Baseball Delivers a Better Product with Dynamic Pricing
The dynamic pricing methods that are emerging as a success on tolled facilities across the U.S. received an unexpected nod earlier this year, with a news report on the World Series-winning Houston Astros’ use of variable rates for ticket sales.
The story points to some interesting parallels between the United States’ beloved national pastime and the surface transportation Americans depend on—often enough to get to and from their favorite baseball games.
Roads—and Baseball Teams—Are Never Paid For
A baseball team, like a piece of physical infrastructure, is never paid for. It takes fresh investment every year to keep it functioning, vibrant, and successful.
Every team in Major League Baseball, like every agency and supplier in the tolling industry, is striving to deliver the best possible product, day in and day out.
A major league stadium, like a tolled road, bridge or tunnel, needs constant maintenance and upkeep. With hundreds of thousands or millions of people setting high expectations for the facility’s performance, its owners and operators don’t dare fall behind on maintenance.
A baseball team, like a tolling agency, must constantly strive to attract and retain the very best talent. And the job is never done. Management knows that generations in the work force will turn over quickly (even more so in baseball than in the tolling business), and the quality of the final product will depend utterly on who’s on deck to deliver it.
Dynamic Pricing to the Rescue
It’s no surprise that the Houston Astros organization—like the majority of Major League teams—has begun to “adjust prices day-to-day based on demand, weather, pitching matchups, team performance, and scores of other variables,” according to the San Antonio Express-News. After the team won the 2017 World Series, its first ever, demand for tickets went up. And prices followed.
The newspaper points out that the community shouldn’t be terribly surprised.
Baseball fans are used to such fluctuations when shopping for airline tickets or a ride home. Toll roads, zoos, theme parks, tequila bars and others have adopted the model.
The article raises concerns that are factored into any tolling agency’s business model—the fear that ticket prices will soar ahead of what customers can afford, or that live baseball will be limited to an elite audience. But Greg Loewen, CEO of dynamic pricing software provider Digonex, assured the Express-News that the league is keeping fans in mind.
“Most teams with dynamic pricing set rules so that, no matter what the algorithm says, prices generally won’t rise above or fall below certain cutoffs,” the paper states. “That protects season ticket holders from losing value if prices fall, teams argue, because those ticket holders will never see prices for their seats fall below face value on the secondary market. It keeps some seats available at reasonable prices even in high-demand situations, while allowing teams to recoup some revenue that otherwise would fall to third-party vendors or scalpers.”
Fiscal Responsibility in All Directions
The explanation from the Astros’ president for business operations, Reid Ryan, shows yet another parallel between baseball and tolling: everyone wants nice things, and nice things are rarely if ever free.
“We have a fiscal responsibility to our fans to field the best team and a fiscal responsibility to the business to price appropriately,” he said, in an earlier interview with the Houston Chronicle. “So, there will be seven to 10 games a year that will be most expensive. But we have all kinds of value pricing, as well.”
So…take me out to the ballgame and use your local toll road to make sure you get there safely and on time.
Get the latest information on financing infrastructure and dynamic pricing for surface transportation at IBTTA’s Summit on Finance & Policy, July 22-24, 2018 in Portland, OR.