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Variable Ticket Pricing in Major League Baseball

Author

Listed:
  • 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.

Suggested Citation

  • Daniel, Rascher & Chad, McEvoy & Mark, Nagel & Matt, Brown, 2007. "Variable Ticket Pricing in Major League Baseball," MPRA Paper 25803, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25803
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    File URL: https://mpra.ub.uni-muenchen.de/25803/1/MPRA_paper_25803.pdf
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    References listed on IDEAS

    as
    1. Levy, Daniel & Bergen, Mark & Dutta, Shantanu & Venable, Robert, 1997. "The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 791-824.
    2. Donald L. Alexander, 2001. "Major League Baseball," 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. Daniel R. Marburger, 1997. "Optimal ticket pricing for performance goods," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 375-381.
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    Citations

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    Cited by:

    1. Pettersson, Billie & Hoffmann, Mikael & Andersson, David & Wändell, Per & Levin, Lars-Åke, 2012. "Utilization and costs of glucose lowering therapies following health technology assessment for the new reimbursement scheme in Sweden," Health Policy, Elsevier, vol. 108(2), pages 207-215.
    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, vol. 17(2), pages 145-159.
    3. Chmait, Nader & Robertson, Sam & Westerbeek, Hans & Eime, Rochelle & Sellitto, Carmine & Reid, Machar, 2020. "Tennis superstars: The relationship between star status and demand for tickets," Sport Management Review, Elsevier, vol. 23(2), pages 330-347.
    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, vol. 15(4), pages 448-460.
    5. 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.
    6. Mehmet Şahin, 2019. "Optimization of dynamic ticket pricing parameters," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(4), pages 306-316, August.
    7. Malasevska, Iveta & Haugom, Erik, 2018. "Optimal prices for alpine ski passes," Tourism Management, Elsevier, vol. 64(C), pages 291-302.
    8. 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, vol. 14(1), pages 44-57, Fall.
    9. Ronald J. Huefner, 2017. "Value-based pricing in professional sports," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(1), pages 30-39, February.
    10. Young Dae Ko & Seung Hwan Jung & Sung Hee Kim & Sung Wook Lee, 2018. "Sustainable Sport Scheduling Approach Considering Team Equity for the Korean Professional Baseball League," Sustainability, MDPI, Open Access Journal, vol. 10(2), pages 1-11, February.
    11. Daniel, Rascher & Andrew, Schwarz, 2010. "Illustrations of Price Discrimination in Baseball," MPRA Paper 25807, University Library of Munich, Germany.

    More about this item

    Keywords

    baseball; variable pricing; dynamic pricing; regression; censored regression;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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