Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets

Forthcoming in Management Science

47 Pages Posted: 12 Sep 2019 Last revised: 1 Apr 2022

See all articles by Hayri Alper Arslan

Hayri Alper Arslan

University of Texas at San Antonio - College of Business - Department of Economics

Necati Tereyagoglu

Darla Moore School of Business, University of South Carolina

Ovunc Yilmaz

Leeds School of Business, University of Colorado Boulder

Date Written: August 9, 2021

Abstract

Although variable pricing enables sports teams to respond to changing demand across games, reports point to somewhat limited implementation. In this paper, we study the implications of a switch to variable pricing on the primary and resale ticket markets using quasi-experimental data from the National Football League. Applying a difference-in-differences technique with propensity score weighting, we first show that the adoption of variable pricing increases primary market ticket sales by 1.59% per game. We then explore the mechanism behind this positive impact. We find that lower prices for the less attractive games are well received by customers, and customers do not have an unfavorable response to higher prices for the more attractive games. Our analysis of the customers' activities in the resale market shows that the minimum resale market prices increase for the more attractive games following the switch to variable pricing. This analysis provides evidence for the increase in the option value created by the resale market and explains the positive response to higher prices for the more attractive games. Finally, we investigate when variable pricing is likely to be the most effective. We find that variable pricing has greater success in team hometowns with lower income levels and higher income diversity, and creating more game tiers in variable pricing leads to higher sales.

Keywords: ticket pricing, resale markets, sports events, difference-in-differences, propensity score

Suggested Citation

Arslan, Hayri Alper and Tereyagoglu, Necati and Yilmaz, Ovunc, Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets (August 9, 2021). Forthcoming in Management Science, Available at SSRN: https://ssrn.com/abstract=3447901 or http://dx.doi.org/10.2139/ssrn.3447901

Hayri Alper Arslan

University of Texas at San Antonio - College of Business - Department of Economics ( email )

6900 North Loop 1604 West
San Antonio, TX 78249
United States

Necati Tereyagoglu

Darla Moore School of Business, University of South Carolina ( email )

United States

Ovunc Yilmaz (Contact Author)

Leeds School of Business, University of Colorado Boulder ( email )

Boulder, CO 80309-0419
United States

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