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Scalping their own seats? Twins try 'demand-based' pricing for hot Target Field tickets

In a season where tickets are hot, fans can only groan at the Twins entering scalper territory.
REUTERS/Eric Miller
In a season where tickets are hot, fans can only groan at the Twins entering scalper territory.

Tickets for the Twins home opener have risen seven bucks. But prices dropped $5 for a midweek series against the Royals.

It’s not happening on Stub Hub, but on the team’s official site.

For 2011, the Twins are trying “demand-based pricing” into two Target Field price categories: “home plate box” behind the lower-deck Champion’s Club, and “home plate view,” the top-deck equivalent.

In a season where tickets are hot, fans can only groan at the Twins entering scalper territory. Last year, the average Twins ticket price rose 45 percent; this year, one broker says demand is higher. For years, the so-called “secondary market” has made millions gaming game day; now, the Twins will nab some of that dough directly from fans.

On some level, a baseball ticket has always been a futures contract on a nice day or a winning team. Now, the weather, the pitching matchup, the day of the week — even a bench-clearing brawl in the previous meeting — will tickle the computer’s algorithm on a daily or even hourly basis.

Prices will almost certainly rise more than they fall. Twins officials, who retain final approval, won’t let ticket prices slip below what season ticketholders pay. There’s more headroom for price hikes, though the team and its vendor, Indianapolis-based Digonex Technologies, says the team wants to fill seats, not charge top dollar.

“Look at the 8th,” says Digonex vice-president of business development Rex Fisher of the Target Field opener. “The average secondary market price for a home plate box is $78 minimum; max $130. That makes the average $104. Go online to twinsbaseball.com and you can get the same seat for $72. That’s $32 less.”

Of course, the Twins originally priced the seat at $65. And the $72 seat was gone within hours of our conversation.

Fans who fumed after being skunked on single-game tickets last month may wonder where the hell the team gets any inventory for their experiment. Steve Smith, Twins vice-president of ticket sales and service, swears the team did not hold any extra seats back from pre-season buyers.

“For many games, the inventory is exclusively made up of internal team holds used to meet the varying needs of players, scouts, league officials, etc." Smith notes; combined with unsold inventory for a few cold-weather games, demand-priced tickets will number “from zero to about 1,500.”

As Royals tickets in April demonstrate, demand-based pricing doesn’t always deliver hikes. The woebegone Timberwolves embraced demand pricing late in the 2010-11 campaign, and reduced prices on seven of 10 games, says Ryan Tanke, senior vice president of tickets.

On those games, Tanke estimates the Wolves sold hundreds of additional seats, making up in volume what it lost per-ticket. On popular games where the price rose — Celtics, Heat, Lakers — the team simply made more money. Overall, Tanke says it’s safe to say team revenues rose at least 10 percent.

That’s why tradition-laden baseball teams like the St. Louis Cardinals have skipped the experiment phase and now price every seat according to demand.

While Digonex’s Fisher says double-digit profit increases should result, the Twins limited the program to the two sections because they are relatively large and didn’t interfere with group and family discount programs.

Smith says, “Our research and our internal culture say ‘let’s make sure we do this right.’ That’s why we’re taking baby steps. We may find it’s not right for us.”

A look at the Twins' early demand-based pricing
A look at the Twins' early demand-based pricing.

Still, the Wolves’ Tanke — whose club went all-in like the Cardinals — predicts within a few seasons “all teams in all leagues” will do demand-based pricing.

There are public policy implications. The Twins’ Target Field lease demands an “affordable seating plan,” though the definition of that is as amorphous as a knuckleball's flight.

The home plate box seats ($53-$65 per game) have never been cheapskate territory, but the $21-$28 home plate view seats are specifically mentioned among the 39 percent priced $23 or lower in the 2011 plan.

Every outfield ticket except for the overlook remains cheaper, as do top-deck seats past the baselines. “I don't think the team's use of dynamic pricing in two sections of the ballpark negates the overall impact of the affordability plan,” Minnesota Ballpark Authority director Dan Kenney says.

