Good for them. Mo' money, less problems when it comes to athletic departments.
Dynamic Pricing to Result in ~$5 Million Revenue
Everything this Hunter Lochmann guy puts out there reads like a cut-and-paste out of a business textbook. You could replace "Michigan football" with "Acme Widgets" and the sentences would still work.
The Brand, The Brand, The Brand...
One of these days you're really going to have a breakdown, and I just hope I'm around to watch.
If you visit the QCue site linked in the Daily article, you can get to a Forbes article - HERE - on the implementation of dynamic pricing in sports generally. I am sure this is one of the bullet points that the athletic department noticed:
"Has dynamic pricing worked? With $2 million raised in funding since their inception according to Mr. Kahn, Qcue has seen clients increase revenue by an average of roughly 30% in high demand situations and approximately 5-10% in low demand situations."
Now, the article mainly discusses some of the successes with MLB clubs - the A's and the Giants both use dynamic pricing, as do the Dodgers, and they are claiming success with it including an increase in attendance. The folks they interviewed seemed to like the idea of being able to make pricing decisions and create different pricing categories for events. It also briefly talks about the implementation of this model at USF as well. It might be a product of specific applications, but the baseball execs that they interviewed note that their season ticket holders tend to see savings as a result too.
Granted, it's a very limited sampling that they talk about in the article, so it will be interesting to see exactly what the prices will be in the new model. They didn't talk about any other high-level Division I program in the article, so there's no real point of reference for us in that sense.
noticing the irony here??? Michigan just expanded the stadium to the tune of roughly $250 million...Making an extra $5 million per year may be good business right now, but to a demographic that can watch the product at home in HD, it may not be wise in the long-run...price gouging will catch-up, and hopefully the AD and company will not have destroyed the game experience for everyone who no longer finds it worth the price of admission
Eh, maybe with smaller-budget programs, but M will always have tons of fans in attendance. I'm not worried about that.
Also, your comment about "watch the product at home in HD," there is literally nothing on the planet (nor will there ever be) more high definition than seeing it in person.
...and my point is more to the fact that why pay $150 for a ticket in row 75 in the corner (not that those are bad seats, basically every seat is good), gas money, food, drinks, etc. when you can use that money and get a great party-like atmosphere with your friends watching it at home?....The school has an $8 BILLION endowment, they are not hurting for money, therefor making the AD and company look greedy and ultimately bad for future business for the like-minded frugal fans like myself and countless others
The school may have an $8 billion endowment, but that money can't be touched by the athletic department. The athletic department must make its own money and set its own budget.
it only reflects as ledger balances at the end of the day becuse they are the same entity subsidized by the tax payers...so technically you are right, but if the athletic department were to go under they would simply be absorbed by the school since the school owns them and any of their money
I would wholeheartedly agree that one factor in the grotesque increase in tuition and fees for colleges and universities across the country is the bloat in administrative staffing. However, that doesn't explain the entire situation at the University of Michigan.
• In 1960, 78% of UM's general fund came from Michigan taxpayers.
• In 2012, 17% of UM's general fund came from Michigan taxpayers.
• UM's taxpayer funding has declined by 25% over the past decade.
• State support for the Ann Arbor campus is $91 million less than it was 10 years ago.
"Science will eventually argue against you..."? I'm going to go against my nature and ask for clarification before I say anything snarky.
will eventually be produced in your home theater set-up and it will mimic actually being at the game...im guessing 25-30 years down the road until that technology is available for every household
HD > Row 40 Endzone tickets that will cost you your first born in 10 years.
Michigan is in an enviable position to not have to raise prices in order to cover costs and we've already seen the effects the TV money is having with softball, baseball, track etc. getting facility upgrades which one would think would last 10 years or so before needing additional upgrades.
At some point they are going to run out of shiny things to add to the budget, and the fan will still be stuck with a $600 (or more) PSD, and dropping $100/ticket to see M beat up Baby Seal U. Ever wonder why they stopped announcing that it was a "sell out crowd" and turned it into being "part of the largest crowd to watch football this saturday"? I want Michigan to have some semblence of the place of my youth rather than just another money grab from the moment you park @ Pioneer.
