Dynamic pricing usage in sports for revenue management

Abstract

Purpose The purpose of this paper is to examine the extent to which dynamic pricing is utilized in North American professional sports. While industries such as airlines and travel services have employed dynamic pricing for decades, professional sports is only now starting to adopt it. Design/methodology/approach The authors survey and interview high ranking executives and managers in North American sports organizations. A total of 72 managers and executives from the four major North American professional sports leagues as well as other sport properties were surveyed. Descriptive statistics and a basic regression provide insight into perceptions v. actual practice among sports organizations. Findings While most sports organizations perceive high usage of dynamic pricing within their organization, current procedures lag. Nearly 70 percent of respondents believe that their organizations frequently or always apply business analytics to dynamic pricing, but only 30 percent update their prices daily. Fully 50 percent of organizations do not automate decision-making processes, which is a hallmark of dynamic pricing. The perception of constant use of analytics in dynamic pricing intensifies as job title increases. Originality/value As one of the initial surveys looking at the usage of dynamic pricing in North American professional sports, this study provides a glimpse into both the perception and the reality. It suggests that there is still ample room for improvement.