Ticket Pricing Strategies

With the current economic conditions hurting everyone under the sun, sports teams are scrambling to figure out the best ways to keep butts in seats.

The New York Knicks have decided to start selling discounted tickets at COSCO. Select seats will be sold at a 40% discount. So, while you’re out picking up a 1364 oz. jar of mayonnaise and a package of 672 rolls of toilet paper you can pick just a pair of seats in the 300 level at a pretty good bargain.

Is this a good strategy? In my opinion, it’s not. Sure, the team gets exposure to potential customers in an unlikely place and the spread of the message is wide. Nevertheless, I don’t think offering a flat discount is the best way to stop the hemoraghing of fans from a team’s stadium. First of all, people will begin to interpret what was once a value product for something that is discounted. The inherent perception will be that since the cost is discounted, the product must be too. Furthermore, people may become used to the discount and will be less than pleased when the team tries to raise prices. Cutting consumer costs by 40% sounds great but an increase of the same size is less than palatable all fans. Thus, it’s a short-term strategy that in the long-run may turn sour—especially if the Knicks can’t turn around their franchise.

A better idea might be to just put a freeze on ticket prices. This is exactly what the Boston Red Sox have done and other teams across all sports, including NCAA, are following suit.

But an even better idea would be to attach “value added” item to the current price of a ticket. For instance, the Knicks could freeze ticket prices but offer certain “All You Can Eat” sections. Or create a package deal such as a “Family Knight Out” where the team sells four tickets plus drinks and hot dogs for a certain deal. Minor league baseball teams survive on these sorts of gimmicks and strategies.

The bottom line is that you don’t want to do anything that might degrade the value of your team’s product. Discounting tickets might work today, but in a few months it’ll be hard to raise prices. Teams would be better off think of ways to implement “value added” strategies that at least give the perception to fans that their getting their money’s worth in these tough economic times.