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Variable Ticket Pricing in Major League Baseball

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  • Daniel, Rascher
  • Chad, McEvoy
  • Mark, Nagel
  • Matt, Brown

Abstract

Sport teams have historically been reluctant to change ticket prices during the season. Recently, however, numerous sport organizations have implemented variable ticket pricing in an effort to maximize revenues. In Major League Baseball, variable pricing results in ticket price increases or decreases depending on factors such as quality of the opponent, day of the week, month of the year, and for special events such as opening day, Memorial Day and Independence Day (July 4). Using censored regression and elasticity analysis, this paper demonstrates that variable pricing would have yielded approximately $590,000 per year in additional ticket revenue for each Major League team in 1996, ceteris paribus. Accounting for capacity constraints, this amounts to only about a 2.8% increase above what occurs when prices are not varied. For the 1996 season, the largest revenue gain would have been the Cleveland Indians, who would have generated an extra $1.4 million in revenue. The largest percentage revenue gain would have been the San Francisco Giants. The Giants would have seen an estimated 6.7% increase in revenue had they used optimal variable pricing.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25803.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:25803

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Related research

Keywords: baseball; variable pricing; dynamic pricing; regression; censored regression;

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References

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  1. Daniel R. Marburger, 1997. "Optimal ticket pricing for performance goods," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 375-381.
  2. Donald L. Alexander, 2001. "Major League Baseball: Monopoly Pricing and Profit-Maximizing Behavior," Journal of Sports Economics, , vol. 2(4), pages 341-355, November.
  3. McDonald, Mark & Rascher, Daniel, 2000. "Does Bat Day Make Cents? The Effect of Promotions on the Demand for Major League Baseball," MPRA Paper 25739, University Library of Munich, Germany.
  4. Rodney Fort, 2004. "Inelastic sports pricing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 87-94.
  5. Levy, Daniel, et al, 1997. "The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(3), pages 791-825, August.
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Citations

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Cited by:
  1. Daniel, Rascher & Andrew, Schwarz, 2010. "Illustrations of Price Discrimination in Baseball," MPRA Paper 25807, University Library of Munich, Germany.
  2. Shapiro, Stephen L. & Drayer, Joris, 2014. "An examination of dynamic ticket pricing and secondary market price determinants in Major League Baseball," Sport Management Review, Elsevier, Elsevier, vol. 17(2), pages 145-159.
  3. Alan L. Morse & Stephen L. Shapiro & Chad D. McEvoy & Daniel A. Rascher, 2008. "The Effects of Roster Turnover on Demand in the National Basketball Association," International Journal of Sport Finance, Fitness Information Technology, vol. 3(1), pages 8-18, February.
  4. Drayer, Joris & Rascher, Daniel A. & McEvoy, Chad D., 2012. "An examination of underlying consumer demand and sport pricing using secondary market data," Sport Management Review, Elsevier, Elsevier, vol. 15(4), pages 448-460.
  5. Tim Dittmer & Bob Carbaugh, 2014. "Major League Baseball: Dynamic Ticket Pricing and Measurement Costs," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center, Middle Tennessee State University, Business and Economic Research Center, vol. 14(1), pages 44-57, Fall.

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