Monday, October 11, 2010

Ricketts Letter: Ticket Pricing - Good Luck Figuring It Out!

If you remember from last week, Tom Ricketts sent a very lengthy letter and I've been breaking it down as best I can so it can be viewed safely by normal human beings without going insane.  By now we've seen that Tom has given a group hug to the fans, talked up the rookies to Corey Patterson levels, glossed over the disaster of the 2010 season, and made some leaps from small sample sizes to build up the hope for 2011.  At this point, he is counting on our eyes glazing over and nobody reading this far.  As one of my heroes,  Dave Barry, has pointed out, it is an age-old tactic dating back to Thomas Jefferson when he wrote the Declaration of Independence:

"When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth the separate and equal station to which the laws of nature and of nature's god entitle them, a decent respect to the opinions of mankind require that they should get some sleep.  Because I have been up for two nights now, declaring independence, and I may be a lanky Virginian but I am not a machine, for heaven's sake, and it just doesn't make sense to sit here scrawling away these complex-compound sentences when I just know nobody's going to read them, because nobody ever does read all the way through these legal documents. Take leases. You take the average tenants, and you could put a lease in front of them with a clause halfway through stating that they have to eat toasted moose doots for breakfast, and I'll guarantee you they never read it."

His betting no one is reading at this point so that it will be an optimal time to slip in some information that won't necessarily be popular along with some confusing plans that are being spun as good news for season ticket holders. Tom is crafty.  It is time to start talking about:

2011 Ticket Pricing

The other question I get regularly concerns our ticket pricing for 2011 and beyond. Overall, our average ticket price will be flat in 2011 compared to 2010. Before going into greater detail on that topic, let me provide some background.

Translation: The amount of revenue we generate from ticket sales on an average per ticket basis will remain the same, but it will change for you. I won't say how yet because I'm going to try to confuse you with more words here in a second.  (Hint: it probably isn't going to go down for you, but I'll try to make you think that it is.)

My family is committed to providing ticket pricing that allows families to enjoy Cubs baseball. In so many ways, our children represent the next generation in the Cubs family. We want to invest in providing families with opportunities to experience Wrigley Field, including such things as running the bases, which will be continued in 2011.

This is nice.  Families can come and watch the Cubs and enjoy the same experiences as the Ricketts FAMILY that now owns the team.  They understand the importance of families and they understand that giving children the opportunity to come to games at an early age is important so that they can get addicted and continue buying tickets for the rest of their lives.

To this end, we will continue the policy of keeping many of our tickets in the sub $10 range-in fact, we will offer a substantial increase in sub-$10 tickets next year compared to 2010.

As long as the families are content sitting in the 500 sections of the upper deck in the outfield (and like to see the Pirates a lot), they can get into the park for less than $10 per person.  I'm sure it is only a coincidence that these sections probably have the fewest season ticket holders since season ticket holders generally want a halfway decent seat if they are going to sit and watch a team lose 81 times per year.

In addition, we are increasing the number of bronze games (our lowest ticket pricing tier) from 6 games in 2010 to 15 games in the bleachers and 11 games in the grandstand in 2011. As a result, there will be 77% more tickets priced at $20 or less in 2011 than there were in 2010. Stated differently, a total of more than 550,000 tickets will be available for $20 or less next year.

This is great news to the single-game ticket buyers because there are now cheaper options available to the games that the Cubs had trouble selling at the end of the year last year (and therefore would probably be a tough sell in 2011).  It could also end up lowering a season ticket holder's cost overall as long as they don't jack up prices to the games they know they are going to sell out anyway.  Let's cross our fingers.

Again, our average ticket price next year will be essentially flat compared to 2010 (actually it is fractionally down vs. 2010). This does not mean all ticket prices will be the same as last year however, as pricing was adjusted based on location and our schedule. A little background might be helpful.

See what I mean about a bunch of words? He already said this, but he really wants to hammer home the message that the average ticket price won't be going up so he'll repeat it again here and then go into some more background (translation: more words to distract us).

To set our pricing in 2011, we examined approximately 5 million transactions from our primary and secondary ticket markets from 2005 through 2010. Our goal was to keep our average ticket price flat overall but improve the alignment of pricing for games and seating sections with actual demand. The result is a market-based ticket model that reflects our fans' buying patterns.

They are segmenting their fanbase based on past ticket buying patterns and splitting the stadium and games into appropriate categories to maximize their profit from every segment. There is nothing sinister about this and they are actually being very smart in not lumping all Cubs fans into one massive group. The duplicitous thing they are doing is talking about a few segments being helped by their price adjustments as if it was benefiting a large percentage of the season ticket holders, which is just not true.

The highlights include: (1) reducing the average ticket price for all gold, silver and bronze games, (2) separating the bleachers and grandstands in the pricing tiers, as the buying patterns vary significantly for each area, and (3) adding a new fifth tier of pricing (Marquee Tier) for our highest demand games.

1) Yay!
2) That's a highlight?
3) Uh. Oh.

