OM in the News: Yield Management Turns to Sports

We discuss the subject of yield (revenue) management in detail in Chapter 13, Aggregate Planning. Examples are provided from the airlines(American), hotels (Marriott), car rental companies (Hertz), and even Disney’s theme parks. But the latest issue of Operations Management/Management Science (OR/MS) Today (Oct., 2010) turns to an interesting and relatively new application of revenue management that may interest your students, namely, major league baseball.

Ticket prices to sporting events have always been priced to depend on the seat’s location. But the San Francisco Giants have discovered that  dynamic pricing of game tickets has increased 2010 revenues 6%. Ticket costs now depend on the opposing teams,  pitching match-ups, day of the week,  and even the weather forecast.

For example, a ticket in the Field Club, behind home plate,  for the Oct. 1st game between the San Diego Padres and the host Giants cost $68 at the start of the season. It went to $92 on Aug. 1st,$121 a week later, $145 on Sept. 4th, and $175  just before the game!

Discussion questions:

1. Are other sports and teams replicating this concept of dynamic pricing ?

2. Will there be fan pushback to the idea?

3. How did the 2010 pennant race impact on the Giant’s decision to use yield management?