If you’re a fan of baseball, or even sports in general, you’re aware of Michael Lewis’ Moneyball. The book paved the way for teams to justify underspending when it comes to building their roster by focusing on Billy Beane’s approach with the Oakland Athletics. While the results of the study can be debated on a player-to-player basis, the impact that the work had on baseball as a whole is still being felt.
While general managers and scouts of all MLB teams crunch numbers in a Bill James fashion to see what diamonds they can find in the rough of baseball players all over the world to maximize their on-field bang-per-buck, the financial-based website Bloomberg.com wrote an interesting analysis piece on the Cleveland Indians and their unique form of statistical number crunching. Sure, Mark Shapiro and crew are always on the lookout for the next Victor Martinez and Grady Sizemore, but when it comes to a middle market franchise, the team has to look to other mediums to maximize profit.
BABIP and Isolated Power are all well and good. But if you ask the Indians front office, so is the impact of things like temperature and opponent when it comes to how many fans are in the seats. Gone are the days of the consecutive sell-outs at The Jake. (And yes, I know, it’s no longer called the Jake). So when you have a team that forecasts itself to have make the playoffs just to break even on their off-season spending, you can bet that they’re going to do whatever it takes to make sure that their forecasts err on the side of conservatism.
While the Indians cannot (and will not) ever make the national news based on their signings of attractive, big-money free agents like Mark Teixeira, they actually are the most progressive in one area: ticket pricing research.
“The Indians are at the forefront of what many teams are trying to do with variable pricing,” said Michael Arya, 47, co- founder of Pasadena, California-based TixTrack Inc., a company that analyzes the secondary ticket market and consults with professional teams. “It’s about more than just charging more when the Yankees come to town. They are trying to make educated decisions, based less on guesswork and more on analysis.”
If you attend multiple games this season, you will notice that the price per ticket may very between each trip to the park. Using a four-tier ticketing platform, games in the summer will cost more than those in the spring or fall – playoffs excluded. If you want to catch the New York Yankees or Boston Red Sox, it will cost you a few more dollars than it would if you choose to admire the actual AL East Champions of 2008 – the Tampa Bay Rays.
And if you think that the giveaways and firework nights are not strategically placed, think again.
Put the name “Grady Sizemore” in a promotion, and you can expect nearly 7,000 more fans in attendance. Give away a bobblehead doll and the rate increases by about 5,000 fans. Unfortunately, no statistical evidence was given for nights that guarantee David Dellucci does not see the field – though one can imagine a decent spike in fan totals then as well.
The good news, though, is that the Indians have a very attractive ticket price in regard to the league median. The average ticket price in baseball for 2008 was $25.40, while Clevelanders pay $25.72. Compare this to the larger markets like Boston ($48.80), Chicago ($42.49) and New York ($36.58), and it costs us a considerably lower amount of money to see those teams play when they come here. The down side to all of this is obviously those that will have to pay for the tickets. With the unemployment rate north of seven percent in northeastern Ohio, the variable pricing may detract the average fan that just wants to see a baseball game. Instead of ponying up for the higher-priced attraction games, they may in fact settle for the lower-tier games.
I would anticipate other teams adaptation of these studies sooner than later. Given that the global credit squeeze has put a relative damper on discretionary spending, these franchises will need to make money in any way possible.
The Cleveland Indians. Your statistical research trailblazers.
Moneyball II: Statistics Driving Marketing for MLB’s Indians [Bloomberg.com]