And what about the scalpers? While no one will shed a tear for them, the teams appear to be cutting into their action.

The silver lining to fans’ high-demand agony? Digonex servers may erase much of the box-office underpricing scalpers exploit.

Mike Nowakowski, one of the owners of Minneapolis-based Ticket King, isn’t worried at all. Most astute operators buy their tickets in alliance with season ticketholders, or are season ticketholders themselves, paying the lowest pre-season price.

Nowakowski says Ticket King is the Timberwolves’ largest non-corporate season ticketholder.

“There used to be a barrier between the primary and secondary market, but the best way to put it is we’re an appreciated season ticket holder of the Timberwolves and they’re an appreciated franchise of Ticket King,” Nowakowski says. “We have an extremely, extremely open relationship with them. We share data with them, help price season tickets, single-game tickets, demand-based tickets.”

Digonex’s model, like those of its competitors, incorporates reseller prices.

Ticket re-sellers retain some important advantages. Unlike the clubs, they can sell below face value (assuming they bought the seat at even lower prices). There’s also less brand damage if markups soar.

And those $72 seats for the Twins home opener? They were likely single tickets. Scalper prices were higher, but the selection was far more vast.

Nevertheless, Digonex’s Fisher says fans who formerly ignored the team website before big games should now check there first.  Brokers who camp out online will be less likely to buy at higher prices, but the team’s price might still be lower enough to make a difference.

Amid last year’s record demand, the Twins raised 2011 season ticket prices 5-9 percent, though a few categories dropped. Ticket King’s Nowakowski thinks Target Field will become the next Wrigley or Fenway Park, a perennial hot ticket even in lean years — which if true, will only tempt the club to price up, by either the traditional or demand-based route.

The Twins’ Smith says the team is more conscious of long-term “brand promise to attract a good fan base in strong years and in lean years. I really believe regardless of what level we approach demand-based price, we are always going to make sure we’re providing our fans with a level of affordability.”

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Comments (19)

Mr Brauer mentions, in passing, that the new Twins pricing strategy raises "public policy implications." Unfortunately, he does not delve into them deeply. The new Twins stadium, financed by public tax revenues, should NOT be in the ticket scalping business. Period.
Hennepin County should oppose this greedy exploitation of public intent and taxpayer good will. But all we get is a Ballpark Authority factotum saying it's OK with him.
Where are the critics in this story?

This much makes me not even want to bother trying to buy a Twins ticket. Ever. I'll go back to trying to find a friend with Wild tickets that'll let me accompany them to a Red Wings game.

We now know for certain that Mr. Coleman, while a well-known journalist and opinionator, is obviously NOT an economist. Demand-based pricing in baseball tickets is no different than demand-based pricing in airline tickets. Even nightclubs used demand-based pricing ($15 tickets that are $20 at the door). The Twins' pricing policies are, and should be, entirely independent of the public policy decision to build stadiums for millionaires.

Mr. Coleman, if you have an issue with demand-based pricing, I suggest you do as I do and don't purchase Twins tickets. I can't fathom that a person will pay $45 for a ticket, plus $6 for a beer and $7 for a sandwich (I'm being charitable in my description, there), all for about two hours and fifteen minutes of "entertainment." But if someone's utility is met at that price, let them pay (says Mr. Barnum).

Mr. Coleman's dudgeon can always be relied on to be high, but is rarely is it well informed or thoughtful. The fact is a very free market exists for single game tickets, and that will inevitably continue be the case whether the Twins participate in it or not. The Twins participation in the market will make it more orderly, more accessible to the fans, and possibly just a little less corrupt. Weekend tickets to Yankee games will be expensive, but weekday tickets to the Royals will be cheap. Between those two extremes a larger spectrum of fans will be able to find tickets that suit both their interest, and their pocket book, not exactly a horrific result.

