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Dynamic Pricing Improves NHL Teams’ Bottom Lines | The Hockey Writers

Given the NHL’s dependence on ticket sales, individual teams have looked for new sources of ticket revenue to improve their bottom lines. Their answer in recent years has been a concept called dynamic pricing or what some businesses call price optimization. Sources suggest that American Airlines was the first major company to adopt the practice in the 1980s. They used the concept to manage their ticket sales revenue with the seat pricing mostly based on seat supply and consumer demand.

Sound familiar? We all know that airline seats attract different prices, with airfares highly dependent upon the number of seats available for a scheduled flight and how far in the future the flight departs. The same factors affect ticket prices at NHL games with the popularity of the visiting team now being a critical factor in the ticket pricing strategy.

Primary and Secondary Ticket Markets
Tickets to NHL games are available in two markets, a primary market where the team sells season tickets to fans in advance of the regular season or advance sales to specific games, and a secondary market where individuals who purchased tickets in advance from the team look to sell to other individuals.

These “street sellers” were better known as scalpers and dominated the secondary market outside the arenas in the past. Today ticket brokers like StubHub and Ticketmaster dominate the secondary market and help to provide a new source of revenues for NHL teams and a secure platform for fans to purchase tickets.

NHL Dynamic Pricing
Dynamic pricing emerged as a strategy by professional sports teams to capture the market dominated by the scalpers and increase ticket revenues by capturing their profits. NHL teams are following the policy of withholding tickets in advance of specific games and allowing more fans to purchase seats before game time online or at the gate.

According to Nufer and Fisher, rather than setting prices for specific sections and seats at the beginning of the season, a dynamic pricing system “…constantly adjust(s) (prices) to variables such as the winning record of the home team, the attractiveness of the opponent, days left until game day, and even the weather forecast.” The system captures the true market-based value of a ticket because it takes into account the variables that affect the demand by fans who choose to attend a particular game.

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Dynamic Pricing Improves NHL Teams’ Bottom Lines.