SBJ/July 30-August 5, 2012/CollegesPrint All
Dynamic pricing, the increasingly popular way of selling tickets among pro teams, is seeping into the college space.
The University of California last week struck a deal with software company Qcue to begin using dynamic pricing on single-game football tickets this season. Cal is Qcue’s first college client.
South Florida is the only other school known to use dynamic pricing. The Bulls did a deal with Qcue competitor Digonex midway through last football season to give dynamic pricing a trial run. After seeing sales trends improve, USF decided to renew with Digonex for this season.
The Bulls are Digonex’s first and only college client. Both USF and Cal intend to use dynamic pricing for basketball as well.
Dynamic pricing enables ticket prices to rise or fall from face value based on demand, although USF and Cal have the ability to manage the pricing if it spikes too high or too low. The dynamic pricing goes into effect on single-game tickets that are sold to the general public.
“This allows us to take advantage of high-demand games and price them at fair market value,” said Ashwin Puri, Cal’s associate athletic director for sales, marketing and service. Puri, a former executive with the NBA and the New York Jets, has brought many of the ticket sales trends he saw in the pros to Cal upon his hiring earlier this year.
Qcue works with more than half of the teams in Major League Baseball, including the San Diego Padres, who served as a consultant to Cal while the school restructured its ticket sales and marketing operation. The Bears this year have developed an outbound sales and service component within their ticketing department, whereas most schools have started outsourcing sales and marketing to companies like The Aspire Group and IMG Learfield Ticket Solutions.
IMG Learfield handles USF’s sales and marketing.
Ayo Taylor-Dixon, USF’s associate AD for marketing and revenue, said the school’s ability to control how much the price fluctuated up or down was part of the attraction.
“You use the market data you’re given, and it’s up to you to make the change in pricing,” Taylor-Dixon said. “But the system is usually right.”
Paciolan, whose software helps schools manage ticketing sales and inventory, has relationships with 105 NCAA Division I schools and sees dynamic pricing as a wave of the future. The company recently surveyed its clients, and 19 percent of them said they were at least moderately likely to adopt dynamic pricing in the next year.
Not everyone in the college space, however, is sold. Some college ticket managers are concerned about prices dipping below face value. Also, the base of season-ticket holders also represents schools’ most prolific donors, so schools want to make sure they don’t agitate their best boosters by undercutting them on price.
“We’re not there yet,” said Michael Espada, Florida State’s director of ticket sales, about dynamic pricing. “I haven’t seen enough of it to gauge how it would work. The last thing we’d want to do is upset our season-ticket holders. … I think if you price your tickets right from the beginning, you should be OK.”
ESPN has taken another step toward owning college football’s new postseason by striking a deal to broadcast the Champions Bowl from 2015 through 2026.Industry sources say ESPN and Fox have expressed the most interest in the playoff package, which includes the championship game, the semifinals and the three “access” bowls that will be among the six bowls in the rotation to host semifinal games.
Even though the Champions Bowl is just two months old, industry sources say it will receive roughly the same rights fee that ESPN will pay the nearly century-old Rose Bowl: an average of $80 million annually over 12 years. The bowl will be played in prime time on New Year’s Day each of the 12 years of the deal, a slot that typically draws strong ratings and enhances the value of the game.
The network wouldn’t comment, but ESPN moved quickly to lock down the rights to the Champions Bowl just weeks after it extended its long-running Rose Bowl deal. That leaves the Orange Bowl and the new playoff package for networks to bid on.
The total playoff package, including the semifinals and finals, the access bowls, as well as the three contract bowls — the Champions, Rose and Orange — is expected to go for $600 million or more a year. TV negotiations for the Orange Bowl are expected to run through August, and talks for the playoff package could begin in September.
With the Rose and Champions bowls in its grasp, ESPN’s next move is to go after the Orange Bowl, which would give the network all of the best games on New Year’s Day. If ESPN secures the Orange, the network will have a Jan. 1 lineup of all three contract bowls — the Orange at 1 p.m.; the Rose at 5 p.m.; and the Champions at 8 or 8:30 p.m. — from 2015 through 2026.
The three access bowls are expected to be played on New Year’s Eve. Other bowls outside of the playoff rotation, such as the Gator or Outback bowls, could be played on Dec. 31 or Jan. 1 as well.
