Wednesday, October 29, 2008

Mo' Money No' Problem

                                                                 October 29, 2008

Dear Mr. McCourt,

What if I told you I had a way you could generate over $10 million in additional ticket revenue while reducing average ticket price by $4 per ticket? Is that something you might be interested in?

Now before I share any secrets with you, let's take a look at your current ticket revenue situation:

Current Seat Plan
Standard Tickets
# of Home Games:
Stadium Capacity:
Total Available Seats:
Seats Sold (2008 Attendance):
% Sold:
Avg Ticket Price:
Total 2008 Ticket Revenue:

Across the 81 home games, there were 4,536,000 seats available (56,000 x 81) at Dodger Stadium. The Dodgers' 2008 official attendance was 3,730,553, meaning 82.2% of the available seats were filled. These 3,730,553 filled seats each generated on average $29.66 in ticket revenue, which in total sums to about $111 million.

Not too shabby, but certainly not as much as you deserve. So let's crank those numbers up. Now, as you've proven, you already know the traditional ways of increasing revenue:

  1. increase price
  2. increase sales

Being only one year removed from the biggest ticket price increase in baseball, which you deftly followed up with an additional 13% ticket price increase the next year, I strongly urge you to avoid another price increase in the short term (not to mention the current economic crisis and Bud Selig's stern warning). And while I know you're always working on increasing sales, I also know that if possible you'd prefer to avoid the costly stadium renovations, expensive superstar signings, or unguarantee-able playoff appearances that such a strategy entails.

So I suggest an alternate strategy: Take a long hard look at your customer, the Los Angeles-area baseball fan. While it's a tired cliche that Dodger fans come to games late and leave early, we all know there's some truth to it. All those folks arriving late are either tied up in traffic and/or don't really care about the early, "less important," innings. All those fans leaving early clearly aren't particularly interested in the outcome. So why not take advantage of this unique Southern California mentality to further line your pockets?

Here's what I propose: segment your target market into three different groups, and sell a specific ticket type for each, as follows:

  1. The "Experiential" Ticket. Of the 56,000 stadium seats, take, say, 16,000 of 'em and sell them to the casual, "Experiential" fan - that is, those fans who come to the game less to see who wins, and more for the "Baseball Stadium Experience". These Experiential tickets, valid from first pitch through the seventh-inning stretch, allow one to enjoy approximately two hours of the full Baseball Stadium Experience (longer than your average movie!), for a discounted price of $20. Look for yourself on Diamond Vision! Dance to the organ and yell "Charge!" at the appropriate time! Catch a bag of peanuts from a vendor! Maybe even participate in a wave! Then end your unforgettable evening with the ultimate baseball experience staple: a rollicking chorus of "Take Me Out To The Ballgame". You'll even make it out of the stadium well ahead of the rest of the crowd, avoiding the post-game traffic!*
  2. The "Results-Oriented" Ticket. These 16,000 seats, good for the critical part of the game - from the bottom of the seventh onward - are for the high-powered, multi-tasking, "Results-Oriented" fan. These overachievers are overburdened with demands on their time. At the office, rather than sit through a 2-hour meeting themselves, they have their underlings provide them the 5-minute recap. They glance only at executive summaries, their time far too valuable to spend on full reports. And, alas, they don't have the luxury of sitting through a full nine innings (they're at the office far too late to arrive on time anyways). All they're interested in is the deciding 2.5 innings - the rest can be recapped for them by an intern the next morning. For the $20 discounted price, these fans can do what they do best: cut to the chase and get to the results, posthaste.
  3. The Standard Ticket. The remaining 40,000 seats would be sold as standard tickets good for an entire game, at the same $29.66 average price as today.

So how do the financials for this new plan work out? Let's take a look (figures assume same sales close rate of 82.2% as in 2008):

SoSG Proposed Plan
Standard Tickets
Experiential Tickets
Results- Oriented Tickets
# Home Games:
Available Seats:
Seats Sold:
% Sold:
Avg Price:
Ticket Revenue:
$79 m
$21.3 m
$21.3 m
$121.7 m

So, by simply segmenting your audience and catering to their priorities, ticket revenue has increased from $111 million to $122 million. That translates to almost $10 million in additional revenue**, with negligible incremental cost! When you factor in additional food, parking, and souvenir sales, incremental revenue could approach $20 million. And here's the kicker: with the influx of discounted $20 tickets, you've actually reduced the average ticket price by more than $4, from $29.66 to $25.37. Think of the PR angle!

So there you have it, Mr. McCourt, thank you for your attention. We await your reply.

                                                                 SoSG Karros

*A $200 penalty will be assessed to Experiential Ticket holders who fail to vacate their seat by the bottom of the 7th inning.

**after SoSG's standard 10% commission on incremental revenue (for providing the idea).


QuadSevens said...

I would seriously go for the "experiential tickets." Not because I like to leave early and beat traffic, but because then I could probably buy some better tickets for a lower price. The last 2.5 innings I would gladly leave my seat and walk around the park. Maybe wander over to find some even better seats that a "results-oriented" ticket holder didn't fill.

Aside from ways to get around the system like I've just mentioned, this could really increase sales to corporate season ticket holders. You know the mega corporations are going to buy both "experiential" and "results-oriented" tickets for every game. So now they are buying twice as many tickets for the same number of seats. I'm surprised nobody has tried to do this in the past.

Orel said...

I would pay extra for beachball-free seating.

I imagine many fans would pay extra for a guaranteed appearance on Diamond Vision.

Erin said...

Beachball-free seating would be amazing.

At every game, I tell my fiance that if I ball hits me, I'm going to pop the damn thing. This makes her nervous, since when a ball does come to our section, she has to spend time making sure it doesn't come near me, lest I cause some major trouble.