What's interesting is how/if this undercuts the existing MLB deal with stub hub.

http://www.nytimes.com/2007/08/02/business/02tickets.html

"StubHub charges a combined 25 percent fee to buyers and sellers on the exchange of tickets. Under the new arrangement, baseball’s interactive company,... which is partly owned by all the baseball franchises, will get a share of revenues, plus a fee, said Robert DuPuy, ... He declined to specify the precise revenue sharing of the deal."

Just for the record, I think it's the home plate view and home plate box sections that are offered in the dynamic pricing (your third para).

Free market capitalism ruins everything. This is why you can't watch baseball on broadcast TV anymore. The same geniuses who came up with demand-based pricing are the same folks who decided more money from cable was a good enough reason to not broadcast games on local TV.

Yes, commercial interruptions can be irritating (see last night's Final Four Championship game) but if the only people who can watch sports are those who can afford cable packages and demand-priced seats, what's the point of having a national pastime?

It's possible to optimize your revenue stream right up to the point where the stream goes dry.

"Diogenex servers may erase much of the box-office underpricing scalpers exploit."

That conjures up an image of guys with lamps checking the street corners around the People's Ball Park, looking for honest scalpers -- or is it a Freudian typo?

Mr Foster and Mr Blum are representative of the laissez faire attitude that has degraded the public debate in this state. I do not -- heaven forbid -- oppose free enterprise or the sacred requirements of the marketplace. All I am saying is that a PUBLICLY financed stadium that promised to be of benefit to the public but which, above all, has enhanced the fortune of one of the wealthiest enterprises in Minnesota should -- in the self-same public interest -- be restricted from selling tickets to the highest bidders. If that seems "thoughtless," perhaps it is because the brilliance of Foster and Blum shines so brightly that the rest of us pale in their company.

"Mr Foster and Mr Blum are representative of the laissez faire attitude that has degraded the public debate in this state."

I don't think advocacy of certain views, laissez faire or otherwise degrades this or any other debate. My occasional lapse into snarkiness might, but that's another matter.

As I have noted before, I am not much of a fan of the deals that led to the building of the Twins Stadium. I won't expand on that issue here. What I will say is that whatever it's merits, a deal between the Twins and Hennepin County was reached and both sides should live up to it. As far as I know, and please if anyone knows differently, please correct me on this, the deal reached contained few if any provisions regarding ticket prices. If the country wanted prices to be limited in one way or another, they should have made that a part of the negotiation, and the final deal with the Twins. They didn't, so they shouldn't expect the Twins to abide by something they never agreed to.

Going forward, if whoever is making the deal with the Vikings wants a limitation on ticket prices or increases, they should make that part of the negotiation. But as with any negotiation, concessions on one side are always made in exchange for concessions on the other side. Let's keep in mind that that particular concession on ticket prices will be made at the expense of the vast majority of Minnesotans who will never see a game at the new stadium, and who will never benefit from the lower ticket prices negotiated.

"I am saying is that a PUBLICLY financed stadium that promised to be of benefit to the public but which, above all, has enhanced the fortune of one of the wealthiest enterprises in Minnesota should -- in the self-same public interest -- be restricted from selling tickets to the highest bidders."

I am an activist member of the DFL. I have been a delegate to conventions, I have managed political campaigns. I voted for Mark Dayton, and believe the rich, when on the menu, should be served with a nice sauce. That said, I am enough of a realist to know that market behavior isn't generally controllable by any one individual. Nick believes the Pohlads, alone among all the Minnesotans who have lived, past or present, should not be allowed to sell a ticket above it's face value. I suspect that he has no similar objections to selling below face value. Why, in the name of Adam Smith and John Maynard Keynes, not? In effect, why should we make them sell at face value to a scalper, who we don't know, who hasn't taken the risk of investing in a baseball team, who doesn't have to listen to the whining of Bud Selig? I am not saying here at least, that the Pohlads are better than the scalper, but what's the rationale for thinking they are worse?

Consider two customers for Twins tickets.

