For hundreds of years people have been highly affine to any kind of sports. Thousands of people regularly watch sports events online and offline and in society the topic of a team‟s or an individual‟s performance is always passionately discussed. Taking a look at Europe the most popular sport is football. Mughai (2016, p. 13) elaborates that football – or sometimes called soccer to avoid interchanging with American football – is globally ranked first in terms of popularity. Supporters that are very passionate about their team are visiting the huge football stadiums week by week. As the capacity of a stadium is limited sometimes fans are even purchasing their entrance tickets weeks or months ahead of the event itself. Especially the German Bundesliga has been facing an enormous interest growth within the last years resulting in an average of 42.609 visitors per match day making the league the most visited one in Europe. (DFL, 2015, p. 22f)
Similar to the ever-growing popularity of sports, the costs are rising. This is caused by mounting player salaries, increased transfer fees and other operational expenses. (Drayer, Lee & Shapiro, 2012, p. 184; Breuer & Kemper, 2015, p. 142) Sport clubs therefore need to steadily open up and augment their sources of revenue: match day revenues, advertising, broadcasting, transfer fees and merchandising. (DFL, 2015, p. 26f) Some of these revenue streams can be actively influenced by the Bundesliga clubs whilst others are hard to affect. One of the determinants that can be modified is ticket pricing.
The objective of this Master Thesis is to explain the prevailing pricing strategy in the German Bundesliga and to present innovative, value-based pricing approaches which can be tested. Creating an understanding of the fans‟ willingness to pay and factors having impact on the purchase decision making process, a gap in research is supposed to be filled. In this Master Thesis the author aims to find sufficient, relevant, reliable and empirically proven answers to the following research questions:
1) Why have innovative value-based pricing strategies like dynamic pricing not yet been implemented in the German Bundesliga?
2) To what extant are fans willing to pay different prices depending on dynamic factors?
3) What determinants need to be taken care of when changing the prevailing pricing strategies of Bundesliga clubs?
Table of Contents
1. Introduction
2. Conceptual Approach
2.1. Situation Analysis and Benchmarking of the Sports Industry
2.1.1. The European Sports Industry
2.1.2. Ticket Pricing Situation in Europe
2.1.3. Demand Drivers
2.1.4. The American Sports Industry
2.2. Theoretical Pricing Approaches
2.2.1. Price Strategies as Profit Driver
2.2.2. Price differentiation
2.2.3. Price Strategies Managing Demand and Capacity
2.2.3.1. Revenue Management
2.2.3.2. Dynamic Pricing
2.2.3.3. Dynamic Pricing Attempts in America
2.2.3.4. Usability of Dynamic Pricing Policies in the Soccer Industry
3. Price Setting of Borussia Mönchengladbach
3.1. Season Tickets
3.2. Match Day Tickets
4. Empirical Evaluation of the Price Setting
4.1. Bias Analysis
4.2. General Information for Clustering Purposes
4.2.1. Evaluation of General Information
4.2.2. Conclusion of General Information Survey Results
4.3. Van Westendorp Approach
4.3.1. Evaluation of Survey Results
4.3.1.1. Evaluation of the Stadium as a Whole
4.3.1.2. Evaluation of the North Curve
4.3.1.3. Evaluation of the South Curve
4.3.1.4. Evaluation of the West Tribune
4.3.1.5. Evaluation of the East Tribune
4.3.1.6. Evaluation of the Whole Stadium Except North Curve
4.3.2. Conclusion of Van Westendorp Survey Results
4.4. Dynamic Ticket Pricing Approach
4.4.1. Evaluation of Survey Results
4.4.2. Conclusion of Dynamic Pricing Survey Results
4.5. Discussing the Possibility of a New Pricing Strategy
4.6. Price Implementation Recommendation
5. Conclusion
6. Recommendation for Further Research
7. Reference List
8. Appendix
Objectives and Topics
This Master Thesis examines the current ticket pricing strategies within the German Bundesliga, specifically focusing on the potential for implementing innovative, value-based pricing models such as dynamic pricing. By evaluating the price sensitivity of fans and identifying key demand drivers through empirical research, the study aims to assess whether such advanced strategies can enhance revenue and stadium utilization without negatively impacting fan loyalty or perception.
- Analysis of the European sports industry and current ticket pricing situations.
- Theoretical evaluation of pricing strategies, including dynamic and variable pricing.
- Empirical study on fan price sensitivity using the Van Westendorp approach at Borussia Mönchengladbach.
- Identification and ranking of demand drivers influencing ticket purchase decisions.
- Development of recommendations for implementing pricing strategies in German professional football.
Excerpt from the Book
2.2.3.4. Usability of Dynamic Pricing Policies in the Soccer Industry
Talking about the implementation of dynamic pricing policies Drayer, Lee and Shapiro (2012, p. 184) proposes that understanding consumer demand can help clubs augment attendance for low-demand games and exploit ticket revenue for high-demand games. Traditionally teams in the sport industry are underpricing their matches due to cost-based pricing approaches that include the main goal of maximizing attendance and maintaining or promoting fan satisfaction. (Drayer, Lee & Shapiro, 2012, p. 184) Rahmann and Kurscheidt (1998, p. 179) elaborates on the cost-based pricing and argues that a stadium cannot be cost-effective as maintenance and operating costs can be hardly covered. However Vornholz (2005, p. 12) disagrees and stresses that modern stadiums are indeed profitable and can be financed using ticket pricing.
