Inspired by Brian's idea to replace lost revenue from home games against a 1AA school with a higher priced marquee matchup every other season (e.g. Alabama , Oklahoma, Texas) it occurred to me that cupcake-scheduling can be blamed on fixed-cost ticket pricing. Under this accounting, a ticket for a 1AA opponent earns the same revenue as all others. Every home game earns the same revenue, so revenue is maximized by maximizing home games. But in reality, the true market rate for a bad opponent is less than the face value of a ticket, while for a good opponent, its much more. (We see this in black market resale rates, especially on campus. e.g. OSU: $100+, MAC teams: $25, 1AA: even less). Season ticket holders subsidizes the unattractive matchups because they're getting a great deal on the more attractive ones. But if a pseudo-market-driven variable pricing scheme was in place you’d sell tickets at prices depending on the opponent and have a more realistic assessment of where revenue comes from - games that interest fans, not just the Michigan Stadium experience.
A marquee matchup every other year, with tickets selling for $70-150 (or more), would make up the lost revenue of a $15-35 1AA opponent very quickly. The key is to stop comparing potential revenue from one marquee matchup to the face value of two home games at the season-ticket-average-price. Instead compare a bad matchup to the closer-to-true market value of marquee matchups: pretty likely less than half of a marquee matchup.
MLB has introduced variable pricing for “premier games” – interleague play and rivalries. Its just a few dollars but why can’t Michigan do the same on a bigger scale? The total cost for season tickets in the short run could be maintained, just allocate the total to games with a distribution that is closer to the market rate. If you did this, I can’t believe you wouldn’t come to a very different revenue-maximizing scenario. Better accounting leads to better decisions.
This is a revenue opportunity for NCAA football as a whole and, in my eyes, a systemic problem (at least for the power-house teams.) Variable pricing for non-conference games (if not the whole season) would create incentive for more attractive matchups and people would be willing to pay a lot of money to see more of them.
Under Canham , Michigan Athletics was a marketing leader. They can do it again and it really wouldn't be as dramatic as it sounds if phased in and marketed correctly (via keeping the total cost of a season ticket unchanged for a year, or implementation for just non-conference games while upping the cost of big ten tickets). More revenue without raising prices on the core schedule is a win-win.
Secondary benefits – another national TV game most likely, and another thing to pitch to FL, CA, TX recruits. Michigan is again viewed as a leader rather than playing catch up to OSU and other powerhouses. More TV revenue and marketing opportunity (though I know these are less tangible and benefit is split to other Big10 schools).
One flaw in this analysis: Impacts to local businesses and residents for parking/restaurants/etc - lose one home game every other year. That is not insignificant, but I think the revenue gains for the school would outweigh the community impacts especially since the U calls the shots. A second potential flaw is that ticket revenues would vary from season to season with the “off” away game year having a lower season ticket price than the “on” years. Perhaps there are some accounting troubles that irregular revenue streams create, but again, nothing that the $$$ shouldn’t be able to smooth over. Also you could just agree to split gate 50/50 (or close to it) with your opponent to create a more consistent revenue stream… Once every major program catches on to this everyone continues to benefit. We get better games, more attention, and more money generated by NCAA football in total. (Yes, I realize the same rationale applies for a bowl playoff and its still not happening, but there are entrenched interests with the bowls actively preventing change. No such hurdle exists for pricing, to my knowledge.
Is there a good reason for the flat pricing scheme that exists? Is it just because its easier for the University to do it this way? What am I missing?