The Champions Bowl will pit the best available teams from the SEC and the Big 12 Conference. If the conference champion is not in the national semifinals, it will play in the bowl game. If the champion is in the playoffs, the next-best team from that conference will go to the Champions Bowl.
The two conferences announced the formation of the game in May to give them what SEC Commissioner Mike Slive called “a new January bowl tradition” that will rival the Rose Bowl. While it might not have the history of the Rose, which started in 1902 with a single game and has run continuously since 1916, the Champions Bowl leveraged its attractive conference matchup and its time slot into a deal on par with the Rose’s.
The SEC and the Big 12 will share revenue equally from the ESPN deal, which was jointly negotiated by the two conferences. In the years when the Champions Bowl rotates in to host a semifinal game in the playoff, the TV revenue will be shared by all of the FBS conferences.
The Orange Bowl annually will have an ACC team playing an opponent to be determined. The ACC is in discussions with Notre Dame, the SEC, the Big 12 and the Big Ten to establish who the opponent will be on a year-to-year basis. ACC Commissioner John Swofford said last week that the Big East has not been a part of the negotiations for the Orange Bowl.
Once the ACC reaches an agreement on an opponent, a decision that is expected in the next week or two, the conference will turn its attention to negotiating a TV deal for the Orange Bowl — and there’s every reason to believe that ESPN will be the front-runner there, too. All of the ACC’s media rights belong to ESPN as part of a separate long-term relationship, and the network will not want one of the bowls in the playoff rotation to get away to Fox or another network contender.
The ACC probably won’t get the same rights fee that the Rose and Champions bowls received, industry sources said, because the matchup and the time slot aren’t as attractive. As is the case with the Champions Bowl, in those years when the game is outside of the playoff rotation, the TV revenue from the Orange will be shared by the ACC and the opponent.
The TV negotiations for the Orange Bowl are expected to run through August, at the end of which time (barring an upset) ESPN likely will own the rights to all three of the contract bowls. ESPN’s current contract for the BCS gives it the right to negotiate first for the playoff package.
The Champions Bowl will now seek a venue for the game. The SEC and Big 12 are working on a request for proposal expected to go out to potential host sites soon.
The University of Southern California is seeking a major overhaul to Los Angeles Memorial Coliseum, and internal discussions concern premium-seat concepts that could extend project costs to $300 million over the next several years, according to industry sources.
The Pac-12 school plans to hire an architect over the next two months tied to a master plan for improving the 89-year-old stadium, said Kristina Raspe, Southern Cal’s vice president of real estate development and asset management and its point person for Coliseum upgrades.
The school will take over stadium operations this fall under the terms of a lease it signed in May with the Los Angeles Memorial Coliseum Commission, the Coliseum’s landlord. The state must approve some final details before the school can officially take over the facility, including a deal between the state and Southern Cal that would take effect after the existing lease expires in 2054, Raspe said.
The master plan will address a stadium with no suites that has fallen far behind the premium amenities offered at other Pac-12 stadiums. School officials have had preliminary talks with architects and builders about what could be done to bring the Coliseum up to par. Sources said those discussions have included constructing a club level with new club seats and loge boxes and that initial costs would run $200 million to $300 million.
Those plans will come into greater focus after Southern Cal hires a sports designer to help the school better understand the costs and revenue tied to those projects, Raspe said. The school has prequalified a half-dozen architects that will be issued the proposal in the coming weeks.
As part of its agreement to take over stadium operations, Southern Cal has committed to spending $70 million in repairs and upgrades that the commission had promised years ago but was unable to deliver on because of a lack of funding.
“We have to do $70 million … but it wouldn’t surprise me if we exceeded that number,” Raspe said. “Luxury amenities are something we are definitely considering, given the fact that the Coliseum is a historic landmark.”
Southern Cal must be careful in its plans. Dramatic changes to the building — home of the first Super Bowl, the 1959 World Series and two Olympic Games — could endanger its status as a National Historic Landmark.
“People love that building. It’s kind of like Fenway Park,” said Joe Diesko, a vice president with HNTB and designer of Galen Center, USC’s basketball arena.
The Coliseum would not, however, be the first college football stadium to undergo a facelift while protecting its landmark status. Ohio State, Illinois and California, where California Memorial Stadium reopens Sept. 1 after a $321 million rehab, all have stadiums as registered landmarks that have gone through major renovations.