Revenue / 03.10.21
The Ticketing Industry Has Paid the Price This Past Year. Now Will the Public?
Teddy Durgin
Experts examine emerging pricing trends
Are you starting to feel it? Are the sensory memories coming back? The buzz of a crowd; the creak of filled seats; the thrill of a show, a concert or a game just starting.
The rollout of the vaccines continues, prompting various cities and states to further ease pandemic restrictions. Chicago, for example, is lifting some coronavirus restrictions in time for Major League Baseball’s Opening Day, allowing fans to attend games at Guaranteed Rate Field and Wrigley Field for the first time in over a year. With California’s earlier decision to allow ballparks (and other outdoor venues) to admit fans, 25 of MLB’s 30 teams have announced plans as of press time to permit fans in the stands in time for the 2021 season’s first pitch.
Meanwhile, arts and entertainment venues in New York City can welcome back attendees starting April 2 with a maximum of 100 people indoors. Of course, Broadway’s return will likely remain up in the air, with shows unlikely to resume until at least the fall or winter.
Russ Stanley
The Evolution of Ticket Pricing
This begs the question. In what ways will ticket pricing change when we do emerge from the pandemic? I posed this query to several industry professionals and got a range of responses. Russ Stanley, Senior Vice President of Ticket Sales and Services for the San Francisco Giants, is about to be among the first to find out, and he and his staff are planning accordingly. “Prices are staying the same for our existing season ticket holders,” he says. “We made a commitment to freeze season ticket prices early on. Single game prices, as always, will fluctuate based on supply and demand. We know, for some period, supply will be low. But we are not sure what the demand will be. We’re hopeful it is strong.”
Amy Graca
Over in the live show realm, Amy Graca, Vice President of National Ticketing for Caesars Entertainment, says, “I believe we will have an even greater elasticity in overall pricing coming out of the pandemic. Fans have certainly had time to sit and reflect on what they want to spend their time and money on when they look to come back to live events. At the same time, I believe fans are going to look for more value and a greater experience when choosing what they decide to attend.”
Qcue COO Derek Palmer concurs but adds that pricing needs to become “more granular, but without overcomplicating.” He insists that “sound, holistic” strategies backed by leveraging all the new data that will be available to venues and ticket sellers will lead the way.
Tixcel CEO John O’Neill acknowledges that COVID-19 has “broken many of our costing and pricing models when it comes to hosting events and pricing tickets. The post-COVID world has introduced many new variables to pricing, and the cost base has changed. These variables will be the main drivers in shaping or changing ticket pricing as we emerge from the pandemic.”
Others like Daren Mitch, Vice President of Ticket Operations for the Phoenix Suns, don’t expect things to be that much different at all. “I honestly don’t foresee noticeable changes across the majority of inventory relating to initial ticket pricing,” he says. “I do anticipate a more active secondary market and possible pricing increases surrounding front-row inventory and VIP packaging.”
Also taking a conservative approach is Dan DeMato, Founder and President of FutureTix. His firm provides consulting on ticketing practices and technologies for arenas, sports teams, colleges and universities, cultural institutions and various attractions. “I don’t think there will be a single answer industrywide. This will depend on geography, event, genre and demand for the event prior to the pandemic.”
At the same time, he says, “I feel as though large ticket packages/commitments could be impacted most negatively. Subscriptions will be down. But with any limitation of capacity, pricing might be on the high end of the spectrum. Organizations that would normally entertain unrelated clients in premium areas such as suites or VIP clubs will have price points impacted, as there will be a reluctance to gather in tight quarters with strangers. Pricing may become even more dynamic and fluid than it already has become.”
Daren Mitch
The Effect of Lower Capacity
Inevitably, many events will be starting back at lower capacity. How will this affect pricing and sales strategy? Again, opinions were varied. Mitch says, “I believe, for the most part, initial pricing strategies will be consistent with what we’ve seen in the past. Where I anticipate noticeable changes will be in creative product offerings, which will maximize revenue. Venues and presenters will become creative by reinventing the assets they currently have available.”
These creative product offerings could include courtside couches with bottle service; identified “vaccinated sections”; lowering the capacity of suites and selling them as four-people “party pods”; and, finally, expanding the packaging of club areas with tickets.
“While distribution has been a key part of driving sales to an all-time high, pricing will now take the lead,” Graca says. “We are going to see higher average ticket prices at these lower capacities. The need to discount, bundle and use as many distribution channels isn’t in a high demand the way it once was with capacities so much lower right now.”
Dan DeMato
DeMato of FutureTix says he is aware of several venues that are charging higher prices for 25-50% capacity or, at the very least, eliminating three or four price levels altogether and having the whole facility priced at their highest ticket price point. Others are simply happy to be open and charging less in a limited capacity setting.
“Some feel that consumers will understand the additional costs to make a facility safe and that higher pricing is justified,” he says. “If a 10,000-seat arena has 250,000 people that they normally serve regionally, and the capacity is now only 2,500, the likelihood is that the 1% of your fan base that you would need to buy at a higher price to sell out very likely exists.”
