Revenue management of sports stadiums are rather challenging due to several obvious reasons. Events/games are only held once a week, once a month, or even just couple times per year depending on the location and the functionality of the stadiums, which is why it is very important to implement sophisticated pricing strategies in order to maximize revenue on the days when events are held. Also, major sports teams’ stadiums are rarely rented out for purposes other than its own sports games (i.e. basketball, baseball, soccer…etc). Whereas other stadiums are used for various events such as music concerts and award ceremonies from time to time.
- Sports stadiums general info: http://en.wikipedia.org/wiki/Sports_stadium
- Stadium guides: http://www.stadiumguide.com/
There are significant differences between RM of sports stadiums compared to the more traditional sectors such as the airline industry. Whether you sit in the 10th row or the 20th row in Economy have minimal difference (there are, of course, differences between Economy and Business class). However, whether or not you sit in the far back row with limited view to the sports ground creates a world of difference to your overall experience when watching a sports game. Flying on a plane may be a part of your necessity to travel from A to B, but watching a sports game in a stadium is about the “experience,” and therefore the perceived value depending on the location of the seats vary immensely.
Implicit Use of Space
How are the space divided in sports stadiums?
- By location of seats
- Regular seats vs. Enclosed suites with multiple seats
- By supporting team
What are the common sources of additional revenue?
- Souvenir shops selling team-specific sports gears
- Most of the premier league soccer teams’ stadiums have museums and tours: visitors even come to the museum on non-game days as well. High numbers of tourists visit the museums in Western European countries
- Dining places (concessions)
- By renting the space for music concerts-picture (per event)
- By holding other sports events (i.e. Olympics)
- Media access charges
How can companies split up the space differently?
- “Quiet” vs. “Loud” seats: I noticed that some sports supporters prefer to sit throughout the game whereas some people like to stand and cheer actively for their teams. Setting aside few rows in each section to those more reserved supports may be effective.
- Create more seat classes: frequent visitors (fans) are likely to be less sensitive to the ticket price, so companies can create more club seats (even create another class between the club seats) and add more varied classes depending on the location and the view from the seats.
Implicit Use of Time
How can companies sell the space explicitly?
- Selling tickets with time limits: This strategy can be very attractive for tourists visiting well-known stadiums or important games such as the World Cup. It would work quite well especially for soccer games. For example, customers will buy tickets for the first-half or and second-half o f the game which will be 45 minutes each. If the full-time ticket is $80, companies can charge $50 for customers purchasing 45-minute tickets.
- Companies can sell a specific seat at a certain stadium by year, month, or season (leasing private seats)
What are the physical rate fences in sports stadiums?
- Location of the seat: proximity or the angle of the view to the sports ground
- Rates for suites differ based on the physical size of the space (maximum capacity): http://www.executiveclub.manutd.com/en.aspx (You’ll notice that almost all executive suites are sold out for this season despite the high rates)
What some of the non-physical rate fences?
- Purchases of tickets via third party sellers: http://www.worldticketshop.com/tickets/chelsea_tickets
- On-line vs. Ticket office purchases
- Club Membership status
- Season ticket holders
- Importance of events: For example, the average seat price for premier league games are more expensive compared to championship league games
- Performance of the teams
- Stadium’s location (accessibility) and the age of the facilities
How can companies generate additional revenue by using creative rate fences?
- Implement bundle selling: price per seat would be more expensive when purchasing one ticket compared to purchasing two or more tickets
- Early reservations should be entitled to discounts
- I believe that companies can start utilizing extensive Customer Relations Management (CRM) in the sports industry by using the personal data gained via increase in on-line ticket purchases and use direct marketing. Companies should implement other rate fences possibly based on the different personalities and characteristics of the customers.
- Companies can upsell those customers reserving suites by offering extensive catering options & extended time before and after the game for extra fee (most stadiums offer the suites per event currently)
- When the time gets closer to the actual day of the game, odd 1 seats that are left in between other reservations can be sold at more friendly rate