Little if anything is being done to control costs. They are just figuring out more revenue streams.
More money coaxed out of state and federal governments.
More money freed up by federally-backed and lowered-interest student loan rates.
More money from commercial sponsors, licensing, corporate deals.
More money from donors.
Glenn Harlan Reynolds wrote a brilliant column for the Wall Street Journal Op-Ed pages just a few days ago. Compare his argument (link is not paywalled; at least not for me on my laptop but it may be because I am a subscriber) about ever-increasing costs and pricing of college tuition, to college football:
Why do students have so much debt? According to a recent study by Mark Perry, a professor of economics and finance at the University of Michigan at Flint, between 1978 and 2011 college tuition in the U.S. increased at an annual rate of 7.45%, vastly exceeding the rate of inflation and the almost-stagnant rate of growth in family incomes.
The difference has been made up by more and more debt. With costs above $60,000 a year for many private schools, and out-of-state costs at many state schools exceeding $40,000, some young people are graduating with student loan debts of $100,000 or more, sometimes much more. A study released last month by Fidelity Investments found that 70% of the class of 2013 is graduating with college-related debt—averaging $35,200.
According to a recent study by the New York Federal Reserve, "the share of twenty-five-year-olds with student debt has increased from just 25 percent in 2003 to 43 percent in 2012" and "student loan delinquencies have also been growing." Almost 12% of student loans are more than 90 days overdue. Student-loan debt, the New York Fed study found, also delays marriage, home purchases and other "adult" decisions that once followed graduation from college.
Now here's where the real immorality kicks in. The skyrocketing cost of a college education is a classic unintended consequence of government intervention. Colleges have responded to the availability of easy federal money by doing what subsidized industries generally do: Raising prices to capture the subsidy. Sold as a tool to help students cope with rising college costs, student loans have instead been a major contributor to the problem.
In truth, America's student loan problem won't be solved by low interest rates—for many students, the debt would be crippling even if the interest rate were zero.
If we want to solve the very real problem of excessive student-loan debt, college costs need to be brought under control. A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty.
Remember: it is the current federal scheme under Title IX, that any gold-plated college football program must also support gold-plated programs for women's gymnastics, softball, and field hockey. Everything, it seems, is being done, more or less deliberately, to raise costs and then chase those costs with more revenue.
Section 1, you are a wise person...I have been telling my friends (mind you, I am rather young myself) that the soaring costs of college need to be cut in order to maintain the ability to go to college...the soaring prices will eventually lead to another bubble that will burst (much like the housing market)....sorry for being political, but the facts are the facts
what the hell do football ticket prices have to do with the cost of going to college?
Bitch all you want, but the seats always seem to sell. When they stop selling, prices will come down or level off. Supply and demand sir...behold the "invisible hand".
if and when the college bubble burst the colleges will go under as well...no loan money = no students attending school which also equals no one going to games when the school administrators have to scarmble like the wall street bankers did to save their ass
The market will decide.
And I am telegraphing to the Athletic Department just how close I am, to saying buh-bye in that marketplace. Better to buy two tickets at scalped rates to 2 or 3 games, than pay $2400 in PSD's plus $1900 in ticket prices and parking (but there isn't much parking to speak of).
It would be a different experience, of course, to go the secondary market route. But it is a dollars-and-cents, practicality-based decision, Mr. Brandon. You understand the dollars and the sense.
which idiot on here marked my comment as "trolling" when i was simply replying to ND Sux question????? talk about a crybaby spartan-like move
You honestly don't know why talking about wall street bankers in any context is not needed here?
with a historical fact, it had nothing to do with politics...if that makes some people on here butt-hurt, that says more about their lack of recent historical knowledge and character than it does about my logical response
pays the tuition for every single scholarship student athlete. It makes sense that if tuition cost rises, so should tickets.
Since I live in the Cleveland area, I prefer watching games at home. Making the trip to Ann Arbor for a football game is expensive. I have the 80" television in the basement with surround sound, so I'm fine with watching games at home, especially since I can change the channel during commercials to see other games. I still go to games every now and then, but not like I used to.
