Here’s The Problem With Sports Teams Letting Fans Upgrade Seats Mid-Game

We haven’t had a sports story in a while, but here’s one from the Golden State — specifically, the Golden State Warriors (who play in the less than golden Oakland).

The Warriors have teamed up with a startup called Pogoseat to offer fans the chance to buy their way up to better seats during the game (In-Game Seat Upgrades – The Next Tech Wave For Sports Tickets?, Nov 29, Forbes).

“If Evan Owens, Co-Founder of tech startup Pogoseat, has his way, the age old practice of sneaking around or bribing ushers is about to come to a close. In the constantly evolving ticket business, his company has developed an application that lets fans use their smart phones to upgrade their seats right in the middle of the game.

Check what’s available, press a button, buy your new seats, and head downstairs. You’re charged the price difference between the two locations, with Pogoseat taking a cut. … Owens sees the demand as yet another fan-enhancing experience that’s needed to drag people away from their HD screens at home.

“You need to keep giving fans a reason to come to the game,” he says.

Early adaption has been slow, with only 30 or so fans buying in-game upgrades through the club’s first six home games. Still, the service is brand new. It’s common at most NBA arenas (and other sports venues) to see a percentage of season ticket holders fail to show for any given game.

If Golden State management can incentivise plan holders to notify them whenever they can’t make it (exactly how remains to be seen), the club can load those tickets into the system for the fans upstairs shopping for upgrades.”

Note that this differs from sports teams using dynamic pricing to better reflect the popularity of the opponent and the day of the week. Indeed, the Warriors are already doing this. The question here is whether there should be much demand for this service.

I have to admit I have my doubts.

First, I acknowledge that this is a clever idea. If there is a seat that is sitting empty at 5 minutes after tipoff, really the only people you could sell it to are those already at the game. My concern is that I cannot imagine there are that many people willing to buy at the prices they are charging.

Warrior ticket prices range from $12 to $375. Now that is obviously going from nosebleed territory at the end of the court to the sweetest court-side seat. However, even going from a centre court upper level to the worst centre court seat on the lower level means that prices jump from $34 to $99. If the pricing differential is based on the difference in the face value of the seats, that’s awfully stiff. If $99 each was too rich when the $34 tickets were bought, why should a $65 add on be tolerable?

I am sure that there has been some work by some behavioural economist that would show that Warrior fans are not as rational as I expect and that fans will discount the initial cost of the ticket and simply focus on the added utility of the upgrade. (Arguably, if the option of upgrading were certain to be available, the rational thing to do would be to buy an inexpensive seat and upgrade if the cheap view were sufficiently poor.)

Now my reservation assumes that a good seat was available when the customer bought his nosebleed seat. That needn’t be true. If season ticket holders hold all the best seats, single game buyers are simply never get to buy great seats before tipoff. Then fans may be willing to buy an upgrade during the game at the full price differential because it is their first shot at these seats. I’m just not sure how the team gets that inventory back.

Even if they give the full premium to the season ticket holder, the ticket holder is likely worse off than selling it on StubHub or taking the best offer from someone in the office.

This post originally appeared at The Operations Room

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