Saturday, January 16, 2010

Annals of the Stupid

When I awoke yesterday morning, I was in a great mood. It was Extravamanza day, the sixth annual version of my festival of all things man: beer, football, and food. Friends and family (all men, of course) travel far and wide to attend, and I look forward to this day for the entire year. Unfortunately, the Orioles did their best to ruin it for me.

See, when I opened my Google Reader, I was greeted with the following headline: O's to charge extra for tickets purchased on game day. As an MBA student, I am required to be a fan of price discrimination, the method by which companies charge their customers different prices according to their willingness to pay. This is why seats behind home plate cost more, and why I fully support charging Red Sox and Yankees fans an arm and a leg to attend a game at Camden Yards. However, I do not support charging game day walk-up purchases a higher price.

People choose to wait until the last minute for many reasons: weather, pitching match-ups, work schedules, etc. Since the Orioles rarely sell-out, they should be encouraging, not discouraging, walk-up purchases. Several times a year I purchase tickets at the walk-up window. Now, I'm less likely to say "Let's go to the game tonight" if I know that tickets for my wife and I will be somewhere between $2 and $10 more expensive.

You could argue that baseball games are like airline tickets: the inventory expires and, if it goes unsold, generates no marginal revenue. Airlines typically charge higher prices at the last minute, capturing the willingness to pay of customers who have to travel today. Baseball doesn't benefit from the same immediacy, however. In fact, it's more like a hotel: unsold rooms generate no revenue, but hotel customers are usually unwilling to pay a higher price at the last minute. Why? Options. Fliers might be able to drive or take a train, but those aren't legitimate options in many situations. Hotel guests can typically walk across the street or around the corner and find another room. Similarly, baseball fans can stay home and watch the game, head to their local watering hole with friends, or do something else entirely, like watch a movie. I fully support variable pricing, raising or lowering prices based on demand, but a blanket price increase for walk-ups is not variable pricing; it's a ticket price increase. I don't know about how other Orioles fans feel, but I don't perceive that the franchise is in any position to raise prices.

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