Similar to the hotel and travel industry the sports industry is selling perishable goods for a predetermined and more importantly fixed event date with a fixed capacity. Hence the assumptions defined by Kimes (1989, p. 14-19) will be transferred to the sports industry. Though being referred to as revenue management the circumstances required for implementation can be transferred to dynamic pricing as well. Having defined prerequisites for the hotel and leisure industry in the revenue management section, it is necessary to compare them with the prevailing conditions in the sports industry:
Ability to segment the market: The sports industry allows for the usage of market segmentation. The market includes all potential stadium visitors as they represent the group of people that are willing to invest time and money in participating in a match. The segmentation criteria include the popular ones of geographic, demographic, psychographic and behavioral.
Perishable inventory: This prerequisite can be defined as one of the major attributes of tickets for a majority of events. A ticket loses all of its value once the match day is over and thus it cannot be sold or distributed afterwards.
Product sold in advance: For football matches a great amount of tickets is not only sold before match day but before the whole season starts – the season tickets. Hence tickets are being sold in advance. Although many tickets are sold as match day tickets, most of the tickets are vended days or weeks ahead of the match itself depending on the level of demand.
Summary of Chapters
1. Introduction: This chapter highlights the rising costs in the sports industry and the resulting need for Bundesliga clubs to explore new revenue streams, specifically focusing on the current limitations of traditional, cost-based ticket pricing strategies.
2. Conceptual Approach: This section provides a comprehensive analysis of the European and American sports industries, discusses various theoretical pricing models, and evaluates the prerequisites and usability of revenue management and dynamic pricing within the soccer context.
3. Price Setting of Borussia Mönchengladbach: This chapter introduces the case study of Borussia Mönchengladbach, detailing its current ticketing policy, season ticket structures, and the influence of opponents on match day pricing.
4. Empirical Evaluation of the Price Setting: This empirical section details the methodology and results of a survey conducted at the stadium, utilizing the Van Westendorp approach to measure price sensitivity and identifying demand drivers that influence fan purchasing decisions.
5. Conclusion: The conclusion synthesizes the primary and secondary data, confirming that while the theoretical basis for dynamic pricing exists, implementing such strategies at Borussia Mönchengladbach currently offers little financial benefit and carries significant risks.
6. Recommendation for Further Research: This chapter suggests that future studies should differentiate more clearly between various pricing concepts and extend research to other clubs to gain a more holistic understanding of dynamic pricing in European football.
Keywords
Dynamic Pricing, Ticket Pricing, Bundesliga, Borussia Mönchengladbach, Revenue Management, Price Sensitivity, Van Westendorp Approach, Demand Drivers, Fan Loyalty, Sports Management, Pricing Strategy, Stadium Utilization, Consumer Behavior, Ticketing, Value-Based Pricing
Frequently Asked Questions
What is the core focus of this thesis?
The thesis explores the potential for German Bundesliga clubs to restructure their traditional, cost-based ticket pricing policies by implementing innovative, value-based approaches such as dynamic pricing.
What are the primary themes discussed?
Key themes include the financial challenges of modern football clubs, the theoretical frameworks of dynamic and variable pricing, comparative benchmarking between European and American sports leagues, and an empirical analysis of fan price sensitivity.
What is the primary research goal?
The primary goal is to determine why dynamic pricing has not yet been adopted in the Bundesliga, to what extent fans are price-sensitive, and what factors need consideration when moving toward more flexible pricing models.
Which scientific methodology is applied?
The research uses a dual approach: a literature review for theoretical foundations and an explorative empirical survey using the Van Westendorp Price Sensitivity Meter and demand driver analysis among stadium visitors.
What topics are covered in the main body?
The main body covers the current Bundesliga pricing situation, an evaluation of revenue management and dynamic pricing, a detailed case study of Borussia Mönchengladbach's ticket pricing, and a critical discussion of the survey findings.
Which keywords best characterize this work?
The work is characterized by terms such as Dynamic Pricing, Bundesliga, Price Sensitivity, Revenue Management, and Fan Loyalty.
How did fans in the study react to potential price changes?
The study found that fans are highly sensitive to price changes. For Borussia Mönchengladbach, the current prices are already perceived as being in the elastic area of demand, meaning further increases could lead to a decrease in revenue and attendance.
Why are German clubs hesitant to adopt dynamic pricing?
Clubs are primarily deterred by the fear of negative fan perception, potential protests from loyal supporter groups (such as the "Kein Zwanni" initiative), and the loss of the financial security provided by selling tickets well in advance.
- Arbeit zitieren
- Alexander Rings (Autor:in), 2016, Restructuring Ticket Pricing Policies by Implementing Innovative Pricing Strategies for Bundesliga Clubs, München, GRIN Verlag, https://www.grin.com/document/340239
