to higher and lower demand games could help fill seats and increase revenue. Clemson will be the largest selling game of Georgia Tech’s 2014 season, but I bet hosting Georgia in 2015 could be an even greater revenue generator. In the article, it states that Georgia Tech struggles to break even financially and does not currently fully fund scholarships for its track, cross country, or swim programs. As long as Georgia Tech truly uses increased revenue for positive incentives such as scholarship funding, I think this is a great method that could be adapted across the board.
One of my favorite parts about this is how it potentially cuts out the “second market” (StubHub, Craigslist, etc.). Some have also proposed the idea of venues having a buyback option of which they can resell for profit, instead of having a final sales policy which causes buyers to resell their tickets on such second market venues. This could be lost revenue for the original venue, especially for sold out events. To me, it makes the most sense to offer a full refund for tickets that they could then resell, especially for high-demand or sold out events. I understand how not having a buyback system avoids sales loss for events that do not sell out however. Most second markets charge a fee of their own, so fans do not receive their full money back, and new buyers usually overpay (unless tickets are marked way down). A venue buyback could potentially be a win-win for themselves and buyers, and could help eliminate second markets and perhaps some scalping. I tried selling tickets on StubHub, and it was going to be impossible for me to get my money back. The demand for the game had decreased since I bought the tickets, and I would have had to post them for more than I bought them for in order to end up with my money back after StubHub got their percentage of the sale.
The article states that Northwestern did not offer sales figures to Georgia Tech, but said that the auctions had been successful. I am interested to see final numbers for both schools for both the higher demand games and the lower demand games.
No comments:
Post a Comment