Hawks sign with Qcue...

[Diesel]

Software firm and dynamic-pricing specialist Qcue has signed deals with three NBA teams for the coming season.

The Atlanta Hawks, Houston Rockets and Utah Jazz are the first pro basketball clients for Qcue, an Austin, Texas, company that already is working with the San Francisco Giants and Dallas Stars.

The agreement with Hawks parent Atlanta Spirit also includes that company’s other team: the NHL’s Atlanta Thrashers.

Dynamic pricing adjusts single-game ticket prices as late as the day of the game through computer analysis of team performance, opponent, weather conditions, day of the week and gate giveaways. For the three NBA teams and the Thrashers, Qcue plans to use its technology to reset single-game ticket prices throughout their arenas, said Barry Kahn, Qcue’s CEO.

That differs from last season’s programs for the Giants and Stars, who restricted dynamic pricing to 1,000 to 2,000 seats in the upper deck that often went unsold.

For 2010, the Giants expanded their program to cover all areas of AT&T Park where single-game tickets are available. The Stars are adding dynamic pricing to the club level at American Airlines Center for the 2010-11 season, said Geoff Moore, executive vice president of sales and marketing for the team.

Kahn said Qcue has a close relationship with the NBA’s team marketing and business operations division and that the three deals fall in line with the league’s push to get teams to more accurately price tickets to fill their buildings.

“Teams are listening to their fans and how they value games, and are adjusting prices accordingly,” said Chris Granger, the NBA’s senior vice president of team marketing and business operations.

The Rockets and the Jazz sent officials to the Bay Area to see dynamic pricing in action during Giants games, giving them a feel for how the system worked in a real-time setting, said Russ Stanley, San Francisco’s managing vice president of ticket services and client relations.

To protect their season-ticket holders, Rockets and Jazz officials said they will not allow the cost of dynamic-priced tickets to fall below season-ticket prices. The Hawks last week were not ready to talk about their deal, team officials said, because they had not notified their season-ticket holders of the move.

Read more: Atlanta Hawks, Thrashers sign up with Qcue - Atlanta Business Chronicle

[macdaddy]

I think this is a great move.

[Guest]

I was harping on here a few months back about this exact thing. Finally the ASG are doing something right, they are realizing that the ASG sucks at pricing tickets and so they should hire someone else to do it for them. But here is the question:

Will Qcue maximize profits or maximize attendance?

These are not necessarily the same thing, my gut tells me profits but a small piece of my heart thinks the ASG will try to maximize attendance since they were complaining about fans not showing up. In the end its a step in the right direction and something I called for months ago.

ASG needs to charge different prices for different games and days of the week. If LeBron comes to play, charge more for that game because you gain a lot more producer surplus. People are more willing to pay to see LeBron than the Clippers, so charge more for LeBron (still leaving you with a sell-out) and charge less for the Clippers which will raise attendance. In baseball this pricing scheme is common, I haven't figured out why it hasn't translated to the NBA yet. Maybe the NBA has a policy against it that I am unaware of?

[Diesel]

I was harping on here a few months back about this exact thing. Finally the ASG are doing something right, they are realizing that the ASG sucks at pricing tickets and so they should hire someone else to do it for them. But here is the question:

Will Qcue maximize profits or maximize attendance?

These are not necessarily the same thing, my gut tells me profits but a small piece of my heart thinks the ASG will try to maximize attendance since they were complaining about fans not showing up. In the end its a step in the right direction and something I called for months ago.

I think the problem is that Qcue has not shown any level of success so far. Plus, the promise to ticket holders is that the price given won't be below that which they are paying. I think that's kinda a mistake. I think that they should give prices that fills the arena and at the end of the year, rebate the season ticket holders the difference if it is lower. I know it's a lot of heeing and hawing and number crunching, but I think it will help. I believe the benefit is if they can fill up those 41 games and everytime the Hawks are on, it's a sellout, more people will buy season tickets the next year (until you are really seeing a high ticket demand).