The first is a businessman. In order to impress a client, he needs to buy tickets to a high demand game, the Yankees maybe. For this privilege he is willing, eager even, to pay above face value, because the value he receives, impressing the client, is in excess of the premium he pays for the ticket. All the more so, when the premium is paid by his expense account. The free, laissez faire market works for his benefit.

The second is an ordinary, perhaps casual fan, who pays for his ticket out of his own money. He doesn't care that much about the opponent, he just wants to see a game at a price he can afford. They Royals on a sunny Thursday afternoon are just fine with him. Because of the free market, he gets his ticket at a cheap price, below face value probably, and has a great day at the ball park. The free market works for his benefit as well.

Who is the loser? One might be the casual, not well off fan, who wants to see the Yankees. He loses, because he can't afford the premium. But the premium will be charged whether the Twins participate in the market or not. If the Twins don't sell the tickets at a premium, scalpers will scoop them up and benefit from the arbitrage. If the Twins sell tickets themselves, they benefit from the premium. But in neither case are face value, below market price tickets available to the casual fan. To see the Yankees, he must pay the premium, and what does it matter to him, to whom the premium goes?

Thanks David - misnamed sections fixed. Thankfully, they were correct later in the story and in the graphic. Richard, you flagged the single misspelling I had for Digonex, damn you!

I wish I could take credit for "brilliance," but my post only pointed out what any Microecon 101 prof would say about demand pricing. Again, as I (and Mr. Foster) stated, the stadium financing decision and the ticket pricing decision should not be coupled (unless, as Mr. Foster mentions, they were explicitly coupled in a legal document relating to the original stadium financing - and I don't believe they were). I actually would like to see demand pricing expanded to EVERY seat at Target field, with no upper OR lower bound. Season ticket holders pay upfront and take on seat-price risk in return for guaranteed seats at the location of their preference. Why shouldn't all seats not sold as season tickets be sold to the highest bidder?

To expand on this, last year I purchased tickets for my family to attend a Twins game with my children's public school group. The cost was atrociously high for what we received -- I believe it was $76 for 4 seats in the very top row of the stadium in the left field corner. I won't be doing that again, even with the school group.

If, however, those same tickets went unsold for a game this year, I might be willing to pay perhaps $2 each for them. That's an incremental $8 for 4 seats that the Twins would otherwise not earn if those seats went unsold (plus the potential for additional revenue from concessions). In this scenario, the Twins receive additional revenue, I receive lousy seats that satisfy my (children's) utility, and if the seats get bid up higher than the $2 per seat I'm willing to spend, I can either pay more or go see a movie at Riverview Theater instead.

A final note: Mr. Coleman complains of "a PUBLICLY financed stadium that promised to be of benefit to the public but which, above all, has enhanced the fortune of one of the wealthiest enterprises in Minnesota ...." I think even Mr. Coleman can agree that Target Field has been of benefit to the public, depending upon your frame of reference (if you're a restaurant owner downtown, it's pretty easy to see; if you are a beet farmer in the Red River Valley, maybe not so much). I think the problem is that Mr. Coleman feels Target Field has not been of benefit to Mr. Coleman. That sounds dangerously Republican (as in, "I'm not paying for public education/state parks/welfare/healthcare for the poor, because I don't receive any direct benefit from them").

"a PUBLICLY financed stadium that promised to be of benefit to the public but which, above all, has enhanced the fortune of one of the wealthiest enterprises in Minnesota should -- in the self-same public interest -- be restricted from selling tickets to the highest bidders."

Hmm...rather than expecting the Twins to leave all the profit on the table for the secondary market to exploit, perhaps a more useful view would press for a PUBLIC recapture of a portion of those profits to repay the public investment.

Not that Nick Coleman needs my defense, but the notion that Target Field has benefited the public in general is hardly beyond question. It's fairly preposterous.

There are a whole lot more beet farmers and Mr. Colemans than there are restaurant owners. How many restaurants saw how much in extra sales anyway, especially with all the publicly built dining options inside the public's stadium? But it's not just restaurant owners, it's...who exactly? The Hennepin County Commissioners with greased palms?