Cutting through it all, the net result for our season ticket holders is that some will see a slight (in all cases, less than 3%) increase, others will see a reduction as much as 6% and some will see virtually no change at all.

Oh ho!  There's the increase snuck in there amongst all the good news and tier talk.  You have to get up pretty early in the morning to sneak that by us in Aisle 424, Tom.

So let's take Tom's approach and cut through it all.  I would be shocked if the percentage of season ticket holders that actually see a drop in their overall price from 2010 is over 20%.  I'd actually be surprised if it was higher than 15%, but I'm being conservative.

Folks holding tickets in the infield portion of the stadium are mostly full plan holders, so they will benefit slightly from an increase in the number of cheaper Crappy Level games, but that will get negated by the boost of including the new Mega-Maxi-Super-Duper-Snazzy-Marquee-alicious Tier in the package.  They also will not benefit from those 550,000 tickets that are under $20 that Tom mentioned before.

Anyone grandfathered into the Combo Plan (nights and weekends) isn't benefiting from all of their restructuring since the price drops will all be in games not included in their package.  I would gather this group will almost assuredly be in the group whose prices actually go up since they now have the Premiere-Ultra-Awesome-Happy-Fun-Luxury Tier games to pay for without anything to offset that cost.

The folks who will benefit are the Bleacher season ticket holders (Yellon and his three friends), and the folks who sit way down the lines and/or far under the upper deck in the Terrace Reserved sections.  Like I said before, the percentage of season ticket holders in these sections are small.  This new pricing structure is actually much more beneficial to the single game buyers like the families Tom talked about a million words ago.

It's all very simple.  Oh, there's a separate pricing structure for bleachers now too?

But Tom, always crafty, has packaged this into his announcement to season ticket holders, and tried to bury it as best he could.  Now he's going to talk about a bunch of stuff that has little to do with the baseball team being good as a way to continue to sell us on what a good deal season tickets are.

Other changes in 2011 include new season ticket holder benefits. Over the years, we have added significant benefits to being a Cubs season ticket holder, such as a dedicated area within our website, early access to Spring Training tickets and other special events (such as the very popular Dave Matthews concerts and Allstate Wrigleyville Classic football game coming in November), and last year's open house.

Dude, we just want the team to fucking win.  Seriously.  Do that and I'll volunteer to let any member of the Cubs organization punch me in the ding and take a dollar from me.  You can form a line.  It will be totally worth it.

For 2011, there are a number of new benefits that I think you will find interesting. Among them is exclusive access to our players, coaches, manager, front office and ownership through Cubs Insider Webcasts that will occur throughout the year. In addition to updates on everything happening inside the ballclub, these webcasts will provide you the opportunity to ask questions on topics of your choice. A Season Ticket Holder Benefit page follows this letter and you should ask your Cubs representative about any of the items listed there.

Finally!  A chance to have my question about what brand of chewing gum Justin Berg prefers answered! 

Actually, as a Cubs blogger, the Webcasts would probably be pure gold as they shove more contrived crap into our consciousness than the people at Vineline could possibly dream.  Get ready to learn way more about Starlin Castro than any normal human being should ever want.

The long and short of it is: the Cubs have lowered prices on games you either don't want to see or can't see because you have a job, and on the seats that you don't want to sit in unless you have to because all of the other good seats are sold.  They have raised ticket prices on all the really good games because they know they can and they will still sell them out.  I'm actually shocked at their restraint in how much they've bumped them.

They can talk about families all they want and how much they care about us, but when it comes down to it, this was about adjusting the single game pricing structure to maximize those revenues while still collecting the full amount of revenue from season ticket holders that they count on each and every year.

5 comments:

AK said...

The silliest thing about this is that they even bother to explain it to season ticket holders in that detail. The people who benefit from this, as you said, are single-game customers. There are a lot of people who will be very happy about this (or at least very relieved from their anger last year). None of them got this letter.

I am one of them, so I'm glad there will be more options for less expensive tickets. It's smart that they're doing it. It's not smart that they waste your time explaining it to you. Just say, "Our pricing structures are more complex to accommodate our entire customer base, but you won't notice much of a change."

berselius said...

Yellon has friends?

Aisle 424 said...

Ricketts, apparently. Al got his tickets reduced and a cookie.

Aisle 424 said...

He had to know this would get reported on in the mainstream media, so the beauty of it, AK, is that he gets to start marketing to the single-game folks through this letter while making the season-ticket folks hope they will be the ones to get a price break. And he gets to do it basically for free since they would have sent something out to season-ticket holders anyway.

Tom comes off as a good guy when all they are doing is correcting their prices to the market by understanding (correctly) that most of their seating areas represent different customer-types and different buying patterns.

Someone spent a lot of time crafting this message, or they are a truly gifted bullshit artist.

Kin said...

They understand the importance of families and they understand that giving children the opportunity to come to games at an early age is important so that they can get addicted and continue buying tickets for the rest of their lives.

LAWLZ. Diabolical.

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