[Guest]

I think the problem is that Qcue has not shown any level of success so far. Plus, the promise to ticket holders is that the price given won't be below that which they are paying. I think that's kinda a mistake. I think that they should give prices that fills the arena and at the end of the year, rebate the season ticket holders the difference if it is lower. I know it's a lot of heeing and hawing and number crunching, but I think it will help. I believe the benefit is if they can fill up those 41 games and everytime the Hawks are on, it's a sellout, more people will buy season tickets the next year (until you are really seeing a high ticket demand).

There are a lot of minor points that one can make about this, but I think the main idea is something everyone can agree on. Change the prices of certain games. Every game of the 41 home games is not created equal, yet the Hawks have been pricing them like they have been.

Season tickets are an interesting topic. On the one hand they say that games won't be priced below the season ticket price, but thats foolish. You shouldn't worry about one game, you should look at the average price. If the average ticket price for all 41 games is below what the season ticket price is then a rebate should be given. But who cares if one particular game is priced below the season ticket price? If the average ticket price for all 41 games is above the season ticket price then the season ticket holder makes out as a winner. A simple 5 game example where the season ticket costs $50 ($10 per game):

Game 1 - $15

Game 2 - $15

Game 3 - $20

Game 4 - $5

Game 5 - $25

Total - $80

So should the Hawks send a rebate of $5 to the season ticket holder because game 4 was below what they paid? The season ticket holder already enjoys great discounts from all the other games, big deal if Game 4 is below average because the season tickets as a whole have saved the individual money.

[Diesel]

There are a lot of minor points that one can make about this, but I think the main idea is something everyone can agree on. Change the prices of certain games. Every game of the 41 home games is not created equal, yet the Hawks have been pricing them like they have been.

Season tickets are an interesting topic. On the one hand they say that games won't be priced below the season ticket price, but thats foolish. You shouldn't worry about one game, you should look at the average price. If the average ticket price for all 41 games is below what the season ticket price is then a rebate should be given. But who cares if one particular game is priced below the season ticket price? If the average ticket price for all 41 games is above the season ticket price then the season ticket holder makes out as a winner. A simple 5 game example where the season ticket costs $50 ($10 per game):

Game 1 - $15

Game 2 - $15

Game 3 - $20

Game 4 - $5

Game 5 - $25

Total - $80

So should the Hawks send a rebate of $5 to the season ticket holder because game 4 was below what they paid? The season ticket holder already enjoys great discounts from all the other games, big deal if Game 4 is below average because the season tickets as a whole have saved the individual money.

No, I was saying rebate the average difference. IF over the 41 games, the average price paid by walkins was $12 and the average paid by STHs for the same area of seats was $15, they should rebate the STHs ($3 * 41) = $123.

The STHs would appreciate the fairness and the walkin off the street would appreciate the price. I think you would grow more STHs in the future. Plus, every game = full. That makes people want to go.

[frosgrim]

An alternative to the rebate is to give the difference for next year's season tickets. This keeps the STH around for the next season by offering a nice incentive.

At any rate, changing the price of the ticket based on demand is the right way to go. Hawksfanatic has it right, the cost should be done across all games. Some games, ala Miami, are going to be well above what the STH pays, while others will be below. In all the differences may wash out. If not, give them a discount for next year.

[Guest]

No, I was saying rebate the average difference. IF over the 41 games, the average price paid by walkins was $12 and the average paid by STHs for the same area of seats was $15, they should rebate the STHs ($3 * 41) = $123.

The STHs would appreciate the fairness and the walkin off the street would appreciate the price. I think you would grow more STHs in the future. Plus, every game = full. That makes people want to go.

When you said the price wouldn't go below STH I thought you were talking about individual games, not the average ticket price. My bad on that one. But from what I have read, only the Rockets and Jazz have given statements on prices lower than season ticket prices:

To protect their season-ticket holders, Rockets and Jazz officials said they will not allow the cost of dynamic-priced tickets to fall below season-ticket prices. The Hawks last week were not ready to talk about their deal, team officials said, because they had not notified their season-ticket holders of the move.

http://atlanta.bizjournals.com/atlanta/stories/2010/08/16/daily1.html

To me, its also unclear what ticket prices they are referring to. I would hope they are talking about average ticket price but it could be each individual game.