I wonder what the pricing model will be in 15-20 years as new Michigan grads are increasingly leaving the state for better career opportunities. i don't think the demand will remain as high with increased pricing and a watered down BIG schedule and perhaps no Notre Dame games.
I don't understand your question about irony -- presumably this is the opposite of irony? The school invested a lot of money in the stadium and are continuing to look for ways to maximize revenue. That doesn't sound like irony.
Also, the whole point of dynamic pricing is that it reflects the market value of the tickets. So under your scenario of nobody wanting to go to the game, then presumably the dynamic pricing wouldn't impact the actual ticket price. People are already paying these prices for the tickets to premium games already -- most of the profits are just ending up in the pockets of scalpers. Now the University gets to keep a greater share of those prices, which seems fair to me.
...the irony comes into play when people stop paying massive amounts of money to attend the premium (or body-bag) games to help pay for the stadium expansion!...the money will ultimately flow into the scalpers pocket, DB's plan is nice in theory, but not in reality...and obviously there will still be a lot of fans that will attend games no matter what, but like I said over TIME this likely will not be the case...People (in general, especially UM fans) are starting to spend their money more wisely...the alums and fans like myself will still trek to AA to tailgate with their friends and family, but eventually the tipping point will be $200 base price to watch a game that is broadcast for free...its as simple as Econ 101
I can't tell you your opinion is wrong -- after all, it's an opinion -- but I'm not convinced. Again, people are already paying these prices to scalpers, now the University will just capture more of that instead of it going to scalpers. I would think many people would even be happier having that money going to the school rather than a scalper (I would, if I were in that position -- not just because of where the money is going but because it gives you greater confidence in the tickets you're purchasing.)
You are wrong about the tipping point being $200 an that being Econ 101. Season ticket holders are generally already paying over $200/game when you include the PSD, and that doesn't seem to have been an issue so far (and frankly, I'm not annoyed by ticket prices very much, but the PSD thing was way more annoying than dynamic pricing.)
and facts to back them up...i am simply projecting based on simple factors such as the product life cycle and the plateau theory: eventually people stop buying the product at such high costs and the demand plateaus...this has happened with many sports teams and will continue to do so...this is easier to project due to the incredible advancements in science, eventually the game-like experience will be available in our living rooms, its just a matter of time....although i could be worng altogether, but history is giving me many reasons to think im correct
There are some major differences between college and pro sports that makes the pro sports experience less likely to apply to Michigan Football, though.
On-field success makes it much easier to move tickets, and to move them at higher prices. There's been research showing that sport ticket price elasticity is driven in large part by current and historical winning percentage. This benefit for a school like Michigan is exaggerated in college sports where there are few mechanisms to create parity like exist in pro sports (draft orders based on inverted standings; salary caps; luxury taxes; etc.). This is a reason why the winningest teams in pro sports have lower all-time win % than in college sports (see below). And these days, money is creating even more significant separation between the 'leaders' in college sports and the bottom.
All-Time Win %
Michigan Football: 73.4%
Los Angeles Lakers: 61.9%
Montreal Canadiens: 58.1%
Chicago Bears: 57.4%
New York Yankees: 56.8%
Also, there's been research to show that college fans (especially in football) have a much stronger affiliation to their team than do fans of professional sports. Finally, price elasticity of season tickets is also impacted by the total outlay. So paying for a handful of games a year will generate lower price elasticity than paying for a longer schedule where absolute dollar values end up being much larger (see: NBA, NHL, sort of MLB, but they offset this by having lower per event ticket prices).
the university will adjust the policies if your hypothetical "tipping point" is reached?
Econ 101 indeed.
is worth a pound of cure...i am simply arguing that the AD should prevent this from happening altogether...make a simple policy to end scalpers like having to present your ID with the tickets you purchased ahead of time in order to enter the game...sure, scalpers will try to find a way to weasel around this, but it will drastically stomp out a lot of them immediately....surely there are smart enough people at UM running the show to think of smarter ways to ensure the game experience without price gouging its loyal fans....not everyone has the money to attend these games but would love to do so, granted you and me and most on the board don't have this problem, but it is one that needs to be addressed and corrected to ensure sustainability
"Scalpers" are allowed to resell tickets via Stubhub. Michigan gets a portion of the secondary market fees generated by Stubhub for Michigan events.
