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Premium Ticket Pricing

For years, collegiate athletic departments have employed a differential ticket pricing strategy for home football games against premium opponents. The University of Oregon is charging $32 for the Duck’s 2005 game against Montana and $55 for the game against in-state rival Oregon State. The University of Nebraska also employs a differential strategy for its football program’s games, but not to the extent that the Ducks do. For its 2005 non-conference home games, NU is charging $50 and for conference games, it is charging $55. Of course, every home Husker game has sold-out since 1962. That tells us something about NU fans – they love their Huskers and their willingness to pay is consistent across games compared to Duck fans.

Baseball has only recently gotten into the act of differential pricing for certain match-ups. From the St. Louis Post-Dispatch:

Playing on Busch Stadium's imminent demise and unprecedented regular season matchups with two storied American League franchises, the Cardinals put into effect the surcharge for series against the world champion Red Sox and the Yankees as well as nine league games that include the season's final series against the Cincinnati Reds. The club anticipates almost $2 million in additional revenue while saying it has received minimal fan backlash.

But differential pricing based on match-ups is not employed by a majority of baseball clubs:

As teams look for more creative ways to maximize revenue, variable ticket pricing is becoming increasingly widespread in the game. Wallace estimates "about one-third" of Major League Baseball's 30 franchises charge more for some games.

Looking at each of the “seating and pricing” links for each team at mlb.com, I found 8 teams that are charging premium prices for particular match-ups this season: Cardinals, Cubs, Red Sox, Royals, White Sox, Brewers, Diamondbacks, and Mets.

The idea behind differential pricing for certain match-ups is straightforward: a team’s fans have a higher willingness to pay for games against particular opponents – their team’s rivals (Cubs vs. Cards) and clubs charge the higher prices to generate extra revenue. Differential pricing is also used for games on particular dates (for example, weekend games) and for special events (for example, the last series at Busch Stadium). More from the Post Dispatch:

"We have such a high demand for certain dates, and we have such a great home schedule," Cardinals President Mark Lamping said Wednesday. "If we can sell tickets and not affect demand through the price, it obviously raises revenue for the club and allows us to support our revenue needs without having to raise prices across the board."

One reason why teams would not employ a differential pricing strategy is that their fans do not have different willingnesses to pay for particular match-ups. But there’s another reason. People I’ve talked to with Major League Baseball say league officials have generally frowned upon the practice of premium match-up pricing because they would rather not acknowledge that one team’s entertainment value is higher than another’s. But given that fans have different willingness to pay for particular match-ups, this lack of acknowledgment carries a steep opportunity cost for baseball teams.