New York Giants Experiment With Variable Ticket Pricing

The New York Giants yesterday e-mailed season ticket-holders an invoice letter cryptically alluding to “significant changes” to ticket pricing. The letter reveals that preseason ticket prices have been reduced by approximately 50 percent and promises that “for most season ticket holders [there will be] an overall [price] reduction from the previous season.” Indeed, a quick glance at The Giants Professor’s ticket invoice does show a nominal $12 dollar per-ticket total price reduction from last season’s bill. What it does not do is break down game-by-game ticket prices, and therein –somewhere– lies the rub. How can $12 of found money be a bad thing? Read on.

While the email appeared to go out of its way to avoid using the term variable ticket pricing, it seems clear that the Giants are moving towards some form of that pricing model. Variable pricing takes into account the opponent, day of the week, time of the game and placement of the game on the schedule in determining ticket prices. Stated simply, the stronger the demand for a game, the higher the ticket price will be.

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The model has been adopted by every team in major league baseball and has yielded demonstrable success, both in putting more fans in otherwise empty seats, and in raising overall revenue for the adopting organizations.

Sixteen NFL teams had been experimenting with at least some form of variable pricing in 2014 and several more, including –apparently– the Giants, had been preparing to adopt the practice next season. With half of the teams in the NFL unable to fill their stadiums on a regular basis, the transition to the model, so effective in Major League Baseball, makes practical sense for smaller market, less popular, NFL teams.

But why are the New York Giants doing it?

In sports where there are a high number of games in a season (i.e., 162 in baseball, 82 in basketball), variable pricing is of obvious use even to highly popular teams like the New York Yankees. The Bronx Bombers themselves cannot fill every seat to every game and so, even they employ the model in order to increase attendance at less desirable games and maximize profits at the highly demanded ones. But variable pricing seems pointless –if not downright bizarre– for an NFL team with an 8-game home schedule that has packed the house every week for over forty years.

Add to this the fact that, since 2010, the season-ticket holders who fill MetLife Stadium are also Personal Seat License (PSL) owners –contractually obligating them to buy every ticket to every game, or risk losing them entirely– and it is plain to see that variable pricing makes little sense for the Giants. Unless there is some other motivation for doing it.

Perhaps the Giants are merely seeking to rectify the long-imposed injustice of charging season ticket holders full price for exhibition game tickets. Some outlets have already reported that the Giants are currently planning only to distinguish between pre-season and regular season prices, and not between high and low demand regular season games. This limited and desirable plan would be the most basic form of variable pricing and would, indeed, remedy the inequitable history of gauging season ticket holders by requiring them to pay regular season prices for pre-season games.

Oct 19, 2014; Arlington, TX, USA; New York Giants co-owner John Mara prior to the game against the Dallas Cowboys at AT&T Stadium. Mandatory Credit: Matthew Emmons-USA TODAY Sports

But if equitable treatment of their fans was the Giants’ only motivation, why did they close the gap almost entirely on the pre-season price reductions by simultaneously raising regular season prices to an essentially equivalent amount? A true cynic might speculate about the NFL’s long-held desire to add two regular season games to the schedule by removing two from the pre-season.

This would make the Giants’ maneuvering of pre-season fees into the regular season a rather shrewd and advantageous move. It is certainly possible that the Maras already know something on the scheduling front that we don’t.

Moreover, it would have been a simple matter for the Giants to have set forth a clear and limited ticket policy change in their e-mail by explaining that the organization desired only to correct the inappropriate price points for pre-season games. But the Giants did not do that, instead opting for vague, generic language leaving the door open for other possible variable pricing innovations.

It is conceivable that the organization merely wishes to keep its options open, but it is hardly a leap to recognize that the next step in variable pricing would be to maximize revenue by charging premium amounts for high-demand games against such division rivals as the Cowboys and Eagles.

The Giants Professor believes that closing the gap between the secondary market and face value of tickets sold is the ultimate goal, not only for the Giants, but for every NFL team. Each team has employees dedicated to studying and monitoring market values and tickets sold on secondary market sites like Stubhub. The clearest way for an organization like the Giants to maximize revenue from a ticket holder base that is already committed to buying nearly 100% of the product it is selling is by charging a price as near the market value as possible, especially for the most sought-after games.

The path to accomplishing this goal ultimately necessitates committing to a full-blown variable pricing model that nets the organization the highest possible premium for those match-ups. It is hard to imagine the Giants implementing the first stages of a variable ticket model in 2015 and then continuing to allow ticket holders to sell, say, $120 face value tickets to a Cowboys game for $250. The NFL is not in the business of allowing even license-holding fans to retain bargain-priced tickets, if they can direct the proceeds back to their teams.

But this path would be a mistake. Secondary ticket markets charge notoriously high transaction fees and NFL teams seeking to completely close the gap between face value and market price may find overwhelmingly disenchanted fans frustrated with continuing to lose money on low-demand games while being unable to make up the difference on the premium matches.

Below is the official e-mail sent by the New York Giants yesterday:

Dear Jeffrey,

On behalf of the entire New York Giants organization, we would like to thank you for your loyal and passionate support.Your 2015 season ticket invoice is now available online. As you have elected to NOT receive a paper invoice, this will be your only notice.

You will notice some significant changes to your 2015 season ticket invoice regarding the pricing of your tickets. These are the first adjustments to your pricing since MetLife Stadium’s inaugural season of 2010. We have reduced the cost of our preseason tickets by approximately 50 percent. In addition, we have established new pricing for our regular season games. The net result of the changes in pricing for most season ticket holders is an overall reduction from the previous season.We believe the modifications we have made in our season ticket pricing offers you the greatest value for the overall season ticket package.Parking will remain at $30 per game and can only be purchased on a season basis.

This year there are two (2) payment options. You can either choose to pay in full no later than May 1, 2015, or you may choose to enroll in a Season Ticket Payment Plan which is described below. If you elect the Season Ticket Payment Plan, you must register your credit card or checking account for automatic payments on the specific dates below. There is no fee to participate in the Season Ticket Payment Plan, but you must enroll at www.giants.com/myaccount no later than April 10, 2015. To enroll, log into your Giants account online and click the “Click to make payment” button. You will be given the option to pay in a Single Payment or select the Season Ticket Payment Plan.

Each payment of 25% will be automatically charged to your credit card or deducted from your checking account on the following dates: April 10, May 1, June 1 and July 1.

For season ticket holders choosing not to enroll in the Season Ticket Payment Plan, please either pay in full online by May 1, 2015 or you can mail payment to our office (see below). If mailing payment, please make sure to include your account number on your check. Please note that credit card payments will only be accepted through your Giants account online. If you have any questions or need assistance making a payment, please call our office at 201-935-8222.

We look forward to seeing you at MetLife Stadium this season. Our 2015 regular season home schedule features our NFC East rivals Dallas, Philadelphia and Washington, as well as Atlanta, Carolina, New England, the Jets and San Francisco. The dates and times of our preseason and regular season games will be announced mid- to late-April. Again, thank you for being a part of the Giants family.

Sincerely,

John Mara

The Giants Professor says: In truth, today’s highly competitive secondary ticket market makes it difficult to break-even for most PSL-holders. Teams like the Giants need to understand that, although PSL-holders are required to buy tickets to every game, every season; not every PSL-holder can afford to actually attend every game every season. For these fans, there needs to be a profit buffer between the face value and market price of their tickets. Removing the profit buffer in the name of maximizing each and every penny of team revenue may be tempting for NFL teams in the short run, but it would foster deep ill-will from ticketholders and be disastrous in the long term.

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