The thread that I posted my original thoughts on ticket prices was a very long thread (4 pages I believe) and only a few months ago. I can't help but wonder if that thread was read by the ASG. I am not suggesting that the Squawk made a difference, but it would be nice to know that the ASG reads what we say. If the ASG did not read what we said about them, then we truly are venting to a wall. If the ASG does read what we say, then it makes our vents slightly better. Pure speculation on my part, but it would be nice to know.

[coachx]

They do the same type of thing with Stub-Hub except tickets are sold at much cheaper prices then what season ticket holders pay (for most games).

Some of Hawks tickets on Stubhub are from individuals but many are from the ASG. Heck, Stubhub's Atlanta office in is in the same building, just 1 floor away from the ASG headquarters.......a couple of blocks from Phillips Arena.

People will be conditioned to wait until the last minute to buy tickets b/c paying full price will be seen as a rip off.

Stub-hub has already conditioned myself to think that way.

Edited August 17, 2010 by coachx

[Diesel]

People will be conditioned to wait until the last minute to buy tickets b/c paying full price will be seen as a rip off.

Stub-hub has already conditioned myself to think that way.

That's why I believe the rebate is important. You can even promise the STH a certain figure under the average ticket price for Rebate. All in all, you have to make it more convenient to be a STH. Of course, my simple math doesn't make room for the number of STHs.

[Guest]

People will be conditioned to wait until the last minute to buy tickets b/c paying full price will be seen as a rip off.

Stub-hub has already conditioned myself to think that way.

For crappy games, sure. But what if its the Miami Heat? You know that there will be more demanders, and so price will be above original price.

The idea behind Qcue is that they have a model that can accurately predict the demand curve for each game. Its debatable as to how accurately they can do this, but at least they are realizing that each game is different so pricing needs to be adjusted accordingly. Its going to be like Airline Ticket pricing. If you are conditioned to wait until the last minute to pay below full price then you will be s*** out of luck for Miami (Thanksgiving), Lakers (Christmas), and Boston (Spring Break? can't really think of another time that flying has greatly increased demand). But at the same time, you could get a great deal if you are willing to fly somewhere at the last minute to Florida in August (Minnesota).

Thats interesting about the ASG and Stubhub, I would have never thought they would be on there. If it really was the ASG on Stubhub then thats third degree price discrimination. They are offering the same seats at two separate prices dependent upon where you are willing to purchase them. Thats shady business practice if you ask me, but no one is so thats just my 2 cents.

[Guest]

Holly crap, do I work for the ASG or something?

The idea behind Qcue is that they have a model that can accurately predict the demand curve for each game. Its debatable as to how accurately they can do this, but at least they are realizing that each game is different so pricing needs to be adjusted accordingly. Its going to be like Airline Ticket pricing.

And then this:

“The best comparison is the airline industry,” he said. “They’ve been doing this for years. This is us taking that concept and applying it to sporting events.”

And again from me:

To me, its also unclear what ticket prices they are referring to. I would hope they are talking about average ticket price but it could be each individual game.

Then the ASG:

White said season-ticket holders are guaranteed to pay the lowest prices per game.

(quotes taken from http://blogs.ajc.com/hawks/2010/08/20/atlanta-hawks-dynamic-pricing-for-tickets-in-2010-11/?cxntfid=blogs_hawks )

I am a little worried how similar my responses so far have been to the ASG. Luckily, my posts have been before the ASG actually announced anything so in my own mind I can imagine the ASG is stealing my ideas.

[Diesel]

Holly crap, do I work for the ASG or something?

...

I am a little worried how similar my responses so far have been to the ASG.

Don't worry, the rest of us have known this for some time. It's good that you have finally come out of the closet!