Michigan is not trying to restricted secondary market sales, but rather, they are trying to adjust primary market ticket prices to what the market would bear.
What if you have 8 tickets in your name? How could you present your ID for each ticket?
The problem is that they were selling these tickets for $95 and then they were going for $200-300 in the after-market. All they are doing is reaping the benefits from what people are willing to pay instead of the scalpers. What people are willing to pay to go to the big ticket games isn't likely to decrease in the long run.
I've watched dozens (maybe hundreds?) of UM football games on HDTV.
I've watched hundreds of UM football games in person...mostly in the Big House but also at other venues.
Nothing compares to seeing the team in person. The energy. The excitement. The fans. The emotions. Etc.
in disagreement with your statement at all, the atmosphere of gameday is a blast....but, people have priorities: bills, kids, college tuition, toys, cars, etc....there is a tipping point, and it appears our current AD is willing to go over that point just to make a few extra drips in the bucket
I would say that they are willing to go over what you believe the tipping point to be. We don't know what the tipping point is, but I don't think this is it. It's supply and demand. There is extraordinary demand for certain games and limited supply. Therefore, those games are going to have extraordinary costs.
The 2009 OSU Scarlet-Out was the direct result of the Athletic Department's banking what had been season tickets, in the run-up to the aisle widening and seat renumbering. Tickets which were then held by the AD for the few years leading up to 2010 went to brokers, who then sold them to, well, anybody.
I really and truly don't mind the idea of the Michigan Athletic Department cutting out ticket broker profits. Better that the AD makes money instead of brokers. No problem with that.
But you have it exactly right, Mr. MShot. There are unintended consequences. Brandon might be able to sell out the entire Stadium to pipe-hittin' M men if his PSD's weren't so damnable. That is the one clear way to eliminate opposition-fan presence. Sell it all out to season ticket holders.
*Associate Athletic Director for Dynamic Pricing
Great idea. I will follow this new initiative closely. I will be very much interested in where the prices go. Because I am a current season ticket holder, paying $600 per ticket as a PSD before paying for the price of my tickets, I will also be at the Stadium for every home game, and I will note carefully the going rate for the "dynamic pricing" around the Stadium environs.
I fear that I will discover that street-price tickets for low-demand games will be cheaper than anything you offer, and the street-rpice tickets for high-demand games will never get so high as to make it seem worthwhile to continue paying high PSD's. Especially not for games on Labor Day weekend, which I don't like, and night games, which are undesirable to me.
Your Dynamic Pricing model might just be the thing to convince me to quit as a season ticket holder, and go to your newly-created free market. Especially since the tax advantages of PSD's are melting away.
Have a nice day!
I completely forgot to mention the faithful season ticket holders!
Dear Section 1
There are always more people want season tickets. While we care about our season ticket holders, we care about these as an abstract group and not as individuals.
We hope to see you at all the games this season, not just the games you can get cheap tickets for (that frankly, we think are boring games anyway).
Thanks for the note, AADFDP
If I really did get such a note from the Athletic Department, I'd be curious to know which games they'd confess to being "boring."
But assuredly, I do have tickets. For all the home games. And they were not cheap. That's what I get, I suppose, for being a member of an "abstract group."
thank you Billy Walsh...this is making want to change my avatar to stick it to the man
Does this mean we can build an underground practice facility for field hockey now?
The games brokers/fans lose money by practically giving away tickets to the crappy games. Those games are still worth $75 even though they sell way below at after market?
Funny how they conveniently left off the opposite end of the spectrum.
Leaving out the opposite end of the spectrum helps protect season ticket holders so the market isn't being flooded by tickets nobody wants, pushing ticket prices down even further. Right now I can get near face value for the majority of tickets when I need to unload mine, though there's usually a game each year where I can only get about half of face value.
Of course, knowing this, the school packages most of these tickets as required purchases as part of ticket packages -- so I'd be surprised if the school is selling a ton of single-game tickets for these particular games in the first place.