What are the rest of us getting for our sales taxes? The chance to hear a major league team on local radio? One that still gets outspent then creamed by New York? A lousy deal will only get lousier.

There’s no such thing as a free market, and that might be especially true for professional sports. Even as new to the Twin Cities as I am, I’ve seen enough to suggest that perhaps the team owners got a heck of a deal on the financing, with, shall we say, considerable government assistance. So, as a Hennepin County resident, I’m paying for Target Field whether I attend a Twins game or not, whether I even like baseball or not. That, my friends, is NOT a “free market.” Quarreling over ticket prices, and who gets how much of the take for a given seat on a given day against a given opponent, and basing the quarrel on whether or not there’s a “free market” misses the point.

I’ve been a baseball fan all my life, having grown up in St. Louis, but this little brouhaha is the best example I’ve come across in a long time to illustrate what baseball fans all too often completely ignore, or forget, or repress. That is, it’s a business. That business is entertainment. Like all businesses, and especially those centered around entertainment, much time, effort and money is spent to get fans enthused about the local team. So enthused, in fact, that they don’t, or won’t, really pay much attention to how much a ticket costs, or whether the seats actually allow for a view of the players that makes them recognizable without binoculars. Businesses exist to make money. They don’t exist to make city residents feel good, though as a side effect, it’s fine if it happens, largely because it might create more demand for the product later in the season, or next season.

The team – any professional team, so it’s not just the Twins, it’s also the Vikings, the Wild, the Timberwolves, and, for all I know, the Frozen Badgers – has licensing rights to team merchandise, it gets a cut of the concessions, it gets TV money, and maybe more TV money now that Twins games are basically no longer shown on local TV, it gets a share of the league TV pot o’ money, and so on and so forth, ad nauseum. Details will vary by team and sport, but none of it’s being done for charitable purposes. Sports franchises, for the most part, are testaments to greed, whether on the part of the owners, the players, the managers, or some combination of all the parties involved.

Can’t afford a ticket? Don’t go. Develop another interest. Go participate in a sport rather than watching one. Or, recognize that the team is making money from your ticket purchase with the help of the government (and that would be true no matter what political party happened to be running the government at the moment), resign yourself to paying through the nose for a seat close enough to the field to at least see the players' numbers without binoculars, and remind yourself that this is but one of several downsides to the glorification of athletics and athletes.

"There’s no such thing as a free market, and that might be especially true for professional sports."

"Freeness" of markets is a vague and relative term, and where Twins tickets are concerned, there are numerous markets, some of them freer than others. But when we consider single game Twins tickets, where there are numerous buyers and numerous sellers, the spot market for them is just about as free as markets ever get.

Ray, I agree with you. I think there are a lot of people out there -- Bob Quarrels (yes, he does) for example -- who feel, as you stated, that "as a Hennepin County resident, I’m paying for Target Field whether I attend a Twins game or not, whether I even like baseball or not. That, my friends, is NOT a free market.'"

Yes, it is, and it is a free market IN A CAPITALIST DEMOCRACY. Folks who don't have kids still benefit from paying for public education, and folks who don't use the court system still benefit from paying for one, and folks who don't hunt or fish still benefit from funding a DNR and on and on and on. This weird "if I don't personally benefit directly from it, I'm not paying for it" mentality is the exact opposite of the free market capitalistic democracy that is the basis of US civil society.

The other principle I cling to is that those of us who are more well-off should help out those of us who are less well-off, so as to not only help everyone meet a minimum standard of existence but also to keep an orderly, civil society. That part, unfortunately, is not normally satisfied by giving handouts to millionaires, but I have yet to encounter a perfect system -- public financing of stadia is one of many places where we help out those that don't seem to need it, while burdening some of those that do.

Ray wrote "Can’t afford a ticket? Don’t go." Yes - and don't become so emotionally attached to something like a sports team that you make foolish economic decisions. A friend of mine says it in a great way - if all of the Vikings players were traded tomorrow for all of the Packers players, would you root for the Vikings? If so, then you've proven that you root for laundry.