The dynamic ticketing revolution comes to Australian sports next month, with the second State of Origin rugby league match in Sydney on June 13 being the first event here where ticket prices will fluctuate according to the basic economics of supply and demand.
The old method of selling sports tickets was to set the price six to nine months out and cross your fingers. New technology is allowing teams to change prices for seats in the decisive 10 days up to kick-off, taking into account the form of the teams, level of sales and excitement the event is generating.
Dynamic ticketing is a boom industry in the United States. Forbes Magazines rated it as a top 3 sports business story this year and named Qcue as the market leader. In 2009 Qcue had one client and now they provide dynamic ticketing software for more than 30 teams in US pro sports including half of the Major League Baseball roster.
Their CEO Barry Kahn was the man NRL’s Michael Johnstone sought out after hearing a lecture on dynamic ticket in Sydney last year by San Francisco Giants’ anaging Vice President, Ticket Sales & Services, Russ Stanley.
The Giants were the first MLBl team to reprice tickets daily. The reasoniong, as Stanley told the New York Times: ““The thing about baseball is that the product changes every day. You could be in first place one day and you’ll be in fifth place the next.”
“Russ told us about the experience at San Francisco Giants and it sounded positive,” Jonstone tells SBI. “At the end of last year I went there to follow up with him and on the same trip I met with Barry Kahn from Qque and we discussed what their plans were for global expansion.
“By then I’d already realised I should be doing it with the Origin 2 game in Sydney.”
It’s the same theory as used in the airline and hotel accommodation industries – as seats or rooms become less available the price rises. As they appear to be left unsold, they are discounted.
“What airlines are trying to do is ensure they can maximise their return for every single flight by using price and to ensure that when demand is high they’re maximising their revenue,” Johnstone says. “When you think about it, it’s strange that when we put an event on sale we just set a price and leave it at that no matter what happens the with supply and demand.”
The system is not quite ready to be revealed in its full glory Down Under. Johnstone has been dealing with Origin ticket agency Ticketek but the technology only allows for a few changes, and only to pre-determined price ranges.
But he says Qcue is working with the agency and a majority of NRL clubs could be in a position to use the fully flexible version as early as next season.
“What will happen in the future with Barry Kahn’s software is that price changes can be made daily and there will be an unlimited number of times we can change the price.
“What happens now in the US is that from about 10 days out prices start to fluctuate more; that’s when people are really starting thinking about buying tickets to events – the team’s form, what the weather is going to be like, factors like that start having an effect.”
For this year’s Origin match, the NRL was allowed three changes. It set prices at the same level as the 2011 series and they have risen marginally twice.
“We gave the public a month to purchase the tickets at same price as last year and from that point on we’ve started to use dynamic pricing, they have gone up, though by less than 10 per cent,” Johnstone said.
“Because it’s the first year, we’ve been very conservative with our price changes, we think we could go a lot harder but we want to check the concept, see if it works and then take it from there.”
He said there has been an interesting change in demand in different categories but overall sales are still tracking as they were last year when the game was sold out.
The key to dynamic pricing is maximising revenue while ensuring you do not alienate fans; and above all looking after your season ticket holders by giving them the best deal.
In the US, Vice President of Ticket Sales for the St Louis Cardinals Joe Strohm, told Forbes: “The biggest challenge was communicating the new pricing structure to our fans and overcoming the concern of season ticket holders that we would be undercutting their price. We have guaranteed season holders that we will never sell individual tickets below the game value of their ticket.”
The NRL is likewise treading carefully, doing all they can to see potential issues or backlash from fans and Johnstone also ruled out dropping the price below the floor set when sales opened.
Johnstone also said dynamic ticketing would not be used for this season’s Grand Final – “it’s a different sales pattern, with Origin 2, it’s a longer slower sales process while with the Grand Final you sell the majority of your tickets on your first day”.
But there’s a clear expectation that this will benefit clubs and the NRL from very soon.
“While we’re doing the changes ourselves manually it’s not as effective,” Johnstone says. “But we’ll begin working with Ticketek soon and once we’ve been able to work out how to apply Qcue software to the Ticketek system then I think we’re got 13 or 14 clubs that are on Ticketek so I think we’d working with all or any that are interested to maximise yield and revenue.”
Ultimately dynamic ticketing gives sporting organisations an ability to be nimble and make the most from their sales game-to-game.
“You don’t have to have a crystal ball six months out from the event and work out what the optimal price is going to be for a seat,” says Johnstone.
“You can take into account different factors during the sales process. For instance if the Blues were to win game one, Origin demand would skyrocket for game 2. We’re not proposing that we’re going to lift prices sky high, we won’t do that.
“But once established it should encourage a lot more pre-purchase. In the past some people have been happy to wait until the last possible moment but this will reward those who have been loyal and who want to buy early, regardless of waiting to see the team’s performances.”