Not looking for the run of the mill guy selling tickets to a single game...more the budding capitalist who gobbles up dozens of tickets...how does his/her model work? Buy 40-100 tickets at prices as low as possible ($20 each?) and try to sell the first 50% of that weeks stack to break even, then sell the rest for the profit? In all my years, I've never sold a single or pair for anything close to face, let alone what I've paid for them. (Of course, family demand is far higher for UTL or OSU or even MSU games than the rest of the schedule...Big TEHHHNNNN be damned.) What I see is dynamic pricing would pull the buyer willing to pay the higher amount into the AD orbit, probably causing problems for the scalper to recoup his/her investment for that particular week. OTOH, IU, Rutgers and Maryland tickets will be in plentiful supply, and dynamic pricing won't apply...everyone who wants to go will get a ticket for the same low entry fee...$20. Comments and insights appreciated.
OTOH, IU, Rutgers and Maryland tickets will be in plentiful supply, and dynamic pricing won't apply...everyone who wants to go will get a ticket for the same low entry fee...$20. Comments and insights appreciated.
If the Michigan Athletic Department is crowing about how many tickets (20% ?!?) will be placed into the Dynamic Pricing model, it will be veryk interesting to see exactly how many IU, Rutgers and Maryland tickets (to say nothing of Akron, Central, Eastern or Baby Seal U) they can sell for $65 or $70 or $75 dollars each. Because you sure can't sell those kinds of games for those kinds of prices at the corner of Greene and Hoover on Saturday mornings. So what's the AD's secret on that one? If you are letting the marketplace rule, doesn't the market also set the floor, in addition to the ceiling?
I might like to FOIA the info as to how those tickets are dealt with.
Honestly I think we are already at the tipping point for the dud games. Without doing the ticket bundles anymore I really don't see those games selling out at that price. You'd have to be an idiot to pay that much for just 1 of those games. That was the whole idea with the bundles. We'll see...
The same way they're doing it this year. Package those tickets with the Ohio State (or Nebraska) 3-pack. One mediocre Big Ten opponent (Minnesota or Indiana), one baby seal (CMU or Akron), and your choice of Ohio State or Nebraska. The school gets face value for each of the games, dynamic pricing does not apply to the packages, which you're willing to pay because if you wanted to get those OSU or Nebraska* tickets individually you'd probably still be paying more than the $245 it costs you to get all 3 of those games.
* Probably a stretch to say Nebraska tickets will be $245; but if you assume you could sell your Minnesota/IU ticket for around face and CMU for half price, the math still works.
I picked up three tickets for $70. IU 3 for $60 and EMU 4 for $34. I missed the ND game that year, but didn't pay face for any tickets including Nebraska and OSU. It helped that OSU was Thanksgiving weekend.
I believe you, but that doesn't mean that's the average ticket price, either. You're obviously good at getting the lowest price possible, but not everyone buys and sells at that price point. As a season ticket holder, I occasionally need to sell my tickets and have not yet gotten under face value for my tickets against B10 opponents, and in only a couple instances have I gotten dramatically less than face against baby seals (I usually get $50-$60 each for these -- the exception being $30/each for EMU in 2009).
And I know my results aren't atypical because I look at the actual prices where the bulk of transactions are taking place and that's generally where I price my tickets.
The other way is apparently the "Coke Zero Football Family Pack." Where, if you are willing to pay face value for 4 tickets to Central Michigan or Akron, they throw in t-shirts, food, drink, and game programs for free. Personally, I don't think that's a great deal since it brings the effective cost of the ticket to $50, which is probably still too much for CMU or Akron, but more power to the school if they can sell it. If you were otherwise going to buy all that crap, it may not be dramatically more expensive than what you'd pay buying the tickets on the corner.
So, now that they admit that they are maximizing income, and that the main purpose of football is to create revenue, how come it's illegal to buy a player a fucking pizza?
College football turns me off more and more. The players at FBS schools are getting pimped. I'm happy to watch games on TV. Admins better not kill the golden goose.
They'll charge what they charge and you can pay or find a more suitable alternative. For me, the costs for live attendance are already way above what I am willing to pay. I have a flat sceen at home, with better seats, food, drink, etc. And, to be honest, the more I hear about the concussion stuff...makes me want to spend more time on my other hobbies anyway.