Derek Palmer
The Importance of Flexibility
For his part, Qcue’s Palmer believes that flexibility will be key in the early going of the post-COVID era. This will mean looking at pricing not only in an event’s “current state” but what the strategy is if the capacity increases or even decreases further due to health concerns. “Predictive modeling and nimble strategies and technologies that are able to react quickly to market changes are now even more critical,” he says, “as will be communication with the public.”
Pent-up demand will likely impact pricing on some level. Mitch expects base pricing, at least as far as the NBA is concerned, will “remain somewhat consistent as it’s been in the past, but with much more movement within the dynamic pricing piece.”
For baseball’s the Giants, Stanley says the team is poised to be “nimble with pricing” and respond in either direction. “Depending on our capacity restrictions,” he says, “we anticipate the demand for big games to be there. At the same time, we have a lot of games in a home stand, so there will also be opportunities to find value in the lower demand games.”
Sean Kelly
Sean Kelly is founder of Vatic, a leading provider of dynamic pricing tools to performing arts and ticketed venues. “We talk a lot about anticipation, even when there isn’t a pandemic, because we feel it is the surest barometer of demand in the marketplace,” he says. “There have been numerous articles looking at previous closures due to war, pandemic, etc. that foresee a strong likelihood for a post-pandemic boom. In a boom period, we would see patrons become less price sensitive because of their desire to get out and do something.”
Graca is hopeful that is the case. “Pent-up demand is real,” the Caesars executive says. “People are ready to get out and enjoy live entertainment, sports, concerts and experiences. People want to feel normal again. While things may not be normal for the operators and the logistics of welcoming all these fans back, fans want to feel safe and get back to enjoying themselves in these settings. This will drive pricing to a new realm of managing inventory in the primary markets in conjunction with new sales strategies.”
DeMato has no doubt there will be major pent-up demand to get out and attend live events. But the reality is, at least for a while, only a percentage of the paying public will feel safe enough to act on that desire. “A great deal is going to depend on how safe a patron will feel with a given event’s logistics (e.g., indoor/outdoor, masks/no masks, vaccines, etc.),” he says. “Obviously, venues with older patron demographics and a previously waning product will be negatively impacted the most.”
Palmer adds, “Demand has always been a key driver to price. What will be interesting is the interaction and intersection of the primary and secondary market given potential capacity and health rules. Smart organizations will take a big-picture approach to managing inventory and pricing strategies via all available distribution channels to provide the best service to their patrons.”
Waiting for Trends
Looking ahead, all concerned feel that certain pricing trends may develop that might surprise some INTIX members. Kelly thinks the industry will see a growing recognition that the value proposition of digital events is more similar to in-person events than previously believed. Venues will almost certainly start to reflect that in their pricing.
Mitch says some pro sports won’t necessarily see the development of new pricing trends. Instead, the big trend will be “utilizing coveted outdoor club spaces by packaging ticketing along with access.” After all, outdoor spaces provide a heightened comfort level to a population emerging from a global health crisis.
DeMato was a bit more cautionary in looking into the proverbial crystal ball. “I feel that certain organizations might experience what I’m calling the consumer ‘Broken Habit’ or ‘Broken Streak’ syndrome, whereby many ticket purchasing organizations and individuals had their annual routine of matter-of-factly renewing their tickets interrupted by COVID.”
This, in turn, has allowed many to realize or rethink that they can survive without a given venue’s offering. “Perhaps they were on the fence to renew in previous years,” he says, “and this interruption makes them understand they can survive without that big season ticket expenditure. I think it will be prudent for venues to recognize the symptoms of this syndrome early and to adjust accordingly. There could be a significant move away from large ticket packages and commitment in the future.”
John O'Neill
Tixcel’s O’Neill agrees and goes even further. “There is another factor at play here,” he says, “and that’s a change in consumer behavior. For the last 12 months, people have found substitute activities to attending games and events — other ways to occupy their time that would have been previously spent attending an event. Event owners will have new competitive forces to deal with in the changed consumer landscape post-COVID. There’s also what is referred to as the ‘de-emotionalization’ of some fans. Their interest and support for a team is on the wane, and that will have an adverse impact on demand.”
He believes price discovery and optimization will have a major impact on shaping ticketing’s recovery curve. “This is the time during COVID when things are already broken and we can introduce change,” O’Neill says. “We have the tools and the time to make this change and come out better on the other side.”
Perhaps Palmer summed it up best: “The continued acceleration of technology adoption whether it be health-based attendance rules or continued digitization of the overall event experience will continue to provide challenges. But if there is one thing we have learned, it’s that INTIX members and this industry can handle whatever is thrown at them. The show must go on.”
You May Also Like
Want news like this delivered to your inbox weekly? Subscribe to the Access Weekly newsletter, your ticket to industry excellence.
Tags: Leadership , COVID-19 , Coronavirus , Revenue